Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

14. 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, 2017 and March 31, 2018, were as follows:

As of March 31, 2018 (in thousands)	Weighted average amortization life in years	Gross carrying amount	Accumulated amortization		Net carrying amount
Amortized intangible assets:
AEC trade names	15	$140	($126	)	$14
AEC technology	15	370	(296	)	74
Customer relationships	15	48,421	(6,462	)	41,959
Customer contracts	6	17,471	(5,830	)	11,641
Other intangibles	5	322	(129	)	193
Net amortized intangible assets		$66,724	($12,843	)	$53,881
Unamortized intangible assets:
MC Goodwill		$72,581	$-		$72,581
AEC Goodwill		95,730	-		95,730
Total unamortized intangible assets:		$168,311	$-		$168,311

As of December 31, 2017 (in thousands)	Weighted average amortization life in years	Gross carrying amount	Accumulated amortization		Net carrying amount
Amortized intangible assets:
AEC trade names	15	$140	($125	)	$15
AEC technology	15	370	(290	)	80
Customer relationships	15	48,421	(5,654	)	42,767
Customer contracts	6	17,471	(5,102	)	12,369
Other intangibles	5	322	(112	)	210
Net amortized intangible assets		$66,724	($11,283	)	$55,441
Unamortized intangible assets:
MC Goodwill		$71,066	$-		$71,066
AEC Goodwill		95,730	-		95,730
Total unamortized intangible assets:		$166,796	$-		$166,796

The changes in intangible assets, net and goodwill from December 31, 2017 to March 31, 2018, were as follows:

(in thousands)	December 31, 2017	Amortization		Currency Translation	March 31, 2018
Amortized intangible assets:
AEC trade names	$15	$(1	)	$-	$14
AEC technology	80	(6	)	-	74
Customer relationships	42,767	(808	)	-	41,959
Customer contracts	12,369	(728	)	-	11,641
Other intangibles	210	(17	)	-	193
Net amortized intangible assets	$55,441	($1,560	)	$-	$53,881
Unamortized intangible assets:
MC Goodwill	$71,066	$-		$1,515	$72,581
AEC Goodwill	95,730	-		-	95,730
Total unamortized intangible assets:	$166,796	$-		$1,515	$168,311

Estimated amortization expense of intangibles for the years ending December 31, 2018 through 2022, is as follows:

	Annual amortization
Year	(in thousands)
2018	$6,234
2019	6,234
2020	6,234
2021	6,163
2022	3,949