Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The Company performed a Step Zero qualitative assessment as part of its 2019, 2018 and 2017 annual impairment tests for all reporting units, which included a review of the Company’s market capitalization. For purposes of the 2019 and 2018 annual impairment tests, based on the Step Zero assessment, the Company determined there were no indications that the fair value of a reporting unit was less than its carrying amount. Therefore, the Company determined that the Step I and Step II tests were not required. For purposes of the 2017 annual impairment test, for all reporting units with goodwill other than the Aerospace reporting unit, based on the Step Zero assessment, the Company determined that there were no indications that the fair value of a reporting unit was less than its carrying amount. Therefore, the Company determined that the Step I and Step II tests were not required for these reporting units.

For purposes of the 2017 annual impairment test for the Company's Aerospace reporting unit, management elected to perform a Step I quantitative assessment in consideration of the partial goodwill impairment charge recorded during 2016. In preparing the Step I analysis, the Company utilized both income and market-based approaches, placing a 50% weighting on each. Significant management assumptions used under the income approach were a weighted average cost of capital ("WACC") of 9.5% and an estimated residual growth rate of 3%. In determining the WACC, management considered the level of risk inherent in the cash flow projections based on reducing previously utilized sales growth and margin expansion assumptions, as well as historical attainment of its projections and current market conditions. The use of these unobservable inputs resulted in the fair value estimate being classified as a Level 3 measurement within the fair value hierarchy. Upon completion of the Step I test, the Company determined that the fair value of the Aerospace reporting unit exceeded its carrying value by more than 15%.

During the three months ended March 31, 2019, in an effort to better align the Company's machining competencies and resources, the Company began reporting its machined products operations within the Specialty Products reportable segment. These operations were previously reported in the Company's Aerospace reportable segment. As a result of the reporting structure change, the Company's previous Aerospace reporting unit was split into two new reporting units, Machined Products and Aerospace. The Company reallocated the goodwill attributed to the previous Aerospace reporting unit on a relative fair value basis between the Machined Products and the new Aerospace reporting units, resulting in an allocation of goodwill of $12.7 million and $133.7 million, respectively.

After the reallocation of goodwill, the Company performed a Step I quantitative assessment for both the Machined Products and the new Aerospace reporting units. As part of this assessment, the Company determined that the fair value of the Aerospace reporting unit exceeded its carrying value by more than 34% and the fair value of the Machined Products reporting unit exceeded its carrying value by more than 13%.

Changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018 are as follows (dollars in thousands):



							Specialty
	Packaging			Aerospace			Products		Total
Balance, December 31, 2017	$	166,400		$	146,430		$	6,560	$	319,390
Foreign currency translation and other	(2,740		)	—			—		(2,740		)
Balance, December 31, 2018	$	163,660		$	146,430		$	6,560	$	316,650
Goodwill from acquisitions	18,400			—			—		18,400
Goodwill reassigned in segment realignment	—			(12,740		)	12,740		—
Foreign currency translation and other	(410		)	—			—		(410		)
Balance, December 31, 2019	$	181,650		$	133,690		$	19,300	$	334,640

Other Intangible Assets

For the purposes of the Company's 2019 and 2018 indefinite-lived intangible asset impairment tests, the Company performed a qualitative assessment to determine whether it was more likely than not that the fair values of the indefinite-lived intangible assets were less than the carrying values. Based on the qualitative assessment performed, the Company does not believe that it is more likely than not that the fair values of each of its indefinite-lived intangible assets are less than the carrying values; therefore, a fair value calculation of the indefinite-lived intangible assets was not required for the 2019 and 2018 annual indefinite-lived intangible asset impairment tests.

In 2017, the Company performed a qualitative assessment as part of its annual impairment test to determine whether it was more likely than not that the fair values of the indefinite-lived intangible assets were less than the carrying values. Based on the assessment, the Company determined that there were no indications that the fair values of any of its indefinite-lived intangible assets were less than the carrying values. However, in consideration of the impairment charge recorded during 2016, the Company performed a quantitative assessment for its indefinite-lived intangible assets recorded on its balance sheet as of October 1, 2017 within the Aerospace reportable segment to supplement its qualitative assessment. Using the relief-from-royalty method with a discount rate of 9.5% and an estimated residual growth rate of 3%, the Company determined each of its Aerospace-related trade names had a fair value that exceeded carrying values by more than 9%. The use of unobservable inputs resulted in the fair value estimates being classified as a Level 3 measurement within the fair value hierarchy.

The gross carrying amounts and accumulated amortization of the Company's other intangibles as of December 31, 2019 and 2018 are summarized below (dollars in thousands):



	As of December 31, 2019					As of December 31, 2018
Intangible Category by Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets:
Customer relationships, 5 - 12 years	$	73,860	$	(49,910	)	$	66,370	$	(42,580	)
Customer relationships, 15 - 25 years	122,280		(56,010		)	122,280		(49,560		)
Total customer relationships	196,140		(105,920		)	188,650		(92,140		)
Technology and other, 1 - 15 years	52,430		(29,790		)	52,420		(27,010		)
Technology and other, 17 - 30 years	43,300		(37,620		)	43,300		(35,600		)
Total technology and other	95,730		(67,410		)	95,720		(62,610		)
Indefinite-lived intangible assets:
Trademark/Trade names	42,850		—			38,270		—
Total other intangible assets	$	334,720	$	(173,330	)	$	322,640	$	(154,750	)

Amortization expense related to intangible assets as included in the accompanying consolidated statement of income is summarized as follows (dollars in thousands):



	Year ended December 31,
	2019		2018		2017
Technology and other, included in cost of sales	$	4,780	$	4,890	$	5,140
Customer relationships, included in selling, general and administrative expenses	13,850		13,370		13,400
Total amortization expense	$	18,630	$	18,260	$	18,540

Estimated amortization expense for the next five fiscal years beginning after December 31, 2019 is as follows (dollars in thousands):



Year ended December 31,	Estimated Amortization Expense
2020		$	18,280
2021		$	16,310
2022		$	12,760
2023		$	10,860
2024		$	9,360