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Note 5 - Supplemental Balance Sheet Information

12 Months Ended

Dec. 31, 2015

Note 5 - Supplemental Balance Sheet Information

a. Inventory

Inventories are stated at the lower of cost or market with cost determined under the first-in, first-out (FIFO) method. The composition of inventories was:

	December 31,
	2015		2014
Raw materials	$	11,602	$	15,100
Work in process		1,560		1,489
Finished products		10,652		9,497
Total	$	23,814	$	26,086

b. Property, Plant and Equipment

Major classes of property, plant and equipment consisted of the following:

	December 31,
	2015			2014
Land	$	123		$	123
Buildings and leasehold improvements		7,490			7,437
Machinery and equipment		49,609			48,054
Furniture and fixtures		1,974			1,811
Computer hardware and software		4,585			4,452
Construction in progress		745			1,351
		64,526			63,228
Less – Accumulated depreciation		(55,488	)		(53,416	)
Total	$	9,038		$	9,812

Estimated costs to complete construction in progress as of December 31, 2015 and 2014 were approximately $180 and $586, respectively.

Depreciation expense was $2,401 and $2,757 for the years ended December 31, 2015 and 2014, respectively.

c. Impairment of Goodwill, Intangible Assets and Long-Lived Assets

We elected to forego the qualitative assessment for our three identified reporting units (Battery & Energy Products business, Communications Systems business, and Able (which is a subset of our Battery & Energy Products business), and conducted a quantitative assessment. The fair value for our reporting units subjected to this quantitative test could not be determined using readily available quoted Level 1 inputs or Level 2 inputs that were observable in active markets. Therefore, we used an income approach to estimate the fair value of the reporting units, using Level 3 inputs. To estimate the fair value of the reporting units, we used significant estimates and judgments, including an assessment of our future revenue prospects, particularly government/defense opportunities, as well as our estimates of the probabilities of the opportunities being funded, awarded, and awarded to us. Other key estimates and factors used in the valuation model included revenue growth rates and profit margins based on internal forecasts, as well as industry and market based terminal growth rates, inputs to the weighted-average cost of capital used to discount future cash flows, and earnings multiples. As a result of the goodwill impairment tests performed during 2015 and 2014, we determined that an impairment was not required.

Similarly, for our four other indefinite-lived intangible assets (trademarks and trade names), we elected to forego the qualitative assessment and proceeded to perform quantitative assessments. The fair value for our indefinite-lived intangible assets subjected to this quantitative test could not be determined using readily available quoted Level 1 inputs or Level 2 inputs that were observable in active markets. Therefore, we used a royalty relief approach, to estimate the fair value of the indefinite-lived intangible assets, using Level 3 inputs. This method also required us to use significant estimates and judgmental factors. The key estimates and factors used in the valuation model included revenue growth rates, as well as industry and market based terminal growth rates, inputs to the weighted-average cost of capital used to discount future cash flows, and determined royalty rates. As a result of the impairment tests performed during 2015, we determined that an impairment amounting to $150 was required to reduce the carrying value of one Communications Systems business trademark to its estimated fair value. As a result of the impairment tests performed during 2014, we determined that no impairments were required.

There is a possibility that our goodwill and other intangible assets, particularly in our Communications Systems business, could be impaired should there be a significant change in our internal forecasts and other assumptions we use in our impairment analysis.

During 2015 and 2014, we also evaluated certain fixed assets for impairment utilizing valuation methods that are classified as Level 3 inputs. Based upon the results of this evaluation, no material impairment was indicated.

d. Goodwill

The following table summarizes the goodwill activity by segment for the years ended December 31, 2015 and 2014:

	Battery & Energy Products			Communi- cations Systems		Total
Balance – January 1, 2014	$	4,926		$	11,493	$	16,419
Effect of foreign currency translation		(12	)		—		(12	)
Balance – December 31, 2014		4,914			11,493		16,407
Effect of foreign currency translation		(124	)		—		(124	)
Balance – December 31, 2015	$	4,790		$	11,493	$	16,283

e. Other Intangible Assets

The composition of intangible assets was:

	December 31, 2015
	Cost		Accumulated Amortization		Net
Trademarks	$	3,411	$	—	$	3,411
Patents and technology		4,482		4,217		265
Customer relationships		3,971		3,716		255
Distributor relationships		370		355		15
Total other intangible assets	$	12,234	$	8,288	$	3,946

	December 31, 2014
	Cost		Accumulated Amortization		Net
Trademarks	$	3,567	$	—	$	3,567
Patents and technology		4,509		4,114		395
Customer relationships		4,029		3,679		350
Distributor relationships		391		365		26
Total other intangible assets	$	12,496	$	8,158	$	4,338

Amortization of intangible assets was included in the following financial statement captions:

	Year ended December 31,
	2015		2014
Research and development expense	$	130	$	176
Selling, general and administrative expense		105		129
Total	$	235	$	305

Except for the impairment charge recorded against a Communications Systems trademark in 2015, the change in the cost value of total intangible assets is a result of the effect of foreign currency exchange rate fluctuations.