Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Note 7 - Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2014 were as follows:



	Mobile Industries			Process Industries			Aerospace			Total
Beginning balance	$	22.3		$	161.4		$	162.4		$	346.1
Acquisitions	—			2.9			—			2.9
Impairment	—			—			$	(86.3	)	$	(86.3	)
Other	(0.1		)	(1.6		)	(0.4		)	(2.1		)
Ending balance	$	22.2		$	162.7		$	75.7		$	260.6

ASC 350, "Intangibles - Goodwill and Other," requires that goodwill and indefinite-lived intangible assets be tested at least annually for impairment. The Company performs its annual impairment test during the fourth quarter after the annual forecasting process is completed. Furthermore, goodwill and indefinite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying values may not be recoverable. In reviewing goodwill for impairment, potential impairment is identified by comparing the fair value of each reporting unit using an income approach (a discounted cash flow model) and a market approach, with its carrying value.

During the third quarter of 2014, the Company reviewed goodwill for impairment for its three reporting units within the Aerospace segment as a result of declining sales forecasts and financial performance within the segment. The Company utilizes both an income approach and a market approach in testing goodwill for impairment. The Company utilized updated forecasts for the income approach as part of the goodwill impairment review. As a result of the lower earnings and cash flow forecasts, the Company determined that the Drive Systems and the Aerospace Aftermarket reporting units could not support the carrying value of their goodwill. As a result, the Company recorded a pretax impairment loss of $86.3 million during the third quarter of 2014, which was reported in impairment and restructuring charges in the Consolidated Statement of Income.

The change related to acquisitions reflects the preliminary purchase price allocation for the acquisition of Schulz completed on April 28, 2014. The goodwill acquired from Schulz of $2.9 million is tax-deductible and will be amortized over 15 years. “Other” primarily includes foreign currency translation adjustments. See Note 4 - Acquisitions for additional information on the acquisition listed above.

The following table displays intangible assets as of September 30, 2014 and December 31, 2013:



	As of September 30, 2014						As of December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Customer relationships	$	159.2	$	56.6	$	102.6	$	160.4	$	49.3	$	111.1
Know-how	32.3		4.8		27.5		31.4		4.4		27.0
Industrial license agreements	0.1		0.1		—		0.1		0.1		—
Land-use rights	8.8		4.7		4.1		8.9		4.5		4.4
Patents	2.3		2.0		0.3		2.3		1.8		0.5
Technology	37.1		11.3		25.8		44.4		17.2		27.2
Tradenames	5.1		2.8		2.3		4.6		2.7		1.9
PMA licenses	8.8		8.0		0.8		8.8		4.0		4.8
Non-compete agreements	3.5		3.0		0.5		3.2		2.8		0.4
	$	257.2	$	93.3	$	163.9	$	264.1	$	86.8	$	177.3
Intangible assets not subject to amortization:
Tradenames	$	15.8	$	—	$	15.8	$	15.9	$	—	$	15.9
FAA air agency certificates	8.7		—		8.7		14.2		—		14.2
	$	24.5	$	—	$	24.5	$	30.1	$	—	$	30.1
Total intangible assets	$	281.7	$	93.3	$	188.4	$	294.2	$	86.8	$	207.4

In addition to recording an impairment loss related to goodwill, the Company recorded an impairment loss of $9.9 million related to intangible assets within the Aerospace segment during the third quarter of 2014.

Amortization expense for intangible assets was $13.4 million and $12.9 million for the nine months ended September 30, 2014 and September 30, 2013, respectively. Amortization expense for intangible assets is estimated to be $17.8 million in 2014; $18.3 million in 2015; $18.1 million in 2016; $17.4 million in 2017; and $17.4 million in 2018.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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