Note 6 - Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

(6) GOODWILL AND INTANGIBLE ASSETS

We have three operating segments which are also our reporting units: Electronic Test, Environmental Technologies and Process Technologies. Goodwill and intangible assets on our balance sheets are the result of our acquisitions. 

Goodwill

Changes in the amount of the carrying value of goodwill for the years ended December 31, 2022 and 2021 are as follows:

Balance - January 1, 2021	$	13,738
Acquisition of Z-Sciences		111
Acquisition of Videology		4,596
Acquisition of Acculogic		2,912
Impact of foreign currency translation adjustments		91
Balance - December 31, 2021		21,448
Adjustments to preliminary amounts recorded in the fourth quarter of 2021 (see Note 3)		451
Impact of foreign currency translation adjustments		(294	)
Balance - December 31, 2022	$	21,605

Goodwill was comprised of the following at December 31, 2022 and 2021:

	December 31,
	2022		2021
Electronic Test	$	3,369	$	3,055
Environmental Technologies		1,817		1,817
Process Technologies		16,419		16,576
Total Goodwill	$	21,605	$	21,448

Intangible Assets

Changes in the amount of the carrying value of indefinite-lived intangible assets for the year ended December 31, 2022 and 2021 are as follows:

Balance - January 1, 2021	$	6,710
Acquisition of Videology		850
Acquisition of Acculogic		878
Impact of foreign currency translation adjustments		(10	)
Balance - December 31, 2021		8,428
Adjustments to preliminary amounts recorded in the fourth quarter of 2021 (see Note 3)		20
Impact of foreign currency translation adjustments		(79	)
Balance - December 31, 2022		8,369

Changes in the amount of the carrying value of finite-lived intangible assets for the years ended December 31, 2022 and 2021 are as follows:

Balance - January 1, 2021	$	5,711
Acquisition of Z-Sciences		389
Acquisition of Videology		4,396
Acquisition of Acculogic		4,196
Impact of foreign currency translation adjustments		(46	)
Amortization		(1,440	)
Balance - December 31, 2021		13,206
Adjustments to preliminary amounts recorded in the fourth quarter of 2021 (see Note 3)		29
Impact of foreign currency translation adjustments		(351	)
Amortization		(2,694	)
Balance - December 31, 2022	$	10,190

The following tables provide further detail about our intangible assets at December 31, 2022 and 2021:

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	16,313	$	7,990	$	8,323
Technology		2,855		988		1,867
Patents		590		590		-
Backlog		492		492		-
Software		270		270		-
Trade name		140		140		-
Total finite-lived intangible assets		20,660		10,470		10,190
Indefinite-lived intangible assets:
Trademarks		8,369		-		8,369
Total intangible assets	$	29,029	$	10,470	$	18,559

	December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	16,544	$	6,160	$	10,384
Technology		2,950		569		2,381
Patents		590		585		5
Backlog		521		85		436
Software		270		270		-
Trade name		140		140		-
Total finite-lived intangible assets		21,015		7,809		13,206
Indefinite-lived intangible assets:
Trademarks		8,428		-		8,428
Total intangible assets	$	29,443	$	7,809	$	21,634

We generally amortize our finite-lived intangible assets over their estimated useful lives based on the pattern in which the economic benefits of the intangible assets are expected to be consumed, or on a straight-line basis, if an alternate amortization method cannot 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 intangible assets have any residual value.

The following table sets forth the estimated annual amortization expense for each of the next five years:

2023	$	2,090
2024	$	1,968
2025	$	1,759
2026	$	1,150
2027	$	731

Impairment of Goodwill and Indefinite Life Intangible Assets

During October 2022 and 2021, we assessed our goodwill and indefinite life intangible asset for impairment in accordance with the requirements of ASC Topic 350 using a quantitative approach. Our goodwill impairment assessment is based upon the income approach, which estimates the fair value of our reporting units based upon a discounted cash flow approach. This fair value is then reconciled to our market capitalization at year end with an appropriate control premium. The discount rate used in 2022 for the discounted cash flows ranged between 16.5% and 18.0% depending on the reporting unit. The discount rate used in 2021 for the discounted cash flows was 16.0% for all of our reporting units. The selection of the rates in each year was based upon our analysis of market-based estimates of capital costs and discount rates. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of control premiums, discount rates, terminal growth rates, forecasts of revenue and expense growth rates, income tax rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results or other underlying assumptions could 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 2022 and 2021, we compared the fair value of our reporting units with their carrying values. This assessment indicated no impairment existed as the fair value of the reporting units exceeded their carrying values in both 2022 and 2021.

During the indefinite life intangible asset impairment assessment in both 2022 and 2021, we compared the fair value of our indefinite life intangible assets with their carrying values. This assessment indicated no impairment existed as the fair value of the indefinite life intangible assets exceeded their carrying values in both 2022 and 2021. 

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

During 2022 and 2021, we did not review any of our long-lived assets for impairment as there were no events or changes in business circumstances that would indicate an impairment might exist.