Identifiable intangible assets and Goodwill

6 Months Ended

Jun. 30, 2015

Identifiable intangible assets and Goodwill [Abstract]

Identifiable intangible assets and Goodwill

Note 5 — Identifiable intangible assets and Goodwill

The Company capitalizes certain costs related to the development of computer software sold by its Hospitality segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs in the period the costs are incurred. Software development costs incurred after establishing technological feasibility (as defined within ASC 985-20) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. Software costs capitalized during the three months and six months ended June 30, 2015 were $807,000 and $1,429,000 respectively. Software costs capitalized during the three and six months ended June 30, 2014 were $532,000 and $1,526,000, respectively.

Annual amortization, charged to cost of sales when the product is available for general release to customers, is computed using the greater of (a) the straight-line method over the remaining estimated economic life of the product, generally three to seven years or (b) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization of capitalized software costs for the three and six months ended June 30, 2015 were $520,000 and $1,020,000, respectively. Amortization for the three and six months ended June 30, 2014 were $468,000 and $932,000, respectively.

During the three and six months ended June 30, 2015, the Company recorded $249,000 and $498,000, respectively, of amortization expense associated with acquired identifiable assets from the acquisition of Brink Software that was acquired on September 18, 2014. The Company did not record amortization expense associated with acquired identifiable assets for the three and six months ended June 30, 2014.

The components of identifiable intangible assets are:

	(in thousands)
	June 30,			December 31,
	2015			2014
Acquired and internally developed software costs	$	27,563		$	26,134
Customer relationships		160			160
Non-competition agreements		30			30
Trademarks, trade names (non-amortizable)		2,200			2,200
		29,953			28,524
Less accumulated amortization		(7,090	)		(5,572	)
	$	22,863		$	22,952

The future amortization of these intangible assets assuming straight-line amortization of capitalized software costs is as follows (in thousands):

2015	$	1,707
2016		3,700
2017		3,599
2018		3,448
2019		3,069
Thereafter		5,140
Total	$	20,663

The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment. The Company operates in two business segments, Hospitality and Government. Goodwill impairment testing is performed at the sub-segment level (referred to as a reporting unit). The three reporting units utilized by the Company for its impairment testing are: Restaurant, Hotel/Resort/Spa, and Government. Goodwill is assigned to a specific reporting unit at the date the goodwill is initially recorded. Once goodwill has been assigned to a specific reporting unit, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.

During the second quarter of 2015, the Company determined, as a result of the potential decline in fair value for one of the Company’s reporting segments, a goodwill impairment triggering event has occurred. However, due to the significant effort that is required to determine the implied fair value of the reporting unit’s goodwill, we are unable to reasonably estimate the amount of goodwill impairment, if any, during the second quarter. The Company will conduct a formal impairment test prior to the required annual test in the fourth quarter, which may result in a material impairment charge. The amount of goodwill carried by the Restaurants, Hotel/Resort/Spa and Government reporting units is $10.3 million, $6.1 million and $0.7 million, respectively, at June 30, 2015 and December 31, 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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