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Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill The Company performed a Step Zero qualitative assessment as part of its 2016 annual impairment test for all reporting units, which included a review of the Company’s market capitalization. For all reporting units with goodwill other than the Aerospace reporting unit, based on the Step Zero assessment, the Company determined that there were no indications that the fair value of a reporting unit was less than its carrying amount. Therefore, the Company determined that the Step I and Step II tests were not required for these reporting units. For the Company's Aerospace reporting unit, management had been monitoring current and expected operating results since the first quarter of 2016, when sales and margins were significantly lower than expected, to assess whether the reductions were other than temporary. Management established and executed against recovery plans, improving sales and margin levels during the second and third quarters of 2016. However, when considering these recent financial results, plus recognizing that fourth quarter 2016 results would be lower than previously expected, and updating the Company's assessment of future expectations for growth and profit levels, the Company determined that there were indicators that the fair value of the Aerospace reporting unit was less than its carrying value. Therefore, the Company performed a Step I quantitative assessment for its Aerospace reporting unit. In preparing the Step I analysis, the Company utilized both income and market-based approaches, placing a 50% weighting on each. Significant management assumptions used under the income approach were a weighted average cost of capital ("WACC") of 10.3% and an estimated residual growth rate of 3%. In considering the WACC, management considered the level of risk inherent in the cash flow projections based on historical attainment of its projections and current market conditions. The use of these unobservable inputs resulted in the fair value estimate being classified as a Level 3 measurement within the fair value hierarchy. Upon completion of the Step I test, the Company determined that the carrying value of the Aerospace reporting unit exceeded its fair value. The Company then performed a Step II test to determine whether goodwill had been impaired and, if applicable, to calculate the amount of the impairment charge. Based on the results of the Step II goodwill impairment test, the Company recorded a goodwill impairment charge of approximately $60.2 million in its Aerospace reporting unit. During 2015, due to a significant decline in profitability levels in the Company's Energy and engine products reporting units and a decline in the Company's stock price and resulting market capitalization, the Company determined there were indicators that the carrying value of certain of its reporting units exceeded their respective fair value. As such, the Company performed a Step I quantitative goodwill impairment test utilizing both income and market-based approaches, placing a 75% and 25% weighting on each, respectively. Significant management assumptions used under the income approach were WACC's ranging from 11% to 14.5% and an estimated residual growth rate of 3%. In considering the WACC for the reporting units under the income approach, management considered the level of risk inherent in the cash flow projections based on historical attainment of its projections and current market conditions. The use of these unobservable inputs resulted in the fair value estimate being classified as a Level 3 measurement within the fair value hierarchy. Upon completion of the 2015 Step I test, the Company determined that the carrying value of the Energy and engine products reporting units exceeded its fair value. The Company then performed a Step II test to determine whether goodwill had been impaired and, if applicable, to calculate the amount of the impairment charge. Based on the results of the Step II goodwill impairment test, the Company recorded goodwill impairment charges of approximately $70.9 million in its Energy reporting unit and approximately $3.2 million in its engine products reporting unit. Changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 are as follows (dollars in thousands):
|  |  |  |  |  |  | Engineered |  |
| Packaging |  | Aerospace |  | Energy |  | Components |  | Total
Balance, December 31, 2014 | $ | 169,350 |  |  | $ | 210,130 |  |  | $ | 73,180 |  |  | $ | 7,420 |  |  | $ | 460,080 |
Goodwill from acquisitions | — |  |  | (3,500 | ) |  | — |  |  | 2,320 |  |  | (1,180 | )
Impairment charge | — |  |  | — |  |  | (70,930 | ) |  | (3,180 | ) |  | (74,110 | )
Foreign currency translation and other | (3,620 | ) |  | — |  |  | (2,250 | ) |  | — |  |  | (5,870 | )
Balance, December 31, 2015 | $ | 165,730 |  |  | $ | 206,630 |  |  | $ | — |  |  | $ | 6,560 |  |  | $ | 378,920 |
Impairment charge | — |  |  | (60,200 | ) |  | — |  |  | — |  |  | (60,200 | )
Foreign currency translation and other | (3,640 | ) |  | — |  |  | — |  |  | — |  |  | (3,640 | )
Balance, December 31, 2016 | $ | 162,090 |  |  | $ | 146,430 |  |  | $ | — |  |  | $ | 6,560 |  |  | $ | 315,080 |
