NOTE 15 – GOODWILL

The following summarizes the changes in the carrying amount of goodwill:



(in thousands)	Power			Renewable			Industrial			Total
Balance at December 31, 2015	$	47,137		$	49,624		$	104,308		$	201,069
Increase resulting from SPIG acquisition	—			—			69,862			69,862
Purchase price adjustment - SPIG acquisition	—			—			2,539			2,539
Currency translation adjustments	(917		)	(1,189		)	(3,969		)	(6,075		)
Balance at December 31, 2016	46,220			48,435			172,740			267,395
Increase resulting from Universal acquisition	—			—			14,413			14,413
Impairment charges⁽¹⁾	—			(49,965		)	(36,938		)	(86,903		)
Currency translation adjustments	1,150			1,530			6,813			9,493
Balance at December 31, 2017	$	47,370		$	—		$	157,028		$	204,398

⁽¹⁾ Prior to September 30, 2017, we had not recorded any goodwill impairment charges.

Our annual goodwill impairment assessment is performed on October 1 of each year (the "annual assessment" date); however, events during 2017 have required two interim assessments of all six of our reporting units. In the second quarter of 2017, significant charges in our Renewable segment were considered to be a triggering event for the interim assessment as of June 30, 2017, which did not indicate impairment. During the third quarter of 2017, our market capitalization significantly decreased to below our equity value, which was considered to be a trigger for a second interim assessment. Additionally, the forecast was reduced for our SPIG reporting unit based on a change in the market strategy implemented by the new segment management to focus on core geographies and products, which we considered to be another triggering event for an interim assessment during the third quarter of 2017. The second interim assessment as of September 30, 2017 indicated impairment for our Renewable and SPIG reporting units as described below. Our 2017 annual goodwill impairment test as of October 1, 2017 did not indicate additional impairment.

Assessing goodwill for impairment involves a two step test. Step 1 of the test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the test is performed to measure the amount of the impairment loss, if any. Step 2 of the test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill, and impairment is measured as the excess of the carrying value over the implied value of goodwill. Estimating the fair value of a reporting unit requires significant judgment. The fair value of each reporting unit determined under Step 1 of the goodwill impairment test was based on a 50% weighting of an income approach using a discounted cash flow analysis using forward-looking projections of future operating results, a 30% to 40% weighting of a market approach using multiples of revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA") of guideline companies and a 20% to 10% weighting of a market approach using multiples of revenue and EBITDA from recent, similar business combinations.

We primarily attributed the significant decline in our market capitalization in the third quarter of 2017 to the announcement of significant charges in the Renewable reporting unit. Accordingly, we increased the discount rate applied to future projected cash flows from 15.0% at June 30, 2017 to 23.5% at September 30, 2017. As a result of the increase in the discount rate and an increase in the carrying value of the reporting unit, impairment was indicated at September 30, 2017, which measured $50.0 million ($48.9 million net of tax), the full carrying value. Other long-lived assets in the reporting unit were not impaired.

For our SPIG reporting unit, which is included in our Industrial segment, the Step 1 also indicated impairment at September 30, 2017. At June 30, 2017 and October 1, 2016, the fair value exceeded the carrying value by less than 1% and 5%, respectively. At September 30, 2017, the independently obtained fair value estimates decreased under both the income and market valuation approaches due to a short-term decrease in profitability attributable to specific current contracts and changes in SPIG's market strategy introduced by segment management during the third quarter. The discount rate applied to future projected cash flows was 14.0% and 12.5% at each of the September 30, 2017 and June 30, 2017 interim tests, respectively. Step 2 of the impairment test at September 30, 2017 measured $36.9 million of impairment (with no income tax impact). The SPIG reporting unit has $38.3 million of goodwill remaining after the September 30, 2017 impairment charge. Our 2017 annual goodwill impairment test as of October 1, 2017 utilized the same assumptions and inputs as the test we performed at September 30, 2017, and it did not indicate additional impairment. Other long-lived assets in the reporting unit were not impaired.

For the remaining four reporting units where impairment was not indicated at September 30, 2017, the goodwill balances at September 30, 2017 (and October 1, 2017) and the Step 1 goodwill impairment test headroom (the estimated fair value less the carrying value) are as follows:



	Power Segment		Industrial Segment
(in millions)	Power	Construction	MEGTEC	Universal
Reporting unit headroom	60%	98%	12%	18%
Goodwill balance	$38.5	$8.9	$104.3	$14.4