Goodwill and Intangible Assets

12 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

As discussed in Note 2, goodwill is not amortized but is tested for impairment at least annually, in accordance with the provisions of ASC Topic 350-20-35-1. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The fair value of a reporting unit is determined using a discounted cash flow methodology. The Company’s reporting units are determined based upon whether discrete financial information is available and reviewed regularly, whether those units constitute a business, and the extent of economic similarities and interdependencies between those reporting units for purposes of aggregation. The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the operating segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” The Company has four reporting units as of March 31, 2017 and 2016. Only two of the four reporting units carried goodwill at March 31, 2017 and only two of the four reporting units carried goodwill at March 31, 2016. The Duff-Norton reporting unit (which designs, manufactures, and sources mechanical and electromechanical actuators and rotary unions) had goodwill of $9,555,000 and $9,627,000 at March 31, 2017 and 2016, respectively, and the Rest of Products reporting unit (representing the hoist, chain, and forgings, digital power control systems, and distribution businesses) had goodwill of $309,744,000 and $161,089,000 at March 31, 2017 and 2016, respectively. Both Magnetek and STAHL have been determined to be part of the Rest of Products reporting unit.

When we evaluate the potential for goodwill impairment, we assess a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value or if economic or other business factors indicate that the fair value of our reporting units may have declined since our last quantitative test, we proceed to a two-step impairment test. The Company performed its qualitative assessment as of February 28, 2017 and determined that the two-step goodwill impairment test should be performed for both the Rest of Products reporting unit and the Duff-Norton reporting unit.

In accordance with ASC Topic 350-20-35-3, the measurement of impairment of goodwill consists of two steps. In the first step, the Company compares the fair value of each reporting unit to its carrying value. As part of the impairment analysis, the Company determines the fair value of each of its reporting units with goodwill using the income approach and market approach. The income approach uses a discounted cash flow methodology to determine fair value. This methodology recognizes value based on the expected receipt of future economic benefits. Key assumptions in the income approach include a free cash flow projection, an estimated discount rate, a long-term growth rate, and a terminal value. These assumptions are based upon the Company’s historical experience, current market trends and future expectations.

The Company performed step one of the two-step impairment test for the Rest of Products and Duff-Norton reporting units as of February 28, 2017. Based on the results of the two-step impairment test, the Company determined that the Rest of Products and Duff-Norton reporting units' fair values were not less than their applicable carrying values.

Future impairment indicators, such as declines in forecasted cash flows, may cause additional significant impairment charges. Impairment charges could be based on such factors as the Company’s stock price, forecasted cash flows, assumptions used, control premiums, or other variables.

In accordance with ASC Topic 350-30-35, indefinite-lived intangible assets that are not subject to amortization shall be tested for impairment annually or more frequently if events or circumstances indicate that it is more likely than not that an asset is impaired. The Company assessed its indefinite-lived intangible assets consisting of trademarks as of February 28, 2017 and determined that the indefinite-lived STB intangible trademark asset was fully impaired. The impairment was due to lower cash flows and royalty rates than at the time of the acquisition. The total impairment loss of $1,125,000 has been recorded within intangible asset impairment on the Company's statement of operations.

Identifiable intangible assets acquired in a business combination are amortized over their estimated useful lives.

A summary of changes in goodwill during the years ended March 31, 2017 and 2016 is as follows:



Balance at April 1, 2015	$	121,461
STB purchase accounting adjustment	(1,669		)
Acquisition of Magnetek (See Note 3)	49,204
Currency translation	1,720
Balance at March 31, 2016	$	170,716
Acquisition of STAHL (See Note 3)	150,322
Currency translation	(1,739		)
Balance at March 31, 2017	$	319,299

Goodwill is recognized net of accumulated impairment losses of $107,000,000 as of March 31, 2017 and 2016, respectively. There were no goodwill impairment losses recorded in fiscal 2017, 2016, or 2015.

Intangible assets at March 31, 2017 are as follows:



	Gross Carrying Amount		Accumulated Amortization			Net
Trademark	$	5,151	$	(2,616	)	$	2,535
Indefinite-lived trademark	46,018		—			46,018
Customer relationships	177,983		(14,873		)	163,110
Acquired technology	46,574		(4,603		)	41,971
Other	3,471		(922		)	2,549
Balance at March 31, 2017	$	279,197	$	(23,014	)	$	256,183

Intangible assets at March 31, 2016 were as follows:



	Gross Carrying Amount		Accumulated Amortization			Net
Trademark	$	5,467	$	(2,431	)	$	3,036
Indefinite-lived trademark	29,006		—			29,006
Customer relationships	58,535		(10,688		)	47,847
Acquired technology	43,198		(1,873		)	41,325
Other	1,481		(566		)	915
Balance at March 31, 2016	$	137,687	$	(15,558	)	$	122,129

The Company’s intangible assets that are considered to have finite lives are amortized over the period in which the assets are expected to generate future cash flows. The weighted-average amortization periods are 18 years for trademarks, 18 years for customer relationships, 18 years for acquired technology, 6 years for other, and 18 years in total. Trademarks with a book value of $46,018,000 have an indefinite useful life and are therefore not being amortized. Total amortization expense was $8,105,000, $5,024,000, and $2,266,000 for fiscal 2017, 2016, and 2015, respectively. Based on the current amount of intangible assets, the estimated amortization expense for each of the succeeding five years is expected to be approximately $14,000,000.

- 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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