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Goodwill and Other Intangible Assets
12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

15. 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. 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 2019, 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 values, of each reporting unit.

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 amortizable intangible assets of $10.0 million and goodwill of $17.3 million.

85


ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

15. Goodwill and Other Intangible Assets — (continued)

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, 2017 to December 31, 2019, were as follows:

(in thousands, except for years)

 

Amortization life in years

 

Balance at December 31, 2018

 

Aquisition

 

Amortization

 

Currency 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 Goodwill

 

 

 

95,730

 

17,343

 

 

189

 

113,262

Total amortized intangible assets

 

 

 

$164,382

 

$17,343

 

$

 

$(791)

 

$180,934

(in thousands, except for years)

Amortization life in years

Balance at December 31, 2017

Amortization

Currency Translation

Balance at December 31, 2018

Amortized intangible assets:

AEC trademarks and trade names

15

$15

$(4)

$

$11

AEC technology

15

80

(24)

56

AEC customer contracts

6

12,369

(2,913)

9,456

AEC customer relationships

15

42,767

(3,229)

39,538

AEC other intangibles

5

210

(65)

145

Total amortized intangible assets

$55,441

$(6,235)

$

$49,206

Unamortized intangible assets:

MC Goodwill

$71,066

$

$(2,414)

$68,652

AEC Goodwill

95,730

95,730

Total amortized intangible assets

$166,796

$

$(2,414)

$164,382

As of December 31, 2019, the gross carrying amount and accumulated amortization of amortized intangible assets was $76.7 million and $23.8 million, respectively.

 

86


ALBANY INTERNATIONAL CORP.

Notes to Consolidated Financial Statements

15. Goodwill and Other Intangible Assets — (continued)

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 $3.3 million in Selling, general and administrative expenses in 2019; $2.9 million in Cost of goods sold and $3.3 million in Selling, general and administrative expenses in 2018; and $3.3 million in Cost of goods sold and $3.6 million in Selling, general and administrative expenses in 2017. Estimated amortization expense of intangibles for the years ending December 31, 2020 through 2024, is as follows:

Annual amortization

Year

(in thousands)

2020

$7,141

2021

7,071

2022

4,856

2023

4,135

2024

4,135

16. Accrued Liabilities

Accrued liabilities consist of:

(in thousands)

2019

2018

Salaries and wages

$22,878

$20,821

Contract loss reserve

17,190

20,708

Employee benefits

14,235

12,316

Returns and allowances

11,249

11,343

Accrual for compensated absences

10,445

10,636

Dividends

6,139

5,808

Contract liabilities

5,656

9,025

Lease liability - Operating lease

4,023

Lease liability - Financing lease

1,835

Postretirement medical benefits – current portion

3,808

3,890

Restructuring costs

1,342

5,534

Professional fees

2,999

2,575

Pension liability – current portion

2,155

2,124

Workers' compensation

1,982

1,794

Utilities

790

974

Interest

517

901

Other

18,642

20,581

Total

$125,885

$129,030

 

As described in Note 20, the Company adopted ASC 842, Leases effective January 1, 2019, which required the recognition of right of use assets, representing our right to use the underlying asset for the lease term, and lease liabilities, representing our obligation to make lease payments over the lease term, on the balance sheet. The cumulative effect of initially applying the new standard increased accrued liabilities $5.0 million.