XML 98 R18.htm IDEA: XBRL DOCUMENT v2.4.0.8
GOODWILL AND INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2013
GOODWILL AND INTANGIBLE ASSETS [Abstract]  
Goodwill and Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
 
(a) Goodwill
 
The changes in the carrying amounts of goodwill by segment from December 31, 2011 to December 31, 2013 were as follows:

 
 
Energy & Security Sonar Solutions segment
 
GridSense segment
 
USSI segment
 
Power Generation Monitoring segment
 
Cathodic Protection segment*
 
Total
Balance as of December 31, 2011
 
$
527

 
$
2,708

 
$
1,402

 
$
—

 
$
—

 
$
4,637

Goodwill recorded in the acquisition of OmniMetrix (see Note 3(a))
 
$
—

 
$
—

 
$
—

 
$
1,517

 
$
413

 
1,930

Translation adjustment
 
14

 
49

 
—

 
—

 
—

 
63

Balance as of December 31, 2012
 
541

 
2,757

 
1,402

 
1,517

 
413

 
6,630

Impairment
 
—

 
—

 
—

 
(1,517
)
 
(413
)
 
(1,930
)
Translation adjustment
 
40

 
(311
)
 
—

 
—

 
—

 
(271
)
Balance as of December 31, 2013
 
$
581

 
$
2,446

 
$
1,402

 
$
—

 
$
—

 
$
4,429


 * Results for the Cathodic Protection segment are included in "Other" in Segment Reporting (see Note 21).

As required, the Company performs an annual impairment test of recorded goodwill (during the fourth quarter of each year), or more frequently if impairment indicators or triggering events are present. In September 2011, the FASB issued guidance that simplified how entities test for goodwill impairment. This guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test.

In performing the 2012 and 2013 goodwill impairment test for our reporting units (other than GridSense in 2012 and Power Generation Monitoring and Cathodic Protection in 2013 - see below), the Company assessed the relevant qualitative factors and concluded that it is more likely than not that the fair values of our reporting units are greater than their carrying amounts. After reaching this conclusion, no further testing was performed. The qualitative factors we considered included, but were not limited to, general economic conditions, industry and market conditions, pipeline and backlog, our recent and forecasted financial performance and the price of the Company's common stock.

In 2012, with respect to the Company's GridSense reporting unit, the Company quantitatively evaluated its goodwill for impairment and determined that the fair value of this reporting unit exceeded its carrying value. The estimated fair value of the GridSense reporting unit used in the analysis exceeded its carrying values by approximately $1,100 or 17%. In 2013, the amount by which the estimated fair value of the GridSense reporting unit exceeded its carrying values increased to over $5,000.

OmniMetrix's PG segment operates primarily on a recurring revenue model where monitors are sold at or below cost in exchange for customer commitments for fixed term monitoring contracts. During the first half of 2013, OmniMetrix marketed primarily to dealers and distributors of the most common brands of generators. While some larger dealers have embraced this business model, it has not universally resonated within the dealer marketplace and the rate of adoption (and thus sales of monitors and monitoring subscriptions) has been far slower than anticipated. Revenue in 2013 and future years (for both PG and CP segments) have been significantly adversely impacted by the inability to make expected penetration in the marketplace and future projections for the segments have been adjusted accordingly. Following a goodwill impairment analysis based upon expected discounted cash flows using Level 3 inputs from both the Company's PG and CP segments, the Company determined that the goodwill recorded with respect to both segments were fully impaired and the Company recorded an impairment charge of $1,930.





