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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 9—GOODWILL AND INTANGIBLE ASSETS

(a) Goodwill

The changes in the carrying amounts of goodwill by segment from December 31, 2012 to December 31, 2014 were as follows:

		Energy & Security Sonar Solutions segment				GridSense segment				M2M segment				PM segment*				Total
Balance at December 31, 2012		$	541			$	2,757			$	1,517			$	413			$	5,228
Impairment			—				—				(1,517	)			(413	)			(1,930	)
Translation adjustment			40				(311	)			—				—				(271	)
Balance at December 31, 2013			581				2,446				—				—				3,027
Impairment			—				(1,773	)			—				—				(1,773	)
Translation adjustment			(63	)			(160	)			—				—				(223	)
Balance at December 31, 2014		$	518			$	513			$	—			$	—			$	1,031

* Results for the PM segment are included in “Other” in Segment Reporting (see Note 18).

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 2013 goodwill impairment test for the Company’s reporting units (other than M2M and Cathodic Protection - see below), the Company assessed the relevant qualitative factors and concluded that it was more likely than not that the fair values of the Company’s reporting units were greater than their carrying amounts. After reaching this conclusion, no further testing was performed. The qualitative factors the Company considered included, but were not limited to, general economic conditions, industry and market conditions, pipeline and backlog, the Company’s recent and forecasted financial performance and the price of the Company's common stock.

In the fourth quarter of 2014, as a result of the annual impairment test of the goodwill with respect to the Company’s GridSense reporting unit, the Company recorded a goodwill impairment charge of $1,773. The impairment test was based upon expected discounted cash flows from the Company’s GridSense reporting unit.

In 2013, the Company concluded that revenues for both M2M and PM segments had been significantly adversely impacted by the inability to make expected penetration in the marketplace and future projections for the segments were adjusted accordingly. Following a goodwill impairment analysis based upon expected discounted cash flows using Level 3 inputs from both the Company's M2M and PM segments, the Company determined that the goodwill recorded with respect to both segments was fully impaired and the Company recorded an impairment charge of $1,930. 

(b) Intangibles

The changes in the carrying amounts of intangible assets and associated accumulated amortization from December 31, 2012 to December 31, 2014 were as follows:

		Energy & Security Sonar Solutions segment								GridSense segment								M2M segment								PM segment**
		Cost				A.A.*				Cost				A.A.*				Cost				A.A.*				Cost				A.A.*				Total
Balance as of December 31, 2012		$	532			$	(364	)		$	2,777			$	(873	)		$	4,385			$	(309	)		$	1,196			$	(118	)		$	7,226
Amortization			—				(82	)			—				(264	)			—				(252	)			—				(101	)			(699	)
Impairment			—				—				—				—				(4,385	)			561				(1,196	)			219				(4,801	)
Sale of Bushing IQ (see Note 4(c))			—				—				(322	)			263				—				—				—				—				(59	)
Cumulative translation adjustment			40				(36	)			(184	)			63				—				—				—				—				(117	)
Balance as of December 31, 2013			572				(482	)			2,271				(811	)			—				—				—				—				1,550
Amortization			—				(82	)			—				(200	)			—				—				—				—				(282	)
Cumulative translation adjustment			(61	)			53				(96	)			47				—				—				—				—				(57	)
Balance as of December 31, 2014		$	511			$	(511	)		$	2,175			$	(964	)		$	—			$	—			$	—			$	—			$	1,211
Weighted average estimated useful lives in years											11.1

* Accumulated amortization

** Results for the PM segment are included in “Other” in Segment Reporting (see Note 18).

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
M2M		Technologies, customer relationships and non-compete agreements
PM**		Technologies and customer relationships

** Results for the PM segment are included in "Other" in Segment Reporting (see Note 18).

During 2013, a customer with whom OmniMetrix had a significant on-going relationship 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 M2M segment of $1,116.

In 2013, OmniMetrix’s potential customers’ adoption of its business model was found to be 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, the Company recorded impairment charges of $2,708 and $977 associated with its M2M and PM segments, respectively.

Amortization in respect of intangible assets amounted to $699 and $282 for 2013 and 2014, respectively.

Amortization expense with respect to intangible assets is estimated to be $191 for each of the years ending December 31, 2015 through 2019.

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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.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 350

-SubTopic 30

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275



Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 350

-SubTopic 20

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267



Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 350

-SubTopic 30

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275



Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 350

-SubTopic 30

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275



Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 350

-SubTopic 20

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267

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