Goodwill and Intangible Assets

The gross carrying amount and accumulated amortization of our intangible assets other than goodwill as of October 28, 2016 and October 30, 2015 are as follows:



		October 28, 2016					October 30, 2015
In thousands	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite lived intangible assets:
Customer relationships	15 years	$	213,062	$	(81,952	)	$	215,703	$	(69,245	)
Engineering drawings	1 year	5,843		(4,964		)	5,843		(4,165		)
Patents	18 years	93,560		(32,948		)	93,520		(27,985		)
Trademarks	5 years	15,024		(8,078		)	15,039		(5,049		)
Unpatented technology	20 years	33,028		(9,164		)	32,852		(7,372		)
Subtotal	16 years	360,517		(137,106		)	362,957		(113,816		)
Indefinite-lived intangible assets:
Trademarks		—		—			6,569		—
Total other intangible assets		$	360,517	$	(137,106	)	$	369,526	$	(113,816	)

Finite-lived intangible assets

Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed, which is principally the straight-line method. Intangible assets that are subject to amortization are evaluated for potential impairment whenever events or circumstances indicate that the carrying amount may not be recoverable.

No impairments were identified related to our finite-lived intangible assets as of October 28, 2016. However, during fiscal 2015, we assessed our intangible finite-lived assets for impairment due to the prolonged suppressed global commodity markets and their related effect on the global mining investment environment. Each asset group was considered and it was determined that the cash flows of an asset group in China and a steel mill would be insufficient to support their carrying value. In connection with the evaluation of these asset groups, we developed an estimate of fair value using a discounted cash flow model. As a result of this analysis, customer relationship non-cash pre-tax impairment charges of $57.9 million and $2.1 million were recorded in fiscal 2015 by our Underground and Surface segments, respectively. These charges are recorded in the Consolidated Statement of Operations under the heading Restructuring and other impairment charges. Assumptions critical to the process included forecasted financial information, discount rates and applicable customer retention rates. This fair value determination was categorized as Level 3 in the fair value hierarchy. See Note 20, Fair Value Measurements, for the definition of Level 3 inputs. No other impairments were identified related to our finite-lived intangible assets as of October 30, 2015.

Amortization expense for finite-lived intangible assets was $23.1 million, $26.5 million and $26.2 million, for fiscal 2016, 2015 and 2014, respectively.

Estimated future annual amortization expense is as follows:



In thousands
For the fiscal year ending:
2017	$	22,750
2018	21,979
2019	21,860
2020	19,171
2021	18,729

Indefinite-lived intangible assets

Indefinite-lived intangible assets are not amortized but are evaluated for impairment annually or more frequently if events or changes occur that suggest an impairment in carrying value, such as a significant adverse change in the business climate. Due to the Company's decision to idle certain facilities in China and the continued market challenges in that region, we conducted an assessment of our indefinite-lived trademarks as of April 29, 2016 using the relief-from-royalty methodology, which evaluates the estimated licensing cost of an intangible asset as an alternative to ownership. This valuation concluded that the carrying value of the Company's indefinite-lived trademarks exceeded the estimated licensing cost. As a result, the Company recorded a $6.6 million non-cash, pre-tax impairment charge to its Underground segment in the year ended October 28, 2016. This charge is recorded in the Consolidated Statement of Operations under the heading Restructuring and other impairment charges. It resulted in the full impairment of our indefinite-lived intangible assets. Assumptions critical to the process include forecasted information and discount rates. This fair value determination is categorized as Level 3 in the fair value hierarchy. Refer to Note 20, Fair Value Measurements, for the definition of Level 3 inputs.

In addition, we assessed our indefinite-lived trademarks in fiscal 2015 due to the prolonged suppressed global commodity markets and their related effect on the global mining investment environment. We developed an estimate of fair value using a similar process as the process described above. As a result, the Company recorded a $10.8 million non-cash, pre-tax impairment charge to its Underground segment in the year ended October 30, 2015. This charge is recorded in the Consolidated Statement of Operations under the heading Restructuring and other impairment charges.

