Annual report pursuant to Section 13 and 15(d)

NOTE 7: - GOODWILL AND OTHER INTANGIBLE ASSETS, NET

NOTE 7: - GOODWILL AND OTHER INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 7:– GOODWILL AND OTHER INTANGIBLE ASSETS, NET

a. Goodwill

The Company allocates goodwill acquired in a business combination to the appropriate reporting unit as of the acquisition date. Currently, the Company’s reporting units are also its reportable segments and the associated goodwill was determined when the specific businesses in the reportable segments were purchased.

A summary of the goodwill by business segment is as follows:

	December 31, 2011		Additions		Adjustments (currency)		December 31, 2012
Training and Simulation Division	$	24,435,641	$	–	$	–	$	24,435,641
Battery and Power Systems Division		5,985,557		–		141,100		6,126,657
Total	$	30,421,198	$	–	$	141,100	$	30,562,298

b. Other intangible assets:

		December 31,
		2012					2011
	Useful life	Cost			Net book value		Cost			Net book value
Technology	4-8 years	$	6,788,000		$	189,429	$	6,788,000		$	284,143
Capitalized software costs	1-3 years		3,690,416			491,433		3,355,716			616,819
Trademarks	10 years		28,000			14,000		28,000			16,800
Backlog/customer relationship	1-10 years		744,000			31,000		744,000			37,200
Customer list	2-10 years		6,773,645			621,740		6,773,645			1,243,480
			18,024,061		$	1,347,602		17,689,361		$	2,198,442
Exchange rate differences			91,671					155,663
Less - accumulated amortization			(16,676,459	)				(15,490,920	)
Amortized cost			1,439,273					2,354,104
Trademarks (indefinite lives)			799,000					799,000
Net book value		$	2,238,273				$	3,153,104

Amortization expense amounted to $1,185,539 and $1,905,097 for the years ended December 31, 2012 and 2011, respectively, including amortization of capitalized software costs of $460,085 and $603,393, respectively.

c. Estimated amortization expenses for the years shown is as follows:

Year ending December 31,
2013	$	1,089,442
2014		231,160
2015		27,000
2016		–
Total	$	1,347,602

Goodwill and other intangible assets are adjusted on a quarterly basis for any change due to currency fluctuations and any variation is included in the accumulated other comprehensive income on the Balance Sheet.

- 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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