Goodwill and Intangible Assets

Gross and net carrying amounts of goodwill at December 31, 2016 and 2015 were as follows:



In thousands	Performance Materials		Technical Nonwovens		Thermal/ Acoustical Metals			Totals
Goodwill	$	12,898	$	3,943	$	12,160		$	29,001
Accumulated amortization/impairment	—		—		(12,160		)	(12,160		)
Balance at December 31, 2015	12,898		3,943		—			16,841
Goodwill	12,777		50,829		12,160			75,766
Accumulated amortization/impairment	—		—		(12,160		)	(12,160		)
Balance at December 31, 2016	$	12,777	$	50,829	$	—		$	63,606

The changes in the carrying amounts of goodwill in 2015 and 2016 were as follows:



In thousands	Performance Materials			Technical Nonwovens			Other Products and Services			Totals
Balance at January 1, 2014	$	13,340		$	3,943		$	4,660		$	21,943
Goodwill adjustment	—			—			(4,660		)	(4,660		)
Currency translation adjustment	(442		)	—			—			(442		)
Balance at December 31, 2015	12,898			3,943			—			16,841
Goodwill addition	—			47,987			—			47,987
Currency translation adjustment	(121		)	(1,101		)	—			(1,222		)
Balance at December 31, 2016	$	12,777		$	50,829		$	—		$	63,606

Goodwill Associated with Acquisitions and Divestitures

The goodwill addition of $48.0 million in 2016 within the Technical Nonwovens segment results from the acquisitions of Texel on July 7, 2016 and Gutsche on December 31, 2016. The amount allocated to goodwill is reflective of the benefits the Company expects to realize from its entrance into the geosynthetic market, expansion in the liquid filtration and other industrial markets and Texel's and Gutsche's assembled workforce. None of the goodwill associated with the Texel acquisition is expected to be deductible for income tax purposes. Of the $19.3 million of goodwill associated with the Gutsche acquisition at December 31, 2016, $16.3 million is expected to be deductible for income tax purposes.

The goodwill adjustment in 2015 associated with Other Products and Services of $4.7 million was the result of the sale of the Company's Life Sciences Vital Fluids business on January 30, 2015.

Goodwill Impairment Testing

During the fourth quarter of 2016, the Company performed its annual impairment analysis of the $12.8 million of goodwill in the Performance Materials reporting unit (PM reporting unit) and $50.8 million in the Technical Nonwovens reporting unit. The Company used the qualitative method to analyze the goodwill for the Performance Materials and Technical Nonwovens reporting units. When considering capital markets environment, economic conditions, industry trends, results of operations, and other factors, the Company determined that it is not more likely than not that the fair value of the reporting unit was less than its carrying amount. For the Performance Materials reporting unit the Company also considered changes in assumptions used in the Company's most recent quantitative annual testing, including results of operations, the magnitude of excess of fair value over carrying value and other factors. As a result, the Company concluded that the Performance Materials and Technical Nonwovens reporting unit goodwill was not impaired.

Other Intangible Assets

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Consolidated Balance Sheets as of December 31, 2016 and 2015:



	December 31, 2016					December 31, 2015
In thousands	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer relationships	$	36,131	$	(1,284	)	$	2,412	$	(411	)
Patents	4,028		(3,300		)	4,137		(3,272		)
Technology	2,500		(477		)	2,500		(310		)
Trade names	3,912		(394		)	220		(82		)
License agreements	583		(583		)	771		(771		)
Other	536		(205		)	392		(187		)
Total amortized intangible assets	$	47,690	$	(6,243	)	$	10,432	$	(5,033	)

In connection with the acquisition of Texel on July 7, 2016, the Company recorded intangible assets of $22.9 million, which included $20.8 million of customer relationships and $2.1 million of trade names. As of December 31, 2016, the weighted average useful lives of the acquired assets were 14 years and 5 years, respectively.

In connection with the acquisition of Gutsche on December 31, 2016, the Company recorded intangible assets of $15.6 million, which included $13.8 million of customer relationships, $1.7 million of trade names and $0.1 million of backlog. As of December 31, 2016, the weighted average useful lives of the acquired assets were 13 years, 5 years and 1 year, respectively.

Amortization of all intangible assets for the years ended December 31, 2016, 2015, and 2014 was $1.5 million, $0.8 million, and $0.9 million, respectively. Estimated amortization expense for intangible assets is expected to be $4.3 million, $5.5 million, $5.2 million, $4.9 million and $4.1 million for each of the years ending December 31, 2017 through 2021, respectively. As of December 31, 2016, the weighted average useful life of intangible assets was approximately 12 years.

Impairment of Long-Lived Assets

During the first quarter of 2016, the Company performed an impairment analysis for long-lived assets Company’s DSM Solutech B.V. (“Solutech”) operation, included in the Performance Materials segment. In March 2016, the Solutech operation became aware of a reduction of demand with certain customers that impacted the outlook for both its Arioso and Solupor membrane product lines that prompted management to adjust its long term revenue projections. These events resulted in a net decrease in forecasted revenue and cash flows. Based on these events and combined with historical operating losses, the Company determined that it was appropriate to test the Solutech asset group for recoverability in the first quarter of 2016.

Patents, with a remaining useful life of approximately 8 years, and machinery and equipment primarily comprise the carrying value of the asset group of $1.9 million. To determine the recoverability of the Solutech asset group the Company completed an undiscounted cash flow analysis and compared it to the asset group carrying value. This analysis was primarily dependent on the expectations for net sales over the period when the business has technological exclusivity provided by its patents. Future cash flows are dependent on the success of commercialization efforts of Solutech products by OEMs, the quality of Solutech products and technology advancements and management’s ability to manage costs.

The impairment test performed at the end of the first quarter of 2016 concluded that the Solutech asset group was not recoverable as the resulting undiscounted cash flows were less than their carrying amount. Accordingly, in accordance with ASC 360 “Impairment of Long-Lived Assets,” the Company estimated the fair value of the Solutech long-lived assets and, based on these fair value estimates, determined that the long-lived assets were not impaired.

Determining fair value is judgmental in nature and requires the use of significant estimates and assumptions considered to be Level 3 inputs including royalty rates, long-term growth rates and discount rates. The fair value of the Solutech patents, was determined using the relief from royalty method, which is a form of the income approach that focused on the level of royalty payments that the user of an intangible asset would have to pay a third party for the use of the asset if it were not owned by the user. Under this approach, revenue associated with the associated technology was projected over the expected remaining useful life of the asset, with a royalty rate applied to the expected revenue. The estimated fair value of machinery and equipment was based on the cost approach. Under the cost approach, the determination of fair value considered the replacement cost of the assets with adjustments in value for physical deterioration, functional obsolescence, and economic obsolescence, all Level 3 inputs.

During the remainder of 2016, the Company continued to monitor the recoverability of the long-lived assets at the Solutech operation as a result of historical operating losses and negative cash flows. Future cash flows are dependent on the success of commercialization efforts of Solutech products by OEMs, and management’s ability to manage costs. A marginal reduction in expected future revenue or the inability to manage identified cost cutting measures could result in an impairment charge. In the event that Solutech's cash flows in the future do not meet current expectations, management, based upon conditions at the time, would consider taking actions as necessary to improve cash flow. A thorough analysis of all the facts and circumstances existing at the time would need to be performed to determine if recording an impairment loss was appropriate.