Goodwill

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

In the first quarter of 2020, the Company completed a business reorganization as part of its “Project Be Ready” restructuring plan which resulted in identification of two reportable segments (Industrial Technologies and Defense Technologies). The Company commenced operating and reporting under the new organization structure effective January 1, 2020. See Note 21, “Restructuring” for further information on Project Be Ready and Note 19, "Operating Segments and Related Information" for additional information on the two new reportable operating segments. Goodwill was allocated to identified reporting units using a relative fair value approach. In conjunction with the change in reportable segments, the Company evaluated goodwill for impairment, both before and after the segment change and determined that goodwill was not impaired.

The following table presents changes in the carrying value of goodwill and the activity by reportable segment for the two year period ending December 31, 2020 (in thousands):


	Industrial Technologies		Defense Technologies		Consolidated
Balance, December 31, 2018	$	620,383	$	284,188	$	904,571
Goodwill from acquisitions	23,945		445,501		469,446
Goodwill impairment	(6,543)		—		(6,543)
Currency translation adjustments	(1,886)		(992)		(2,878)
Balance, December 31, 2019	635,899		728,697		1,364,596
Adjustments to goodwill	(6)		(12,617)		(12,623)
Goodwill from acquisitions	—		22,857		22,857

Currency translation adjustments	15,546		3,988		19,534
Balance, December 31, 2020	$	651,439	$	742,925	$	1,394,364

During the year ended December 31, 2020, the Company recorded $22.9 million of goodwill in connection with the preliminary purchase price allocation associated with the Altavian, Inc. ("Altavian") acquisition and completed the tax assessment for the short–period return in connection with the final purchase price allocation associated with Endeavor Robotics Holdings, Inc. ("Endeavor") acquisition that resulted in a goodwill adjustment of $12.6 million. During the year ended December 31, 2019, the Company recorded $469.4 million of goodwill in connection with the purchase price allocation associated with the following acquisitions: Acyclica, Inc. ("Acylica"), SeaPilot AB ("SeaPilot"), Aeryon Labs, Inc. ("Aeryon"), Endeavor and New England Optical Systems, Inc. See Note 20, "Business Acquisitions" for additional information on goodwill from acquisitions.

The Company reviews its goodwill for impairment annually during the third quarter, or more frequently, if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value. During the first quarter of 2020, as a result of a deterioration in macroeconomic conditions driven by COVID-19 as well as Company-specific events which combined resulted in declines to our stock price and market capitalization, the Company determined it was more likely than not that these factors had a significant adverse impact on its reporting units. An interim quantitative goodwill impairment analysis was performed as of March 31, 2020 and the Company determined that the fair values of its reporting units were greater than their carrying values. During the third quarter of 2020, the Company performed its annual goodwill impairment analysis. The Company performed a qualitative analysis for all reporting units and determined that it was more likely than not that the fair values of the reporting units were in excess of the individual reporting units carrying values, and as a result, a quantitative step one analysis was not necessary. There were no goodwill impairments during the year ended December 31, 2020.

During the third quarter of 2019, the Company completed its annual review of goodwill and determined that no impairment of its recorded goodwill was necessary. During the fourth quarter of 2019, the Company approved a plan to restructure the OTS reporting unit within the Industrial Technologies segment. The restructuring discontinued operations of the thermal and night vision business and refocused strategy on the Personal Vision System product line in the law enforcement and public safety markets. As a result, the Company revised its outlook and lowered its financial forecast for the OTS business. The Company determined that the above factors are more likely than not to have a significant adverse impact on the OTS reporting unit and therefore an interim goodwill impairment quantitative analysis was performed utilizing both an income and market approach to determine the reporting units fair value.

Note 9. Goodwill - (Continued)

The income approach, discounted cash flow method, was performed by calculating the fair value based on future forecasted cash flows discounted back to the present value, including significant judgments related to risk adjusted discount rates, terminal growth rates, and the weighted average cost of capital (“WACC”). The projected cash flows were developed by the Company for planning purposes based on current known business and market conditions as well as future anticipated industry trends. A terminal value growth rate of 2.5% and WACC of 16% were utilized based on industry and macroeconomic indicators as well as estimated risk premiums. The market approach, guideline public company method, was performed to calculate the fair value of the OTS reporting unit by applying pricing multiples derived from selected publicly traded guideline companies. The Company utilized enterprise/earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples and enterprise/revenue multiples which ranged from low 5.0 to high 20.6, and from low 0.6 to high 4.6, respectively.

Based on the quantitative goodwill impairment test the Company determined that the fair value of the OTS reporting unit, determined using an equal weighting from the income and market approaches, was approximately 63% of its carrying value. As a result, the Company recorded goodwill impairment charges of $6.5 million in Industrial Technologies segment, which represents the difference between the carrying value and the fair value of the OTS reporting unit, for the year ended December 31, 2019. The Company recorded the goodwill impairment charge in "Selling, general and administrative" in the Consolidated Statements of Income.