Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

In accordance with ASC 350 Intangibles - Goodwill and Other, goodwill and intangibles with indefinite lives are not amortized, but instead measured for impairment at least annually or when events indicate that impairment exists. The following table summarizes the changes in the Company's goodwill accounts for the year ended December 31, 2012 (in thousands):



	Network Integration
Goodwill	$	2,831
Accumulated impairment losses and amortization	(1,760		)
Balance as of December 31, 2011	1,071

Impairment of Tecnonet goodwill	(1,055		)
Foreign currency translation adjustment, net	(16		)

Goodwill	2,831
Accumulated impairment losses and amortization	(2,831		)
Balance as of December 31, 2012	$	—

The fair value of goodwill is tested for impairment on a non-recurring basis using Level 3 inputs. During the year ended December 31, 2012, the Company concluded that there was an indication of impairment to Tecnonet S.p.A, our Italian subsidiary. Below is a description of the Level 3 inputs used:



Quantitative Information about Level 3 Fair Value Measurements
($ in thousands)

	Fair Value at September 30, 2012		Valuation Technique	Unobservable Input	Range (Median)

Equity investment in Tecnonet	$	20,100	Income approach-discounted cash flow ("DCF")	Weighted average cost of capital	19.8%-25.8% (22.8%)
				Long term growth rate	1.5%-4.5% (3.0%)

Based on the valuation of Tecnonet, the associated goodwill was determined to be impaired and was written off during the year ended December 31, 2012. Reasons for the impairment include lower revenue and lower profit forecast for the business due to worsening economic conditions in Italy. The amount of the impairment, $1.1 million, is equal to the total carrying amount of goodwill on the books as of September 30, 2012.

During the year ended December 31, 2012, the Company concluded that there was an indication of impairment to Alcadon-MRV AB ("Alcadon"), our Scandinavian subsidiary, which was subsequently sold in October 2012. Below is a description of the Level 3 inputs used:



Quantitative Information about Level 3 Fair Value Measurements
($ in thousands)

	Fair Value at June 30, 2012		Valuation Technique	Unobservable Input	Range (Median)

Equity investment in Alcadon	$	13,100	DCF	Weighted average cost of capital	34.3%-40.3% (37.3%)
				Long term growth rate	1.5%-4.5% (3.0%)
	$	11,900	Non-binding offer from third party	N/A	$	11,900

Based on the valuation of Alcadon, the goodwill associated with Alcadon was determined to be impaired and was written off during the year ended December 31, 2012. Reasons for the impairment include the loss of a key customer in the first half of 2012 lowering revenue and profit forecast for the business. The amount of the impairment was equal to the total carrying amount of goodwill on the books as of June 30, 2012, $3.7 million.

The Company did not have any remaining goodwill on its Consolidated Balance Sheets as of December 31, 2014 and 2013.

Intangible assets, net of amortization totaled $1.4 million and $0.9 million as of December 31, 2014 and 2013, respectively, and consist of intellectual property purchased during the years ended December 31, 2014 and 2013. A portion of these assets, approximating $0.4 million, which represent software license agreements, were placed into service during the year ended December 31, 2014. Amortization of intangible assets was $0.05 million for the year ended December 31, 2014. None of these assets were in service as of December 31, 2013, therefore amortization of other intangible assets was zero for the year ended December 31, 2013. The terms of the some of these license agreements provide for use of the licensed software into perpetuity while others are more definite. The Company plans to amortize the cost of the license agreements over the estimated useful life, which can range between three to five years. The Company recorded an impairment charge of $0.1 million during the year ended December 31, 2014 on one of the software license agreements placed into service. The Company did not record any impairment charges related to intangible assets for the years ended December 31, 2013 and 2012. As of December 31, 2014, intangible assets not yet placed into service totaled approximately $1.1 million.

The following table illustrates the estimated future amortization expense of intangible assets as of December 31, 2014 (in thousands):



Year ending December 31,	Estimated Amortization Expense
2015	$	167
2016	328
2017	280
2018	214
2019	214
Thereafter	161
Total	$	1,364

- 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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