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Acquisitions | 3 Months Ended
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Mar. 31, 2015
Acquisitions [Abstract] |
Acquisitions | 3. ACQUISITIONS Since January 1, 2014, the Company has acquired two businesses in the U.S. These acquisitions have allowed the Company to expand its products and service capabilities and offer its customers a greater breadth of solutions for their electrical power distribution and backup power needs. A summary of the acquisitions is as follows:
Business Acquired |  | Closing |  | Net Assets Acquired (in 000s) |  | Segment |  | Primary Form of Consideration
Titan Energy Worldwide, Inc. |  | 12/02/14 |  | $ | 1,958 |  | Critical Power |  | Cash/stock
Harmonics Holdings Inc. |  | 01/16/15 |  |  | 1,182 |  | T&D Solutions |  | Seller note/debt forgiveness
|  |  |  | $ | 3,140 |  |  |  |
Each of the acquired businesses has been included in the Company’s results of operations since the date of closing its respective closing. 2014 Acquisition On December 2, 2014, the Company acquired voting control of Titan Energy Worldwide, Inc. (“Titan”), a Minneapolis-headquartered provider of sales and service for commercial and industrial-scale onsite power systems, including generators and associated switching equipment. By December 31, 2014, the Company had acquired 100% ownership of Titan. The Company funded the acquisition through a new term loan provided under its U.S. credit facilities and the issuance of shares of its common stock to former convertible preferred stock holders and note holders of Titan. The following table summarizes the consideration paid for the Titan acquisition and presents the preliminary allocation of the amount to the net tangible and identifiable intangible assets based on their estimated fair values as of December 2, 2014 (in thousands):
|  |  |  | Titan Acquisition
Purchase Price |  |  |  |  |
Cash consideration |  |  |  | $ | 953
Common stock consideration |  |  |  |  | 1,005
|  |  |  | $ | 1,958
Purchase Price Allocation |  |  |  |  |
Current assets, including cash and cash equivalents of $0.1 million |  |  |  | $ | 3,721
Property, plant and equipment |  |  |  |  | 410
Identifiable intangible assets |  |  |  |  | 5,147
Goodwill |  |  |  |  | 2,719
Total assets acquired |  |  |  |  | 11,997
Current liabilities |  |  |  |  | (6,881)
Notes payable |  |  |  |  | (3,158)
Net assets acquired |  |  |  | $ | 1,958
The Company determined the preliminary purchase price allocation based on estimates of the fair values of the tangible and intangible assets acquired and liabilities assumed. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can impact the Company’s results of operations. The finalization of the purchase accounting assessment may result in changes in the valuation of assets acquired and liabilities assumed and may have a material impact on the Company’s results of operations. Management utilized recognized valuation techniques, including the income approach and cost approach for the net assets acquired, in addition to relying on preliminary asset appraisals. The fair value of the assets acquired and liabilities assumed are preliminary and remain subject to potential adjustments including but not limited to assessment of income tax related assets and liabilities The major classes of intangible assets arising from the acquisition of Titan, their respective amortization periods, and the amount of amortization expense recognized during the three months ended March 31, 2015 are as follows (in thousands):
| Weighted Average Amortization Years |  | Titan Acquisition
Acquired Intangible Assets |  |  |  |
Customer relationships | 4 |  | $ | 4,320
Distributor territory license | 4 |  |  | 474
Internally developed software | 7 |  |  | 289
Trade names | 1 |  |  | 64
|  |  | $ | 5,147
Amortization expense recorded during the three months ended March 31, 2015 |  | $ | 326
All of the goodwill and intangibles arising out of the Titan acquisition are amortizable for tax purposes. The Company incurred $0.7 million of transaction, due diligence and integration costs during the year ended December 31, 2014 that are reflected in the Company’s results as a period expense. T hese costs included legal reorganization expenses, professional fees and integration costs and are included in the Company’s other expense in its statements of operations for the three months ended March 31, 2015. 2015 Acquisition On January 16, 2015, the Company acquired substantially all the assets of Harmonics Holdings Inc. (“Harmonics”), consisting primarily of intellectual property, machinery and equipment and accounts receivable. Harmonics is a Connecticut-based specialty provider of equipment that incorporates a patented technology for the elimination of harmonic currents in power distribution systems. The transaction was accounted for under the purchase method of accounting and the Company funded the cash consideration for the acquisition from available cash on hand. The following table summarizes the consideration paid for the Harmonics acquisition and presents the preliminary allocation of the amount to the net tangible and identifiable intangible assets based on their estimated fair values as of January 16, 2015 (in thousands):
|  |  |  | Harmonics Acquisition
Purchase Price |  |  |  |  |
Cash consideration |  |  |  | $ | 93
Forgiveness of trade payables and indebtedness due to purchaser |  |  |  |  | 609
Deferred payments due to seller |  |  |  |  | 500
|  |  |  | $ | 1,202
Purchase Price Allocation |  |  |  |  |
Current assets, including cash and cash equivalents of $0 |  |  |  | $ | 21
Property, plant and equipment |  |  |  |  | 4
Goodwill |  |  |  |  | 1,177
Total assets acquired |  |  |  |  | 1,202
Current liabilities |  |  |  |  | -
Net assets acquired |  |  |  | $ | 1,202
The acquisition resulted in the recognition of goodwill in the Company’s consolidated financial statements because the purchase price exceeded the net tangible asset value and reflects the future earnings and cash flow potential of the acquired business. The Company made an initial allocation of the purchase price at the date of the acquisition, based upon its understanding of the fair value of the acquired tangible assets and assumed liabilities. After additional information is obtained about the intangible assets of the acquired business, the Company anticipates that its final allocation of the purchase price will result in a reduction to goodwill by an amount representing the estimated fair value of the intangible assets identified, which are likely to include patents, other intellectual property, customer relationships and non-compete agreements. The Company incurred $13,000 of transaction costs related to the acquisition during the three months ended March 31, 2015 that are reflected in the Company’s statement of operations as a period expense.

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