GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table summarizes the net carrying amount of goodwill by segment at December 31, 2013 and 2012, respectively:



							Engineering
	Aerostructures						Services				Total
	2013			2012			2013		2012		2013			2012
Balance at December 31,

Gross Goodwill	$	141,663		$	135,431		$	50,741	$	49,536	$	192,404		$	184,967
Accumulated impairment loss	(79,181		)	(5,653		)	—		—		(79,181		)	(5,653		)
Net Goodwill	$	62,482		$	129,778		$	50,741	$	49,536	$	113,223		$	179,314

The change in the net goodwill balance for Aerostructures was primarily related to the acquisition of Valent in December 2012, with Valent accounting for $56,288 and $123,584 of the balance at December 31, 2013 and 2012, respectively. Under ASC 805, the acquiring entity has a period of time, referred to as the measurement period, to finalize the accounting for a business combination. The increase in gross goodwill from December 2012 to December 2013 in Aerostructures is due to measurement period changes related to the acquisition of Valent. The material adjustments recorded in 2013 were related to a loss reserve on a long-term contract of $5,267 and a reduction in the value of fixed assets $482 which were offset by a working capital settlement adjustment of $1,219. The Company determined that an acquired contract on the Boeing 787 program was under-priced related to the level of effort required, resulting in a loss contract. In addition, during the fourth quarter of fiscal 2013, in accordance with the Company’s accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company performed the annual impairment analysis and determined that carrying value for goodwill for Valent was above its fair value. As a result, a goodwill impairment charge of $73,528 was recorded in the fourth quarter of 2013. The fair value for the remaining goodwill in Aerostructures exceeded its carrying value.

The net goodwill balance at December 31, 2013 also consisted of $44,428 from the acquisition of D3 Technologies, Inc. (“D3”) in July 2007, $6,194 from the acquisition of Intec in January 2009 and $6,313 from the acquisition of TASS in August 2012. The net goodwill balance at December 31, 2012 consisted of $42,908 for the acquisition of D3, $6,194 from the acquisition of Intec, $6,628 from the acquisition of TASS and $123,584 from the acquisition of Valent. The increase in goodwill related to D3 resulted from the correction of a deferred tax liability that should have been recorded at acquisition on an indefinite lived intangible asset. Goodwill and deferred tax liability were increased by $1,520 to reflect the correction.

During the fourth quarter of fiscal 2013, in accordance with the Company’s accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company also performed the annual impairment analysis on the Engineering Services group and the fair value exceeded the carrying value of the reporting unit.

Goodwill recorded as a result of the D3 and Intec acquisitions is not deductible for tax purposes, while goodwill recorded as a result of the Valent and TASS acquisitions is deductible for tax purposes.

Intangible Assets

Intangible assets primarily consist of trademarks and customer intangibles resulting from the acquisitions of Versaform Corporation, D3, Intec, TASS, and Valent. The trademark of $4,222 that resulted from acquisition of D3 was determined to have an indefinite life. During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name will no longer be used and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired. The amount was calculated using the income approach with a level 3 valuation. The impairment loss was recognized in the Engineering Services segment in a separate line in the selling, general and administrative expenses of the Consolidated Statements of Comprehensive Income for the year ended December 31, 2013.

The remaining trademarks resulted from the acquisitions of Intec, TASS, and Valent and have a weighted average useful life of 4.5 years. Customer intangibles have a weighted average useful life of 18.5 years. Other intangible assets have a weighted average useful life of 5.3 years. The carrying values were as follows:



	December 31,
	2013			2012
Trademarks	$	778		$	5,000
Customer intangible assets	68,991			68,991
Other	1,481			1,481
Accumulated amortization	(15,785		)	(11,138		)
Intangible assets, net	$	55,465		$	64,334

Intangibles amortization expense for 2013, 2012 and 2011 was $4,647, $3,185 and $2,137, respectively. Amortization expense for 2011 includes $1,163 for an impairment loss. During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line. The impairment loss was recognized in the Aerostructures segment in a separate line in the selling, general and administrative expenses of the Consolidated Statements of Comprehensive Income.

Estimated annual amortization expense for these intangibles is as follows:



Year ending December 31,
2014	$	4,524
2015	4,359
2016	4,134
2017	3,915
2018	3,563
Thereafter	34,970
	$	55,465

- 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.

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