PURCHASED INTANGIBLE ASSETS

12 Months Ended

Jan. 31, 2023

PURCHASED INTANGIBLE ASSETS

PURCHASED INTANGIBLE ASSETS

NOTE 7 – PURCHASED INTANGIBLE ASSETS

The Company used a qualitative approach to assess the goodwill of the GPS reporting unit, which is included in the power industry services segment, as of November 1, 2022 and 2021. At each date, the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded the corresponding carrying value by a substantial margin. Therefore, completion of the quantitative impairment assessment was considered to be unnecessary in each case.

Similarly, the Company used a qualitative approach to assess the goodwill of the TRC reporting unit, which represents the industrial fabrication and field services segment, as of November 1, 2022 and concluded that it was more likely than not that the fair value of the reporting unit exceeded the corresponding carrying value by a substantial margin. Therefore, the completion of the quantitative impairment assessment was considered to be unnecessary. The Company performed a goodwill impairment assessment for the reporting unit as of November 1, 2021 with the assistance of a professional business valuation firm. It was determined that the fair value exceeded the corresponding carrying value at the assessment date; accordingly, there was no impairment loss recorded as of that date.

During Fiscal 2022, the Company completed the acquisition of Lee Telecom, Inc. (“LTI”), which is located in Hampton, Virginia. The results of operations of LTI are included in the Company’s telecommunications infrastructure services segment. The acquisition represented a purchase of the assets of LTI, for which the Company paid $0.6 million cash, including customer contracts and goodwill.

The changes in the balances of the Company’s goodwill by reportable segment for Fiscal 2023 and Fiscal 2022 were as follows:

	Power		Industrial		Telecom
	Services		Services		Services		Totals
Goodwill as of February 1, 2021	$	18,476	$	9,467	$	—	$	27,943
Impairment losses		—		—		—		—
Acquisition of LTI		—		—		90		90
Goodwill as of January 31, 2022		18,476		9,467		90		28,033
Impairment losses		—		—		—		—
Goodwill as of January 31, 2023	$	18,476	$	9,467	$	90	$	28,033
Balances, January 31, 2023:
Goodwill	$	22,525	$	14,365	$	90	$	36,980
Accumulated impairment losses		(4,049)		(4,898)		—		(8,947)
Goodwill as of January 31, 2023	$	18,476	$	9,467	$	90	$	28,033

As of January 31, 2023, the accumulated impairment losses for the power industry services segment relate solely to the APC reporting unit.

For income tax reporting purposes, goodwill related to acquisitions in the approximate amount of $16.5 million is being amortized on a straight-line basis over periods of 15 years. The other amounts of the Company’s goodwill are not amortizable for income tax reporting purposes.

Purchased intangible assets, other than goodwill, consisted of the following elements as of January 31, 2023 and 2022:

		January 31, 2023						January 31, 2022
	Estimated	Gross		Accumulated		Net		Gross		Accumulated		Net
	Useful Life	Amounts		Amortization		Amounts		Amounts		Amortization		Amounts
Trade names	15 years	$	4,499	$	2,150	$	2,349	$	8,142	$	5,492	$	2,650
Process certifications	7 years		1,897		1,897		—		1,897		1,671		226
Customer relationships	10 years		916		656		260		916		565		351
Customer contracts	< 1 year		114		114		—		95		—		95
Totals		$	7,426	$	4,817	$	2,609	$	11,050	$	7,728	$	3,322

The Company determined the fair values of the trade names using a relief-from-royalty methodology. The amounts related to the trade name that become fully amortized during Fiscal 2023 was removed from the table. The Company believes that the useful life of the remaining trade name represents the remaining number of years that such intangible asset is expected to contribute to future cash flows. In order to value the process certifications, the Company applied a reproduction cost method that required the estimation of the costs to replace the assets with certifications that would have the same functionality or utility as the acquired assets. The fair value of the customer relationships was determined at the time of the acquisition by discounting cash flows expected from existing significant customer relationships. Other than the addition to customer contracts related to the acquisition of LTI, there were no additions to other purchased intangible assets during Fiscal 2023 or Fiscal 2022. In addition, there were no impairment losses related to the assets for Fiscal 2023, Fiscal 2022 or Fiscal 2021. Amortization expense related to purchased intangible assets for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $0.7 million, $0.9 million and $0.9 million, respectively.

The future amounts of amortization related to purchased intangibles are presented below for the years ending January 31,

2024	$	391
2025		392
2026		376
2027		300
2028		300
Thereafter		850
Total	$	2,609