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Goodwill and Other Intangible Assets
6 Months Ended
Jun. 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.

 

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 June 30, 2017, were as follows:

 

As of June 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  $25  $18 
AEC technology 15  228  136  92 
Customer relationships 15  49,490  4,131  45,359 
Customer contracts 6  20,420  4,263  16,157 
Other intangibles 5  1,720  430  1,290 
Total amortized intangible assets    $71,901  $8,985  $62,916 
             
Unamortized intangible assets:            
MC Goodwill    $68,598  $-  $68,598 
AEC Goodwill    95,730  -  95,730 
Total unamortized intangible assets:    $164,328  $-  $164,328 

 

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 June 30, 2017, were as follows:

 

(in thousands) December 31,
2016
Amortization Currency Translation June 30, 2017
             
Amortized intangible assets:            
AEC trade names $20  $(2) $-  $18 
AEC technology 104  (12) -  92 
Customer relationships 47,009  (1,650) -  45,359 
Customer contracts 17,859  (1,702) -  16,157 
Other intangibles 1,462  (172) -  1,290 
Total amortized intangible assets $66,454  ($3,538) $-  $62,916 
             
Unamortized intangible assets:            
MC Goodwill $64,645  $-  $3,953  $68,598 
AEC Goodwill 95,730  -  -  95,730 
Total unamortized intangible assets: $160,375  $-  $3,953  $164,328 

 

 

Estimated amortization expense of intangibles for the years ending December 31, 2017 through 2021, is as follows:

  Annual amortization
Year (in thousands)
2017  $7,076
2018                         7,076
2019                         7,076
2020                         7,076
2021                         6,796