Goodwill and Intangible Assets (Notes)

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets [Text Block]

GOODWILL AND INTANGIBLE ASSETS

Definite Lived Intangible Assets



(Dollars in thousands)	December 31, 2012						December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks and patents	$	6,283	$	227	$	6,056	$	6,118	$	140	$	5,978
Technology	36,479		8,394		$	28,085	35,769		4,655		31,114
Covenant-not-to-compete	1,042		358		$	684	956		135		821
Customer relationships	20,529		2,066		$	18,463	19,851		1,315		18,536
Total other intangible assets	$	64,333	$	11,045	$	53,288	$	62,694	$	6,245	$	56,449

In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations.

Amortization expense was approximately $4.4 million, $5.4 million and $1.1 million in 2012, 2011 and 2010, respectively. The estimated annual future amortization expense is $5.9 million, $6.0 million, $5.7 million, $5.3 million and $4.8 million in 2013, 2014, 2015, 2016 and 2017, respectively. These amounts could vary based on changes in foreign currency exchange rates.

The weighted average amortization period as of December 31, 2012, by intangible asset class, is presented in the table below:



Intangible Asset Class		Weighted Average Amortization Period
Trademarks and patents		6.3
Technology		9.3
Covenant not-to-compete		3.9
Customer relationships		9.4
Total other intangible assets		7.6

On January 4, 2011 we acquired Curamik, which contributed $52.4 million of intangible assets and $79.8 million of goodwill. The intangible assets are comprised of trademarks, technology, and customer relationships and include approximately $5.3 million of indefinite-lived intangible assets comprised of trademarks, which are assessed for impairment annually or when changes in circumstances indicate that the carrying values may not be recoverable. The definite-lived intangible assets are amortized using a fair value methodology that is based on the projected economic use of the related underlying asset.

Goodwill

The changes in the carrying amount of goodwill for the period ending December 31, 2012, by reportable segment, are as follows:



(Dollars in thousands)	High Performance Foams		Printed Circuit Materials		Curamik Electronics Solutions		Power Distribution Systems		Other		Total
December 31, 2011	$	22,597	$	—	$	77,357	$	—	$	2,224	$	102,178
Foreign currency translation adjustment	1,376		—		1,487		—		—		2,863
December 31, 2012	$	23,973	$	—	$	78,844	$	—	$	2,224	$	105,041

Annual Impairment Testing

We perform our annual goodwill impairment testing in the fourth quarter of the year. However, since the Curamik Electronics Solutions operating segment (also a reporting unit as defined for this test) results declined substantially in 2012 as compared to 2011, we determined that this decline was an indicator of impairment and performed an interim impairment test as of September 30, 2012. In accordance with applicable accounting guidance, we chose to perform Step 1 of the goodwill impairment test, which compared the fair value of the Curamik Electronics Solutions operating segment to its carrying amount (including goodwill and definite and indefinite-lived intangible assets). The fair value of the operating segment was determined using a discounted cash flow model based on our most recent forecasts of the business, taking into consideration macro-economic and other market trends known to us at that time. Based on this model, we determined that the fair value of the operating segment exceeded its carrying amount by approximately 14.6% and that no impairment of goodwill existed as of September 30, 2012. From a sensitivity perspective, if the fair value of the Curamik Electronics Solutions operating segment declined by 10% , the fair value of the operating unit would exceed the carrying value by approximately 3.1% . These amounts are both significantly lower than the calculation performed in the fourth quarter of 2011 (our annual impairment test date), which yielded a fair value that was approximately 55.1% in excess of the operating segment's carrying value, which reflects the current decline in the segment's results. In the fourth quarter of 2012, we reviewed the assumptions utilized in the third quarter of 2012 discounted cash flow model and no facts or circumstances existed that would cause us to change any of the underlying assumptions in that original model. Therefore, we concluded that no impairment existed as of December 31, 2012.

We believe that the assumptions and rates used in the impairment test related to Curamik Electronics Solutions are reasonable, but inherently uncertain. The key assumptions used in the discounted cash flow model include a discount rate of 14%, terminal growth rate of 3%, sales growth rate that ranges from 0% to 18.6% with a compounded annual growth rate of approximately 11% over the projected period, and an improving operating profit margin driven by current streamlining initiatives and better leverage on growing sales volumes. These assumptions are based on our current understanding of the markets, products and customers of Curamik Electronics Solutions, as well as projections for raw material prices, sales prices, and incremental cost streamlining initiatives, among others, over the period of the discounted cash flow model. If we fail to achieve the forecasted growth rates or the margin improvements assumed in the model or other assumptions utilized in the model need to be modified, the operating segment's fair value could become less than its carrying value, resulting in a future impairment of goodwill, other intangibles and other long lived assets of the operating segment.

For the two other reporting units with goodwill and intangible assets, High Performance Foams and Elastomer Components Division (ECD), the 2012 impairment test was performed in the fourth quarter of 2012. No impairment charges resulted from this analysis. The excess of fair value over carrying value for these reporting units was 470% for HPF and 170% for ECD. From a sensitivity perspective, if the fair value of these operating segments declined by 10% the fair value of the HPF operating segment would exceed its carrying value by approximately 415% and the fair value of the ECD operating segment would exceed its carrying value by approximately 140%. These valuations are based on a five year discounted cash flow analysis, which utilized a discount rate of approximately 14% and a terminal year growth rate of 3%.

- 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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