Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

16. Segment Information

The Company has historically operated under four business segments: SL Power Electronics Corp. (“SLPE”), the High Power Group, SL-MTI and RFL. On November 17, 2014, the Company completed the sale of all the issued and outstanding capital stock of RFL and classified the results of operations of its RFL segment as discontinued operations. As a result, the Company currently operates under three business segments from continuing operations: SLPE, the High Power Group, and SL-MTI. TEAL Electronics Corp. (“TEAL”) and MTE Corporation (“MTE”) are combined into one business segment, which is reported as the High Power Group. The Company aggregates operating business subsidiaries into a single segment for financial reporting purposes if aggregation is consistent with the objectives of ASC 280 “Segment Reporting.” Business units are also combined if they have similar characteristics in each of the following areas:

• nature of products and services

• nature of production process

• type or class of customer

• methods of distribution

SLPE designs, manufactures and markets high-reliability power conversion products in internal and external footprints. The Company’s power supplies provide a reliable and safe power source for the customer’s specific equipment needs. SLPE, which sells products under three brand names (SL Power Electronics, Condor and Ault), is a major supplier to the original equipment manufacturers (“OEMs”) of medical, industrial/instrumentation, military, information technology equipment, and LED lighting and audio visual systems. The High Power Group sells products under two brand names (TEAL and MTE). TEAL designs and manufactures custom power conditioning and distribution units for OEMs of medical imaging, medical treatment, military aerospace, semiconductor, solar and advanced simulation systems. MTE designs and manufactures power quality products used to protect equipment from power surges, bring harmonics into compliance and improve the efficiency of variable speed motor drive systems. SL-MTI designs and manufactures high power density precision motors that are used in numerous applications, including military and commercial aerospace, oil and gas, and medical and industrial products. With the acquisition of Torque Systems, SL-MTI’s product portfolio has expanded to include engineered motion control products, including brush servo motors, brushless servo motors, incremental encoders, and linear actuators. SL-MTI’s product portfolio was further expanded by the Davall acquisition, which includes custom gears, gearboxes, and assemblies primarily for the military and aerospace markets. The Unallocated Corporate Expenses segment includes corporate related items, financing activities and other costs not allocated to reportable segments, which includes but is not limited to certain treasury, risk management, legal, litigation and public reporting charges and certain legacy costs. The accounting policies for the business units are the same as those described in the summary of significant accounting policies. For additional information, see Note 1 of the Notes to the Consolidated Financial Statements included in Part IV of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Business segment operations are conducted through domestic subsidiaries. For all periods presented, sales between business segments were not material. Each of the segments has certain major customers, the loss of any of which would have a material adverse effect on such segment.

The unaudited comparative results for the three and nine month periods ended September 30, 2015 and September 30, 2014 are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Net sales
SLPE	$	17,243	$	17,821	$	51,687	$	54,504
High Power Group		15,224		21,699		53,366		64,461
SL-MTI		17,208		11,205		42,025		32,175
Net sales	$	49,675	$	50,725	$	147,078	$	151,140

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
Income from operations
SLPE	$	2,416		$	1,971		$	6,140		$	5,203
High Power Group		1,028			2,838			5,914			9,676
SL-MTI		1,791			1,243			6,200			5,146
Unallocated Corporate Expenses (1)		(1,553	)		(1,870	)		(5,396	)		(5,099	)
Income from operations	$	3,682		$	4,182		$	12,858		$	14,926

(1) Unallocated Corporate Expenses includes corporate related items, financing activities and other costs not allocated to reportable segments, which includes but is not limited to certain legal, litigation and public reporting charges and certain legacy costs.

Total assets as of September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015		December 31, 2014
	(in thousands)
Total assets
SLPE	$	33,128	$	34,989
High Power Group		33,267		33,306
SL-MTI		58,236		22,752
Unallocated Corporate Assets		10,043		40,729
Total assets	$	134,674	$	131,776

Goodwill and other intangible assets, net, as of September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015		December 31, 2014
	(in thousands)
Goodwill and other intangible assets, net
SLPE	$	4,547	$	4,530
High Power Group		9,848		9,839
SL-MTI		20,478		2,491
Goodwill and other intangible assets, net	$	34,873	$	16,860