In 2015, the Company's estimate of the underlying obligation for certain tax amounts related to the acquisition of Allfast was adjusted due to the finalization of the Seller's tax liability, resulting in a $3.5 million decrease to the deferred purchase price liability and goodwill. Other Intangible Assets The Company performed a qualitative assessment as part of its 2016 annual impairment test to determine whether it was more likely than not that the fair values of the indefinite-lived intangible assets were less than the carrying values. Based on the assessment , the Company determined that there were no indications that the fair values of any of its indefinite-lived intangible assets, except for the Aerospace indefinite-lived intangible assets, were less than the carrying values. Therefore, a quantitative assessment was not required for these indefinite-lived intangible assets. The Company performed a quantitative assessment for all of its indefinite-lived intangible assets included within the Aerospace reportable segment, using a relief-from-royalty method. Significant management assumptions used under the relief-from-royalty method were a discount rate of 10.3% and an estimated residual growth rate of 3%. The use of these unobservable inputs resulted in the fair value estimates being classified as a Level 3 measurement within the fair value hierarchy. Upon completion of the quantitative impairment test, the Company determined that certain of the Company's Aerospace-related trade names had carrying values that exceeded their fair values, and therefore recorded impairment charges of approximately $38.7 million. In 2015, as part of the broadly focused restructuring initiative within the Company's Energy reportable segment, it was determined that the Company would discontinue use and wrote-off all of the approximately $1.6 million of carrying value of certain of its Energy-related trade names. Additionally, as part of the 2015 annual impairment test, the Company performed a quantitative assessment for all of its indefinite-lived intangibles assets except for the Allfast trade name, using a relief-from-royalty method. The Company performed a Step Zero qualitative analysis for the Allfast trade name as it was acquired less than one year prior and long-term sales projections were consistent with those expected in the purchase price valuation. Significant management assumptions used under the relief-from-royalty method were discount rates ranging from 14% to 17.5% and an estimated residual growth rate of 3%. The use of these unobservable inputs resulted in the fair value estimates being classified as a Level 3 measurement within the fair value hierarchy. Upon completion of the quantitative impairment test, the Company determined that the fair value of the Company's indefinite-lived intangible assets exceeded the carrying value, and thus there was no impairment. The Company amortizes its other intangible assets over periods ranging from one to 30 years. The gross carrying amounts and accumulated amortization of the Company's other intangibles as of December 31, 2016 and 2015 are summarized below (dollars in thousands):
|  | As of December 31, 2016 |  | As of December 31, 2015
Intangible Category by Useful Life |  | Gross Carrying Amount |  | Accumulated Amortization |  | Gross Carrying Amount |  | Accumulated Amortization
Finite-lived intangible assets: |  |  |  |  |  |  |  |
Customer relationships, 5 - 12 years |  | $ | 73,570 |  |  | $ | (33,200 | ) |  | $ | 74,890 |  |  | $ | (25,960 | )
Customer relationships, 15 - 25 years |  | 132,230 |  |  | (44,970 | ) |  | 132,230 |  |  | (38,060 | )
Total customer relationships |  | 205,800 |  |  | (78,170 | ) |  | 207,120 |  |  | (64,020 | )
Technology and other, 1 - 15 years |  | 57,470 |  |  | (26,040 | ) |  | 57,860 |  |  | (22,770 | )
Technology and other, 17 - 30 years |  | 43,300 |  |  | (31,370 | ) |  | 43,300 |  |  | (29,250 | )
Total technology and other |  | 100,770 |  |  | (57,410 | ) |  | 101,160 |  |  | (52,020 | )
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |
Trademark/Trade names |  | 42,930 |  |  | — |  |  | 81,630 |  |  | — |
Total other intangible assets |  | $ | 349,500 |  |  | $ | (135,580 | ) |  | $ | 389,910 |  |  | $ | (116,040 | )
Amortization expense related to intangible assets as included in the accompanying consolidated statement of operations is summarized as follows (dollars in thousands):
|  | Year ended December 31,
|  | 2016 |  | 2015 |  | 2014
Technology and other, included in cost of sales |  | $ | 5,680 |  |  | $ | 6,010 |  |  | $ | 5,030 |
Customer relationships, included in selling, general and administrative expenses |  | 14,790 |  |  | 14,960 |  |  | 11,030 |
Total amortization expense |  | $ | 20,470 |  |  | $ | 20,970 |  |  | $ | 16,060 |
Estimated amortization expense for the next five fiscal years beginning after December 31, 2016 is as follows (dollars in thousands):
Year ended December 31, | Estimated Amortization Expense
2017 |  | $19,800
2018 |  | $19,470
2019 |  | $19,100
2020 |  | $18,160
2021 |  | $15,380

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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