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Goodwill and Other Intangible Assets | 9 Months Ended
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Sep. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | 13. Goodwill and Other Intangible Assets Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Determining the fair value of a reporting unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates, and future market conditions, among others. Goodwill and other long-lived assets are reviewed for impairment whenever events, such as significant changes in the business climate, plant closures, changes in product offerings, or other circumstances indicate that the carrying amount may not be recoverable. To determine fair value, we utilize two market-based approaches and an income approach. Under the market-based approaches, we utilize information regarding the Company as well as publicly available industry information to determine earnings multiples and sales multiples. Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. In the second quarter of 2017, the Company applied the qualitative assessment approach in performing its annual evaluation of goodwill and concluded that no impairment provision was required. There were no amounts at risk due to the large spread between the fair, and carrying value, of each reporting unit. In the third quarter, the Company decided to discontinue the Bear Claw® line of hydraulic fracturing components used in the oil and gas industry, which was part of the Harris aerostructures business acquired by AEC in 2016. This decision resulted in a non-cash write-off of intangibles for $4.1 million to restructuring expense, which is presented as other changes in the table below for intangible assets and goodwill as of September 30, 2017. The write-off represents the full carrying value of intangible assets associated with the Bear Claw® product line as, based upon anticipated cash flows and the Company’s plan to exit the business, we determined the product line to have no fair value as of September 30, 2017. Due to the decision to exit this product line, management performed an interim assessment of goodwill and concluded that no goodwill was allocable to the Bear Claw® product line, and no impairment provision was required. We are continuing to amortize certain patents, trade names, customer relationships, customer contracts and technology assets that have finite lives. The gross carrying value, accumulated amortization and net values of intangible assets and goodwill as of December 31, 2016 to September 30, 2017, were as follows:
As of September 30, 2017 (in thousands) | Weighted average amortization life in years | Gross carrying amount | Accumulated amortization | Net carrying amount
Amortized intangible assets: |  |  |  |  |
AEC trade names | 15 | $43 | $27 |  | $16
AEC technology | 15 | 228 | 142 |  | 86
Customer relationships | 15 | 48,528 | 4,956 |  | 43,572
Customer contracts | 6 | 18,211 | 5,114 |  | 13,097
Other intangibles | 5 | 742 | 516 |  | 226
Total amortized intangible assets |  | $67,752 | $10,755 |  | $56,997
Unamortized intangible assets: |  |  |  |  |
MC Goodwill |  | $70,280 | $- |  | $70,280
AEC Goodwill |  | 95,730 | - |  | 95,730
Total unamortized intangible assets: |  | $166,010 | $- |  | $166,010
As of December 31, 2016 (in thousands) | Weighted average amortization life in years | Gross carrying amount | Accumulated amortization | Net carrying amount
Amortized intangible assets: |  |  |  |  |
AEC trade names | 15 | $43 | $23 |  | $20
AEC technology | 15 | 228 | 124 |  | 104
Customer relationships | 15 | 49,490 | 2,481 |  | 47,009
Customer contracts | 6 | 20,420 | 2,561 |  | 17,859
Other intangibles | 5 | 1,720 | 258 |  | 1,462
Total amortized intangible assets |  | $71,901 | $5,447 |  | $66,454
Unamortized intangible assets: |  |  |  |  |
MC Goodwill |  | $64,645 | $- |  | $64,645
AEC Goodwill |  | 95,730 | - |  | 95,730
Total unamortized intangible assets: |  | $160,375 | $- |  | $160,375
The changes in intangible assets and goodwill from December 31, 2016 to September 30, 2017, were as follows:
(in thousands) | December 31, 2016 | Amortization | Other Changes | Currency Translation | September 30, 2017
Amortized intangible assets: |  |  |  |  |  |  |  |  |  |
AEC trade names | $20 |  | $(4 | ) | $- |  | $- |  | $16 |
AEC technology | 104 |  | (18 | ) | 0 |  | - |  | 86 |
Customer relationships | 47,009 |  | (2,475 | ) | (962 | ) | - |  | 43,572 |
Customer contracts | 17,859 |  | (2,553 | ) | (2,209 | ) | - |  | 13,097 |
Other intangibles | 1,462 |  | (258 | ) | (978 | ) | - |  | 226 |
Total amortized intangible assets | $66,454 |  | ($5,308 | ) | ($4,149 | ) | $- |  | $56,997 |
Unamortized intangible assets: |  |  |  |  |  |  |  |  |  |
MC Goodwill | $64,645 |  | $- |  |  |  | $5,635 |  | $70,280 |
AEC Goodwill | 95,730 |  | - |  |  |  | - |  | 95,730 |
Total unamortized intangible assets: | $160,375 |  | $- |  | $- |  | $5,635 |  | $166,010 |
Estimated amortization expense of intangibles for the years ending December 31, 2017 through 2021, is as follows:
| Annual amortization
Year | (in thousands)
2017 | $6,865
2018 | 6,232
2019 | 6,232
2020 | 6,232
2021 | 6,162

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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 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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