(b) Intangibles
 
The changes in the carrying amounts of and accumulated amortization of intangible assets from December 31, 2011 to December 31, 2013 were as follows:

 
 
Energy &
Security Sonar
Solutions
segment
 
GridSense segment
 
USSI segment
 
Power Generation Monitoring segment
 
Cathodic Protection segment**
 
 
 
 
Cost
 
A.A.*
 
Cost
 
A.A.*
 
Cost
 
A.A.*
 
Cost
 
A.A.*
 
Cost
 
A.A.*
 
Total
Balance as of December 31, 2011
 
$
519

 
$
(274
)
 
$
2,748

 
$
(543
)
 
$
2,565

 
$
(235
)
 
$
—

 
$
—

 
$
—

 
$
—

 
$
4,780

Acquisition of license
 
—

 
—

 
—

 
—

 
150

 
—

 
—

 
—

 
—

 
—

 
150

Intangibles recorded in the acquisition of OmniMetrix (see Note 3(a))
 
—

 
—

 
—

 
—

 
—

 
—

 
4,385

 
—

 
1,196

 
—

 
5,581

Amortization
 
—

 
(81
)
 
—

 
(324
)
 
—

 
(145
)
 
—

 
(309
)
 
—

 
(118
)
 
(977
)
Cumulative translation adjustment
 
13

 
(9
)
 
29

 
(6
)
 
—

 
—

 
—

 
—

 
—

 
—

 
27

Balance as of December 31, 2012
 
532

 
(364
)
 
2,777

 
(873
)
 
2,715

 
(380
)
 
4,385

 
(309
)
 
1,196

 
(118
)
 
9,561

Amortization
 
—

 
(82
)
 
—

 
(264
)
 
—

 
(150
)
 
—

 
(252
)
 
—

 
(101
)
 
(849
)
Impairment
 
—

 
—

 
—

 
—

 
—

 
—

 
(4,385
)
 
561

 
(1,196
)
 
219

 
(4,801
)
Sale of Bushing IQ (see Note 3(d))
 
—

 
—

 
(322
)
 
263

 
—

 
—

 
—

 
—

 
—

 
—

 
(59
)
Cumulative translation adjustment
 
40

 
(36
)
 
(184
)
 
63

 
—

 
—

 
—

 
—

 
—

 
—

 
(117
)
Balance as of December 31, 2013
 
$
572

 
$
(482
)
 
$
2,271

 
$
(811
)
 
$
2,715

 
$
(530
)
 
$
—

 
$
—

 
$
—

 
$
—

 
$
3,735

Weighted average estimated useful lives in years
 
6
 
11.1
 
20
 

 

 
 

*    Accumulated amortization
** Results for the Cathodic Protection segment are included in "Other" in Segment Reporting (see Note 21).

The composition of intangibles in each of the Company's segments are as follows:

Segment
 
Type of Intangible
Energy & Security Sonar Solutions
 
Naval technologies
GridSense
 
Software and customer relationships
USSI
 
Sensor technologies and license
Power Generation Monitoring
 
Technologies, customer relationships and non-compete agreements
Cathodic Protection*
 
Technologies and customer relationships

* The Cathodic Protection segment is included in "Other" in Segment Reporting (see Note 21).

During the second quarter of 2013, a customer with whom OmniMetrix had a significant on-going relationship at the time of the Company's acquisition of OmniMetrix in February 2012, indicated that they would be disconnecting all of their power generator monitoring units over a period of time. Accordingly, the Company recorded an impairment of the customer relationship intangible asset associated with that customer in its Power Generation Monitoring segment of $1,116.

As reported in Note 7(b), OmniMetrix's potential customers adoption of its business model has been far slower than anticipated. The goodwill impairment analysis performed also indicated that the acquired intangible assets (technologies, customer relationships and non-compete agreements) were also impaired based on Level 3 inputs. Accordingly, in the third quarter of 2013, the Company recorded impairment charges of $2,708 and $977 associated with its PG and CP segments, respectively.

     Amortization in respect of intangible assets amounted to $939, $977 and $849 for 2011, 2012 and 2013, respectively (such amortization includes amounts associated with discontinued operations of $407 for 2011).
 
Amortization expense with respect to intangible assets is estimated to be $431, $350, $350, $350 and $350 for each of the years ending December 31, 2014 through 2018.