Goodwill

Changes in the carrying amount of goodwill in fiscal 2016 and 2015 are as follows:



In thousands	Balance as of October 30, 2015			Disposition of business			Translation adjustments		Balance as of October 28, 2016
Underground
Goodwill	$	1,199,256		$	—		$	—	$	1,199,256
Accumulated impairment	(1,199,256		)	—			—		(1,199,256		)
Net goodwill	$	—		$	—		$	—	$	—
Surface
Goodwill	$	354,621		$	(4,345	)	$	567	$	350,843
Accumulated impairment	—			—			—		—
Net goodwill	$	354,621		$	(4,345	)	$	567	$	350,843
Total Consolidated
Goodwill	$	1,553,877		$	(4,345	)	$	567	$	1,550,099
Accumulated impairment	(1,199,256		)	—			—		(1,199,256		)
Net goodwill	$	354,621		$	(4,345	)	$	567	$	350,843



In thousands	Balance as of October 31, 2014		Goodwill acquired during the year		Goodwill impairment charges			Translation adjustments			Balance as of October 30, 2015
Underground
Goodwill	$	1,160,191	$	55,717	$	—		$	(16,652	)	$	1,199,256
Impairment charges	—		—		(1,199,256		)	—			(1,199,256		)
Net goodwill	$	1,160,191	$	55,717	$	(1,199,256	)	$	(16,652	)	$	—
Surface
Goodwill	$	356,502	$	—	$	—		$	(1,881	)	$	354,621
Impairment charges	—		—		—			—			—
Net goodwill	$	356,502	$	—	$	—		$	(1,881	)	$	354,621
Total Consolidated
Goodwill	$	1,516,693	$	55,717	$	—		$	(18,533	)	$	1,553,877
Impairment charges	—		—		(1,199,256		)	—			(1,199,256		)
Net goodwill	$	1,516,693	$	55,717	$	(1,199,256	)	$	(18,533	)	$	354,621

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is assigned to specific reporting units, and is tested for impairment at least annually during the fourth quarter of our fiscal year, or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Our fiscal 2016 annual goodwill impairment analysis was completed for our Surface reporting unit, as all Underground goodwill was fully impaired in fiscal 2015. After completing our step one analysis using a discounted cash flow model, we concluded that the estimated fair value of our Surface reporting unit exceeded its carrying value by 54%. Although we have concluded that there is no impairment on the goodwill of $350.8 million associated with our Surface reporting unit as of October 28, 2016, we will continue to closely monitor this in the future considering the volatility and uncertainty in the global commodity markets that our surface mining equipment services. Should there be further market declines, particularly in Latin American copper or North American coal and iron ore, which are the most significant markets serviced by our Surface reporting unit, there would be an increased risk that we would be required to recognize impairment to the Surface reporting unit's goodwill.

In addition, in fiscal 2015 we concluded that an indicator was present that suggested impairment may exist for our goodwill, as our total shareholders’ equity exceeded our market capitalization due to the prolonged suppressed global commodity markets, their related effect on the global mining investment environment and the resulting impact on our market capitalization. Based on this indicator of impairment, we worked with a third party appraisal firm to perform an analysis for impairment of goodwill using a discounted cash flow model. The result of our analysis for the Surface reporting unit was that the fair value of the reporting unit exceeded carrying value. However, we determined that the estimated fair value of our Underground reporting unit was lower than the carrying value of the reporting unit, and we recorded a non-cash, pre-tax goodwill impairment charge of $1.2 billion. This impairment charge represented a complete impairment of goodwill in the Underground reporting unit, and it is recorded in the Consolidated Statement of Operations under the heading Goodwill impairment charges. Assumptions critical to the process included forecasted financial information and discount rates. This fair value determination was categorized as Level 3 in the fair value hierarchy. See Note 20, Fair Value Measurements, for the definition of Level 3 inputs.