Note 4 - Goodwill, Intangible and Long-lived Assets

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

(4)   GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS

Goodwill and intangible assets on our balance sheets are the result of our acquisitions of Sigma Systems Corp. ("Sigma") in October 2008 and Thermonics in January 2012. The acquisition of Thermonics is discussed further in Note 3.

Goodwill

All of our goodwill is allocated to our Thermal Products segment. There were no changes in the amount of the carrying value of goodwill for the year ended December 31, 2013.

Intangible Assets

The following table provides further detail about our intangible assets as of December 31, 2013 and 2012:

	December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	1,480	$	725	$	755
Patented technology		590		307		283
Software		270		142		128
Trade name		140		68		72
Customer backlog		70		70		-
Non-compete/non-solicitation agreement		48		48		-
Total finite-lived intangible assets		2,598		1,360		1,238
Indefinite-lived intangible assets:
Sigma trademark		510		-		510
Total intangible assets	$	3,108	$	1,360	$	1,748

	December 31, 2012
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	1,480	$	439	$	1,041
Patented technology		590		233		357
Software		270		115		155
Trade name		140		33		107
Customer backlog		70		70		-
Non-compete/non-solicitation agreement		48		24		24
Total finite-lived intangible assets		2,598		914		1,684
Indefinite-lived intangible assets:
Sigma trademark		510		-		510
Total intangible assets	$	3,108	$	914	$	2,194

We generally amortize our finite-lived intangible assets over their estimated useful lives on a straight-line basis, unless an alternate amortization method can be reliably determined. Any such alternate amortization method would be based on the pattern in which the economic benefits of the intangible asset are expected to be consumed. None of our finite-lived assets have any residual value. The following table provides further information about the estimated useful lives of our finite-lived intangible assets as of December 31, 2013:

	Estimated Useful Life		Remaining Estimated Useful Life at Dec. 31, 2013
	- - - - (in months) - - - -
Finite-lived intangible assets resulting from the acquisition of Sigma:
Customer relationships		72		9
Software		120		57
Patented technology		60		-
Finite-lived intangible assets resulting from the acquisition of Thermonics:
Customer relationships		72		48.5
Customer backlog		3		-
Trade name		48		24.5
Patented technology		132		108.5
Non-compete/non-solicitation agreement		18		-

The following table sets forth changes in the amount of the carrying value of finite-lived intangible assets for the year ended December 31, 2013:

Balance - January 1, 2013	$	1,684
Amortization		(446	)
Balance - December 31, 2013	$	1,238

Total amortization expense for the years ended December 31, 2013 and 2012 was $446 and $476, respectively. The following table sets forth the estimated annual amortization expense for our finite-lived intangible assets for each of the next five years:

2014	$	355
2015	$	289
2016	$	229
2017	$	212
2018	$	65

Impairment of Goodwill and Indefinite Life Intangible Assets

During December 2013 and 2012, we assessed our goodwill and indefinite life intangible asset for impairment in accordance with the requirements of ASC Topic 350 (Intangibles - Goodwill and Other). Our goodwill impairment assessment is based upon a combination of the income approach, which estimates the fair value of our reporting units based upon a discounted cash flow approach, and the market approach which estimates the fair value of our reporting units based upon comparable market multiples. This fair value is then reconciled to our market capitalization at year end with an appropriate control premium. The discount rate used in 2013 and 2012 for the discounted cash flows were 20% and 24%, respectively. The selection of these rates was based upon our analysis of market based estimates of capital costs and discount rates. The peer companies used in the market approach operate in our market segment. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of appropriate peer group companies, control premiums, discount rate, terminal growth rates, forecasts of revenue and expense growth rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results or other underlying assumptions would have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge.

During the goodwill impairment assessment in both 2013 and 2012, we performed a Step I test to identify potential impairment, in which the fair value of the reporting unit was compared with its book value. This assessment indicated no impairment existed as the fair value of this reporting unit was determined to exceed its carrying value by 65% or $13,888 at December 31, 2013 and by 41% or $7,516 at December 31, 2012.

During the indefinite life intangible asset impairment assessment in both 2013 and 2012, we compared the fair value of our intangible asset with its carrying amount. This assessment indicated no impairment existed as the fair value of the intangible assets exceeded their carrying values in both 2013 and 2012.

Impairment of Long-Lived Assets and Finite-lived Intangible Assets

As previously noted, our long-lived assets consist of our finite-lived intangible assets and property and equipment. During both December 2013 and 2012, due to continued operating losses experienced in our Mechanical Products segment, we assessed the long-lived assets of this segment for impairment. Our assessments indicated that the property and equipment that is allocated to this segment was not impaired. During 2013 and 2012, we did not review our Thermal and Electrical Products segment's long lived assets for impairment as there were no events or changes in business circumstances that would indicate an impairment might exist.