Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets [Abstract]

8. Goodwill And Intangible Assets

Goodwill and intangible assets consist of the following:


	September 30, 2011						December 31, 2010
			Accumulated						Accumulated
	Gross Value		Amortization		Net Value		Gross Value		Amortization		Net Value
	(in thousands)
Goodwill	$	22,738	$	—	$	22,738	$	22,756	$	—	$	22,756
Other intangible assets:
Customer relationships		3,700		2,460		1,240		3,700		2,079		1,621
Patents		1,250		1,146		104		1,245		1,107		138
Trademarks		1,672		—		1,672		1,672		—		1,672
Developed technology		1,700		1,471		229		1,700		1,243		457
Licensing fees ⁽¹⁾		450		272		178		355		231		124

Total other intangible assets		8,772		5,349		3,423		8,672		4,660		4,012

	$	31,510	$	5,349	$	26,161	$	31,428	$	4,660	$	26,768


⁽¹⁾		During January 2011, the Company’s RFL division purchased licensing fees for $95,000. The estimated useful life of the asset is five years.

In accordance with ASC 350 “Intangibles — Goodwill and Other,” goodwill and other indefinite-lived intangible assets are not amortized, but are tested for impairment. Such impairment testing is undertaken annually, or more frequently upon the occurrence of some indication that an impairment has taken place. The Company conducted an annual impairment test as of December 31, 2010.

A two-step process is utilized to determine if goodwill has been impaired. In the first step, the fair value of each reporting unit is compared to the net asset value recorded for such unit. If the fair value exceeds the net asset value, the goodwill of the reporting unit is not adjusted. However, if the recorded net asset value exceeds the fair value, the Company performs a second step to measure the amount of impairment loss, if any. In the second step, the implied fair value of the reporting unit’s goodwill is compared with the goodwill recorded for such unit. If the recorded amount of goodwill exceeds the implied fair value, an impairment loss is recognized in the amount of the excess.

For the testing conducted as of December 31, 2010, the Company concluded that no impairment charge was warranted. Going forward there can be no assurance that economic conditions or other events may not have a negative material impact on the long-term business prospects of any of the Company’s reporting units. In such case, the Company may need to record an impairment loss, as stated above. The next annual impairment test will be conducted as of December 31, 2011 under the guidance of ASU 2011-08 unless management identifies a triggering event in the interim.

Management has not identified any triggering events, as defined by ASC 350, during 2011. Accordingly, no interim impairment test has been performed.

The other intangible assets that have definite lives are all amortizable and have original estimated useful lives as follows: customer relationships are amortized over approximately six years and eight years; patents are amortized over a range from five to twenty years; developed technology is amortized over approximately five years and six years; and licensing fees are amortized over approximately five years and ten years. Trademarks are not amortized.

Amortization expense for intangible assets for each of the three-month periods ended September 30, 2011 and September 30, 2010 was $230,000 and $225,000, respectively. Amortization expense for intangible assets for each of the nine-month periods ended September 30, 2011 and September 30, 2010 was $689,000 and $676,000, respectively. Amortization expense for intangible assets subject to amortization in each of the next five fiscal years is estimated to be: $884,000 in 2011, $734,000 in 2012, $405,000 in 2013, $366,000 in 2014 and $23,000 in 2015.

Changes in goodwill balances by segment (defined below) are as follows:


	Balance					Balance
	December 31,		Foreign			September 30,
	2010		Exchange			2011
	(in thousands)
SL Power Electronics Corp.	$	4,263	$	(18	)	$	4,245
High Power Group:
MTE Corporation		8,189					8,189
Teal Electronics Corp.		5,055					5,055
RFL Electronics Inc.		5,249					5,249

Total	$	22,756	$	(18	)	$	22,738

- 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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