Goodwill and Other Intangible Assets

Goodwill

The Company performed a Step Zero qualitative assessment as part of its 2017 and 2016 annual impairment tests 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 purposes of the 2017 annual impairment test for the Company's Aerospace reporting unit, management elected to perform a Step I quantitative assessment in consideration of the partial goodwill impairment charge recorded during 2016. 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 9.5% and an estimated residual growth rate of 3%. In determining the WACC, management considered the level of risk inherent in the cash flow projections based on reducing previously utilized sales growth and margin expansion assumptions, as well as 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 fair value of the Aerospace reporting unit exceeded its carrying value by more than 15%.

For purposes of the 2016 annual impairment test 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 utilizing both income and market-based approaches, placing a 50% weighting on each. Significant management assumptions used under the income approach were a WACC of 10.3% and an estimated residual growth rate of 3%. In determining the WACC, management considered the level of risk inherent in the cash flow 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 2016 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 determining 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 their 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, 2017 and 2016 are as follows (dollars in thousands):



									Engineered
	Packaging			Aerospace			Energy		Components		Total
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
Foreign currency translation and other	4,310			—			—		—		4,310
Balance, December 31, 2017	$	166,400		$	146,430		$	—	$	6,560	$	319,390

Other Intangible Assets

The Company conducted its annual indefinite-lived intangible asset impairment test as of October 1, 2017. For purposes of the Company's 2017 indefinite-lived intangible asset impairment test, the Company performed a qualitative assessment 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 were less than the carrying values. However, in consideration of the impairment charge recorded during 2016, the Company perform a quantitative assessment for its indefinite-lived intangible assets recorded on its balance sheet as of October 1, 2017 within the Aerospace reportable segment to supplement its qualitative assessment. Using the relief-from-royalty method with a discount rate of 9.5% and an estimated residual growth rate of 3%, the Company determined each of its Aerospace-related trade names had a fair value that exceeded carrying values by more than 9%. The use of unobservable inputs resulted in the fair value estimates being classified as a Level 3 measurement within the fair value hierarchy.

In 2016, the Company performed a qualitative assessment as part of its 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. As such, 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, 2017 and 2016 are summarized below (dollars in thousands):



	As of December 31, 2017					As of December 31, 2016
Intangible Category by Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets:
Customer relationships, 5 - 12 years	$	73,910	$	(41,000	)	$	73,570	$	(33,200	)
Customer relationships, 15 - 25 years	132,230		(51,880		)	132,230		(44,970		)
Total customer relationships	206,140		(92,880		)	205,800		(78,170		)
Technology and other, 1 - 15 years	57,340		(29,120		)	57,470		(26,040		)
Technology and other, 17 - 30 years	43,300		(33,490		)	43,300		(31,370		)
Total technology and other	100,640		(62,610		)	100,770		(57,410		)
Indefinite-lived intangible assets:
Trademark/Trade names	42,930		—			42,930		—
Total other intangible assets	$	349,710	$	(155,490	)	$	349,500	$	(135,580	)

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,
	2017		2016		2015
Technology and other, included in cost of sales	$	5,340	$	5,680	$	6,010
Customer relationships, included in selling, general and administrative expenses	14,580		14,790		14,960
Total amortization expense	$	19,920	$	20,470	$	20,970

Estimated amortization expense for the next five fiscal years beginning after December 31, 2017 is as follows (dollars in thousands):



Year ended December 31,	Estimated Amortization Expense
2018		$19,450
2019		$19,080
2020		$18,140
2021		$15,360
2022		$11,810