Goodwill and Other Intangible Assets

The following table represents the goodwill balance by reportable segment:



	Rail Products and Services			Construction Products		Tubular and Energy Services			Total
Balance at December 31, 2015:	$	48,188		$	5,147	$	28,417		$	81,752
Foreign currency translation impact	(1,524		)	—		—			(1,524		)
Disposition	(154		)	—		—			(154		)
Impairment charges	(32,725		)	—		(28,417		)	(61,142		)
Balance at December 31, 2016:	13,785			5,147		—			18,932
Foreign currency translation impact	853			—		—			853
Balance at December 31, 2017:	$	14,638		$	5,147	$	—		$	19,785

The Company performs goodwill impairment tests annually during the fourth quarter, and also performs interim goodwill impairment tests if it is determined that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. Qualitative factors are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. No goodwill impairment was recorded in connection with these evaluations for the twelve months ended December 31, 2017. The Company continues to monitor the recoverability of the long-lived assets associated with certain reporting units of the Company and the long-term financial projections of the businesses. Sustained declines in the markets we serve may result in future long-lived asset impairment.

During the year ended December 31, 2016, various reporting units underperformed against their projections and revised their forecasts downward. The revised forecasts, which were primarily attributable to weakness in the rail and energy markets, indicated longer recovery horizons than we previously projected. In connection with the revisions to the longer term projections and a substantial decline in market capitalization, the Company concluded that these qualitative factors indicated that there was a more likely than not risk that the carrying value of goodwill exceeded its fair value.

As a result of the Company’s qualitative review, with the assistance of an independent valuation firm, the Company performed a quantitative interim test for impairment of goodwill as of June 1, 2016. The valuation included the use of both the income and market approaches. Greater weighting was applied to the income approach since the Company believes it is the most reliable indication of value as it captures forecasted revenues and earnings for the reporting units in the projection period that the market approach may not directly incorporate. In addition, a lack of comparable market transactions has limited the availability of information necessary for the market approach.

The results of the test indicated that the Rail Technologies (within the Rail Products and Services segment), Chemtec (or “Precision Measurement Systems”), and Protective Coatings (Chemtec and Protective Coatings are within the Tubular and Energy Services segment) business units’ respective fair values were less than their carrying values. All other reporting units that maintain goodwill substantially exceeded their carrying value and were not at risk of impairment. As a result of the continued weakness in the commodity cycles impacting the energy and rail markets, the near term projections of the Rail Technologies, Chemtec, and Protective Coatings business units had deteriorated and the expected future growth of these business units was determined to be insufficient to support the carrying values.

The Company determined the implied fair values of the Rail Technologies, Chemtec, and Protective Coatings business units by using level 3 unobservable inputs, which incorporated assumptions that we believe would be a reasonable market participant’s view in a hypothetical purchase, to develop the discounted cash flows of the respective reporting units. Significant level 3 inputs included estimates of future revenue growth, gross margin and earnings before interest, taxes, depreciation and amortization (“EBITDA”). The resulting fair values of each reporting unit were allocated to the assets and liabilities of the respective reporting unit as if each reporting unit had been acquired in a business combination as of the test date and the fair value was the purchase price paid to acquire each reporting unit. The results of the step 2 analysis indicated that the carrying amounts of the goodwill of Rail Technologies, Chemtec, and Protective Coatings exceeded the implied fair values of that goodwill. Accordingly, the Company recognized a non-cash goodwill impairment of $61,142, which represented the full impairment of goodwill within the Chemtec and Protective Coatings business units and approximately 68% of Rail Technologies goodwill. No additional impairments were triggered as a result of the Company’s 2016 annual impairment test.

At December 31, 2017, approximately $14,638 of the Company’s goodwill balance is allocated to the Rail Technologies business unit within the Rail Products and Services reportable segment.

In 2015, the Company compared the implied fair values of the IOS (or “Test and Inspection Services”) and Chemtec goodwill amounts to the carrying amounts of that goodwill. The fair values of the IOS and Chemtec business units were allocated to all of the assets and liabilities of the respective reporting unit as if IOS and Chemtec had been acquired in business combinations as of the test date and the fair value was the purchase price paid to acquire each reporting unit. As a result of this valuation, it was determined that the carrying amounts of IOS’s and Chemtec’s goodwill exceeded the implied fair values of that goodwill. The Company recognized a non-cash goodwill impairment charge of $80,337 to write down the carrying values to the implied fair values, of which $69,908 represented the full carrying value of goodwill related to the IOS acquisition and the remaining $10,429 related to the Chemtec reporting unit. No additional impairments were triggered as a result of the Company’s 2015 annual impairment test.

At December 31, 2017, the Company had an aggregate goodwill impairment of $141,479, which was related to the 2016 and 2015 write downs.

The following table represents the gross definite-lived intangible assets balance by reportable segment at December 31:



	2017		2016
Rail Products and Services	$	57,654	$	56,476
Construction Products	1,348		1,348
Tubular and Energy Services	29,179		29,179
	$	88,181	$	87,003

During the year ended December 31, 2017, based on the Company's review of impairment indicators, there was no test performed on the recoverability of our definite-lived intangible assets. There were no definite-lived intangible asset impairments recorded during the years ended December 31, 2017 or 2015.

During the year ended December 31, 2016, the results of our testing indicated that the long-lived assets related to the IOS and Chemtec business units, within the Tubular and Energy Services segment, had carrying values in excess of the asset groups’ fair value. Based upon level 3 unobservable inputs, the Company incorporated assumptions that it believes would be a reasonable market participant’s view in a hypothetical purchase, to develop the discounted cash flows. Significant level 3 inputs included estimates of future revenue growth, gross margin and EBITDA. As a result of the analysis, the Company recorded a $42,982 non-cash impairment of definite-lived intangible assets related to the IOS business unit and a $16,804 non-cash impairment of definite-lived intangible assets related to the Chemtec business unit.

The components of the Company’s intangible assets are as follows at:



	December 31, 2017
	Weighted Average Amortization Period In Years	Gross Carrying Value		Accumulated Amortization			Net Carrying Amount
Non-compete agreements	5	$	4,238	$	(3,100	)	$	1,138
Patents	10	389		(164		)	225
Customer relationships	17	37,679		(9,171		)	28,508
Trademarks and trade names	14	10,085		(4,091		)	5,994
Technology	14	35,790		(14,215		)	21,575
		$	88,181	$	(30,741	)	$	57,440

	December 31, 2016
	Weighted Average Amortization Period In Years	Gross Carrying Value		Accumulated Amortization			Net Carrying Amount
Non-compete agreements	5	$	4,219	$	(2,217	)	$	2,002
Patents	10	373		(143		)	230
Customer relationships	18	36,843		(6,582		)	30,261
Trademarks and trade names	14	10,018		(3,238		)	6,780
Technology	14	35,550		(11,304		)	24,246
		$	87,003	$	(23,484	)	$	63,519

Intangible assets are amortized over their useful lives ranging from 4 to 25 years, with a total weighted average amortization period of approximately 15 years. Amortization expense for the years ended December 31, 2017, 2016, and 2015 was $6,992, $9,575, and $12,245, respectively.

Estimated amortization expense for the years 2018 and thereafter is as follows:



	Amortization Expense
2018	$	7,036
2019	6,314
2020	5,991
2021	5,971
2022	5,904
2023 and thereafter	26,224
	$	57,440