Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

5. Goodwill and Intangible Assets

Goodwill

The activity related to goodwill for the nine months ended September 30, 2015 was as follows:


Balance at December 31, 2014	$	161
Goodwill related to acquisition of Nexgen business		3,332

Balance at September 30, 2015	$	3,493

The goodwill of $3.5 million relates to the RF Solutions segment. In February 2015, the Company acquired substantially all of the assets and assumed certain liabilities of Nexgen Wireless, Inc. As of September 30, 2015, the Company recorded goodwill of $3.3 million as part of the provisional allocation of the purchase price. Based on revisions to the Nexgen valuation, goodwill was lowered by $0.6 million and customer relationships was increased by $0.6 million during the third quarter 2015. See Note 7 for additional information on the acquisition. The Company recorded $0.2 million of goodwill related to the business acquired from Envision Wireless, Inc. in 2011.

The Company performs an annual impairment test of goodwill as of the end of the first month of the fiscal fourth quarter (October 31st), or at an interim date if an event occurs or if circumstances change that would indicate that an impairment loss may have been incurred. In performing the impairment test, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If the qualitative assessment is indicative of possible impairment, then a two-step quantitative fair value assessment is performed at the reporting unit level. In the first step, the fair value of each reporting unit is compared with its carrying value. If the fair value exceeds the carrying value, then goodwill is not impaired and no further testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of goodwill is then compared against the carrying value of goodwill to determine the amount of impairment.

The RF Solutions segment has experienced declining profitability year to date (See Note 12 for the segment information). The Company considered the decline to be an interim change in circumstances that would indicate that an impairment loss may have been incurred at September 30, 2015. There are two reporting units for goodwill testing purposes within the RF Solutions segment, Products and Services, and both carry goodwill. The Company performed a qualitative assessment on both reporting units and determined it is more likely than not that the fair value of a reporting unit is greater than its carrying value, including goodwill. The primary positive evidence considered was the recent restructuring of costs that is expected to lower the cost structure by several million dollars annually. In addition the Company performed a Step 1 quantitative goodwill test at September 30, 2015 at the lower forecasted cost structure, which confirmed the qualitative assessment.

Intangible Assets

The Company amortizes intangible assets with finite lives on a straight-line basis over the estimated useful lives, which range from one to eight years. The summary of other intangible assets, net as of September 30, 2015 and December 31, 2014 are as follows:


	September 30, 2015						December 31, 2014
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Customer contracts and relationships	$	25,497	$	17,880	$	7,617	$	17,381	$	15,933	$	1,448
Patents and technology		10,114		7,171		2,943		6,781		6,507		274
Trademarks and trade names		4,960		3,631		1,329		3,988		3,152		836
Other		2,743		2,198		545		1,998		1,919		79

	$	43,314	$	30,880	$	12,434	$	30,148	$	27,511	$	2,637

The $9.8 million increase in the net book value of intangible assets at September 30, 2015 compared to December 31, 2014 reflects $13.2 million of intangible assets recorded for the purchase of the business from Nexgen, offset by amortization expense of $3.0 million recorded for the nine months ended September 30, 2015, and a restructuring charge of $0.4 million recorded in June 2015. The restructuring charge related to the Company’s exit from the mobile towers product line. The Company wrote off the remaining patents and technology and a portion of the trade names and customer relationships from the acquisition of TelWorx in 2012. The amortization related to the assets recorded for the acquisition of the business from Nexgen was $0.7 million and $1.7 million for the three and nine months ended September 30, 2015, respectively. The amortization related to all other intangible assets was $0.4 million and $1.3 million for the three and nine months ended September 30, 2015.

The assigned lives and weighted average amortization periods by intangible asset category is summarized below:


Intangible Assets	Assigned Life		Weighted Average Amortization Period
Customer contracts and relationships		4 to 6 years		5.0
Patents and technology		3 to 6 years		4.5
Trademarks and trade names		3 to 8 years		4.7
Other		1 to 6 years		4.4

The Company’s scheduled amortization expense for 2015 and the next five years is as follows:


Fiscal Year	Amount
2015	$	4,020
2016	$	2,962
2017	$	2,785
2018	$	2,708
2019	$	2,508
2020	$	414

- 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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