GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 5—GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets with indefinite lives are tested annually or whenever events or circumstances indicate the carrying value of these assets may not be recoverable. In accordance with authoritative guidance issued by the FASB, the Company performed an annual impairment test of goodwill and indefinite-lived intangible assets during the fourth quarter based on conditions as of November 30, 2015.

The impairment testing is performed in two steps: (i) The Company compares the fair value of a reporting unit with its carrying value, and (ii) if there is impairment, the Company measures the amount of impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill. The revised fair value of a reporting unit is allocated to the assets and liabilities of the business unit to arrive at an implied fair value of goodwill, based upon known facts and circumstances, as if the acquisition occurred at that time. In 2015, with respect to Florida Pneumatic and Hy-Tech, the Company determined the fair value using the income approach methodology of valuation, which considers the expected present value of future cash flows. As an integral part of the valuation process the Company utilizes its latest cash flows forecasts for the next four fiscal years, and then applies projected minimal growth for all remaining years, based upon available statistical data and management’s estimates. The result of the Company’s Step one impairment test for both Florida Pneumatic and Hy-Tech determined that the fair value of each reporting unit exceeded the carrying value and, as such, no impairment to Goodwill and other intangible assets was recorded in 2015. With respect to Nationwide, the Company performed a qualitative impairment analysis on its goodwill. The Company determined that Nationwide’s fair value exceeded its reported book value at November 30, 2015. As such, no impairment was indicated and no further testing was required.

The changes in the carrying amount of goodwill by segment for 2014 and 2015 are as follows:

	Consolidated		Tools		Hardware
Balance, January 1, 2014	$	5,150,000	$	3,277,000	$	1,873,000
Acquisition of ETI, UAT and ATSCO		6,845,000		6,845,000		—
Currency translation adjustments		(15,000)		(15,000)		—
Balance December 31, 2014		11,980,000		10,107,000		1,873,000
Adjustment to Acquisition of ATSCO		62,000		62,000		—
Currency translation adjustments		(15,000)		(15,000)		—
Balance, December 31, 2015	$	12,027,000	$	10,154,000	$	1,873,000

Other intangible assets were as follows:

	December 31, 2015						December 31, 2014
			Accumulated		Net book				Accumulated		Net book
	Cost		amortization		value		Cost		amortization		value
Other intangible assets:
Customer relationships(1)	$	13,185,000	$	5,386,000	$	7,799,000	$	13,194,000	$	4,551,000	$	8,643,000
Trademarks and trade names(1)		2,015,000		—		2,015,000		2,035,000		—		2,035,000
Engineering drawings		410,000		159,000		251,000		410,000		120,000		290,000
Licensing		305,000		293,000		12,000		305,000		235,000		70,000
Non-compete agreements(1)		362,000		134,000		228,000		368,000		41,000		327,000
Patents		1,205,000		400,000		805,000		1,205,000		133,000		1,072,000
Totals	$	17,482,000	$	6,372,000	$	11,110,000	$	17,517,000	$	5,080,000	$	12,437,000

(1)	A portion of these intangibles are maintained in a foreign currency, and are therefore subject to foreign exchange rate fluctuations.

As of December 31, 2015, the Company has no accumulated impairment losses.

The weighted-average amortization periods (in years) related to other intangible assets are as follows:

	December 31, 2015		December 31, 2014
Customer relationships		10.0		10.9
Trademarks and trade names		—		—
Engineering drawings		8.5		9.2
Licensing		0.3		1.2
Non-compete agreements		2.7		3.6
Patents		5.8		6.1

Amortization expense for intangible assets was approximately $1,295,000 and $718,000, respectively, for the years ended December 31, 2015 and 2014.

Amortization expense for each of the next five years and thereafter is estimated to be as follows

2016	$	1,247,000
2017		1,115,000
2018		974,000
2019		940,000
2020		769,000
Thereafter		4,050,000
	$	9,095,000

There were no impairment charges recorded for the years ended December 31, 2015 and 2014.

- Definition

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.

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