Discontinued Operations

3 Months Ended

Mar. 31, 2014

Discontinued Operations [Abstract]

Discontinued Operations

4.   Discontinued Operations

On June 13, 2013, the Company announced a global strategic restructuring plan designed to accelerate the Company’s future growth and reduce costs. See Note 3 for additional information. As part of the global strategic restructuring plan, the Company decided to exit the security and certain microphone and receiver businesses.  On January 27, 2014, the Company completed the sale of the security business and certain microphone and receiver businesses of IntriCon Tibbetts Corporation, IntriCon’s wholly owned subsidiary based in Camden, Maine, to Sierra Peaks Corporation, pursuant to an Asset Purchase Agreement entered into on January 27, 2014 between Sierra Peaks Corporation, as the buyer, and IntriCon Tibbetts Corporation as the seller. Sierra Peaks Corporation paid $500 cash at closing for the assets and assumed certain operating liabilities of the businesses.

The Company recorded a loss on the sale of $120. The net loss was computed as follows:

Accounts receivable, net	$	384
Inventory, net		128
Property, plant and equipment, net		127
Other assets		1
Accounts payable		(69)
Total	$	571
Cash proceeds received from Sierra Peaks		500
Net assets sold		(571)
Transaction costs		(49)
Loss on sale of discontinued operations	$	(120)

The following table shows the results of operations of the Company’s discontinued operations:

		Three Months Ended
		March 31,		March 31,
		2014		2013
		(Unaudited)		(Unaudited)
Sales, net	$	207	$	544
Operating costs and expenses		(357)		(1,000)
Operating loss		(150)		(456)
Other income, net		-		8
Net loss from discontinued operations	$	(150)	$	(448)

The following table shows the assets and liabilities of the Company’s discontinued operations:

		March 31,		December 31,
		2014		2013
Cash	$	-	$	4
Accounts receivable, net		-		350
Inventory, net		-		26
Other current assets		-		2
Current assets of discontinued operations	$	-	$	382
Property and equipment, net		-		131
Other assets		-		1
Other assets of discontinued operations	$	-	$	132
Accounts payable		-		70
Accrued compensation and other liabilities		-		84
Current liabilities of discontinued operations	$	-	$	154

Management considered the global strategic restructuring plan a triggering event and therefore, in June 2013, the Company evaluated the related assets for impairment and recorded non-cash impairment charges of $983 to the Company’s results from discontinued operations.  Throughout the remainder of 2013, the Company continued to evaluate the remaining assets for further impairment indicators and, with the continued decline in U.S. Government revenues due to the government sequestration and government shut-down, the Company concluded that an additional non-cash impairment charge of $717 was required for accounts receivable, inventory, fixed assets, and other assets. These charges were recorded in the Company’s results from discontinued operations for the year ended December 31, 2013. See further information below.

In determining the nonrecurring fair value measurements of impairment of goodwill and other short and long-term assets, the Company utilized the market value approach, considering the fair value of security, microphone and receiver net assets held for sale or disposition. Based on the market value assessment, the Company determined fair values for the identified assets and incurred impairment charges for the remaining book value of the assets during the 12 months ended December 31, 2013 as set forth in the table below. These charges were reflected in the Company’s discontinued operations in 2013 and had no impact for the first quarter of 2014.

		Fair value as of measurement date		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Impairment Charge
Long-lived assets of discontinued operations	$	131	$	-	$	-	$	131	$	604
Goodwill of discontinued operations		-		-		-		-		515
Accounts Receivable		350		-		-		350		73
Inventory		26		-		-		26		468
Other Assets		3		-		-		3		40