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Goodwill and Other Intangible Assets
 12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets
15. Goodwill and Other Intangible Assets

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. Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually at the reporting unit level, using either a qualitative or quantitative approach. Impairment is the condition that exists when the carrying amount of a reporting unit, including goodwill, exceeds its fair value. Our reportable segments are consistent with our operating segments.
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 2020, management applied the quantitative assessment approach in performing its annual evaluation of goodwill and concluded that no impairment provision was required. As part of this evaluation, the Company considered projected cash flows and market multiples for the Company’s Machine Clothing reporting unit and three AEC reporting units. Management performed these quantitative assessments and concluded that each reporting unit’s fair value continued to exceed its carrying value. In addition, there were no amounts at risk due to the estimated spread between the fair and carrying values. Accordingly, no impairment charges were recorded.
On November 20, 2019, the Company acquired CirComp GmbH, a privately-held developer and manufacturer of high-performance composite components located in Kaiserslautern, Germany. The assets acquired include goodwill of $17.7 million and amortizable intangible assets of $10.3 million, including measurement period adjustments recorded in 2020.
We are continuing to amortize certain patents, trademarks and names, customer contracts, relationships and technology assets that have finite lives. The changes in intangible assets and goodwill from December 31, 2018 to December 31, 2020, were as follows:
(in thousands, except for years)
Amortization life in years
Balance at December 31, 2019Other Changes
Amortization
Currency Translation
Balance at December 31, 2020
Amortized intangible assets:
AEC Trademarks and trade names
6-15
$73 $— $(16)$— $57 
AEC Technology
10-15
5,804 — (670)610 5,744 
AEC Intellectual property
15
1,243 — (83)— 1,160 
AEC Customer contracts
6
6,544 — (2,912)— 3,632 
AEC Customer relationships
8-15
39,147 329 (3,513)297 36,260 
AEC Other intangibles
5
81 — (65)— 16 
Total amortized intangible assets$52,892 $329 $(7,259)$907 $46,869 
Unamortized intangible assets:
MC Goodwill
$67,672 $— $— $4,618 $72,290 
AEC Goodwill
113,262 335 — 1,666 115,263 
Total unamortized intangible assets$180,934 $335 $— $6,284 $187,553 
(in thousands, except for years)
Amortization life in years
Balance at December 31,
2018		AcquisitionAmortizationCurrency
Translation		Balance at December 31,
2019
Amortized intangible assets:
AEC Trademarks and trade names
6-15
$11 $68 $(6)$— $73 
AEC Technology
10-15
56 5,821 (73)— 5,804 
AEC Intellectual property
15
— 1,250 (7)— 1,243 
AEC Customer contracts
6
9,456 — (2,912)— 6,544 
AEC Customer relationships
8-15
39,538 2,834 (3,247)22 39,147 
AEC Other intangibles
5
145 — (64)— 81 
Total amortized intangible assets$49,206 $9,973 $(6,309)$22 $52,892 
Unamortized intangible assets:
MC Goodwill$68,652 $— $— $(980)$67,672 
AEC Goodwill95,730 17,343 — 189 113,262 
Total unamortized intangible assets$164,382 $17,343 $— $(791)$180,934 
As of December 31, 2020, the gross carrying amount and accumulated amortization of amortized intangible assets was $78.0 million and $31.1 million, respectively.
Amortization expense related to intangible assets was reported in the Consolidated Statement of Income as follows: $3.0 million in Cost of goods sold and $4.3 million in Selling, general and administrative expenses in 2020; $3.0 million in Cost of goods sold and $3.3 million in Selling, general and administrative expenses in 2019; and $2.9 million in Cost of goods sold and $3.3 million in Selling, general and administrative expenses in 2018. Estimated amortization expense of intangibles for the years ending December 31, 2021 through 2025, is as follows:
Year
Annual amortization
(in thousands)
2021$7,200 
20225,000 
20234,200 
20244,200 
20254,200