2. Supplementary Financial Information

Inventories

The following table presents details regarding our inventories:

	March 31,

	2014		2013
	(In thousands)
Materials and supplies	$	1,320	$	1,504
Work in process		175		105
Finished goods		1,051		856


	$	2,546	$	2,465

Property and Equipment

The following table presents details of our property and equipment:

	March 31,

	2014			2013
	(In thousands)
Equipment	$	6,541		$	6,126
Leasehold improvements		1,975			1,953
Accumulated depreciation		(6,970	)		(6,217	)


	$	1,546		$	1,862

Depreciation expense was approximately $768,000 and $901,000 in the fiscal year ended March 31, 2014 ("Fiscal 2014") and the fiscal year ended March 31, 2013 ("Fiscal 2013"), respectively.

Intangible Assets

The following table presents details regarding our intangible assets:

	March 31,

	2014					2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Technology	$	1,856	$	(1,422	)	$	1,856	$	(1,178	)
Customer contracts / relationships		750		(371	)		750		(247	)
Trade names and non-compete agreements		1,110		(754	)		1,110		(495	)
Capitalized software development costs		498		(83	)		328		—


Total	$	4,214	$	(2,630	)	$	4,044	$	(1,920	)

Amortization expense for intangible assets subject to amortization was approximately $733,000 for Fiscal 2014, of which approximately $106,000 was recorded to cost of revenues and approximately $627,000 recorded to amortization expense in the consolidated statement of operations. Approximately $644,000 and $504,000 was recorded to amortization expense for the fiscal years ended March 31, 2013 and 2012, respectively.

We capitalized approximately $172,000 and $190,000 for the fiscal years ended March 31, 2014 and 2013, respectively, of internal costs incurred in developing software products to be sold. These costs related to the internal development of our performance measurement software offerings. During the fourth quarter of the fiscal year ended March 31, 2014, we recognized a loss on impairment of intangible assets related to capitalized software of approximately $108,000.

Capitalized software development costs for the iPeMS platform and acquired data sets began to be amortized in October 2013, resulting in approximately $106,000 recorded to cost of revenues in the accompanying consolidated statement of operations for the year ended March 31, 2014. We do not have any intangible assets with indefinite useful lives. As of March 31, 2014, the future estimated amortization expense of approximately $1.6 million is entirely associated with our iPerform business segment, as follows:

Year Ending March 31,

(In thousands)
2015	$	597
2016		526
2017		365
2018		88
2019		8
Thereafter		—


	$	1,584

Refer to Note 4 for additional information regarding intangible assets acquired during the last three fiscal years. If we acquire additional intangible assets in future periods, our future amortization expense will increase.

Goodwill

The following table presents the activity related to the carrying value of our goodwill by reportable segment for Fiscal 2012, Fiscal 2013 and Fiscal 2014:

	Roadway Sensors		Transportation Systems			iPerform		Total

	(In thousands)
Balance—March 31, 2012
Goodwill		8,214		17,074			—		25,288
Accumulated impairment losses		—		(7,970	)		—		(7,970	)


	$	8,214	$	9,104		$	—	$	17,318


Balance—March 31, 2013
Goodwill		8,214		16,278			796		25,288
Accumulated impairment losses		—		(7,970	)		—		(7,970	)


		8,214		8,308			796		17,318


Balance—March 31, 2014
Goodwill		8,214		14,906			2,168		25,288
Accumulated impairment losses		—		(7,970	)		—		(7,970	)


	$	8,214	$	6,936		$	2,168	$	17,318

In Fiscal 2013, the Company established the iPerform segment, which included the performance measurement and information management solutions, including all the operations of Berkeley Transportation Systems, Inc. ("BTS"). As a result, the goodwill attributed to the BTS acquisition of approximately $796,000 was transferred to the newly created iPerform segment.

In the first quarter of Fiscal 2014, as part of an internal reorganization, the Company's ClearPath Weather operations (formerly, Maintenance Decision Support System or MDSS), historically included in the Transportation Systems segment, was reassigned to the iPerform segment to better align the Company's predictive weather and traffic capabilities, resources, and initiatives. As a result, the goodwill attributed to the ClearPath Weather operations from the Meridian Environmental Technology, Inc. ("MET") acquisition of approximately $1,372,000 was transferred to the iPerform segment.

Warranty Reserve Activity

The following table presents activity with respect to the warranty reserve:

	Year Ended March 31,

	2014			2013			2012
	(In thousands)
Balance at beginning of fiscal year	$	169		$	231		$	279
Additions charged to cost of sales		179			139			86
Warranty claims		(164	)		(201	)		(134	)


Balance at end of fiscal year	$	184		$	169		$	231

Earnings Per Share

The following table sets forth the computation of basic and diluted income from continuing operations per share:

	Year Ended March 31,

	2014		2013		2012
	(In thousands, except per share amounts)
Numerator:
Income from continuing operations	$	1,320	$	914	$	1,306




Denominator:
Weighted average common shares used in basic computation		32,665		33,491		34,259
Dilutive stock options		111		60		96
Dilutive restricted stock units		70		56		25
Dilutive warrants		1		2		—


Weighted average common shares used in diluted computation		32,847		33,609		34,380




Income from continuing operations per share:
Basic	$	0.04	$	0.03	$	0.04




Diluted	$	0.04	$	0.03	$	0.04

The following instruments were excluded for purposes of calculating weighted average common share equivalents in the computation of diluted income from continuing operations per share as their effect would have been anti-dilutive:

	Year Ended March 31,

	2014		2013		2012
	(In thousands)
Stock options		854		1,049		1,840
Warrants		—		4		15