Annual report pursuant to section 13 and 15(d)

GOODWILL AND OTHER INTANGIBLE ASSETS

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GOODWILL AND OTHER INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2011
GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS
NOTE 6
GOODWILL AND OTHER INTANGIBLE ASSETS
The following summarizes changes in the carrying amount of goodwill by reporting segments.   In the fourth quarter of 2009, we determined that we had not appropriately recorded a deferred tax liability on indefinite lived intangible assets in connection with our acquisition of PFNWR in June 2007.  Accordingly, we recorded an adjustment in the fourth quarter of 2009 to correct goodwill and deferred tax liability related to the acquisition.  This correction increased goodwill and increased deferred tax liability by $298,000. We did not amend our prior financial statements for this adjustment as the correction was not considered material to the Consolidated Balance Sheet and had no impact on our Consolidated Statement of Operations, income per share, accumulated deficit or our cash flow.  The $734,000, $2,978,000 and $840,000 recorded in 2009, 2010, and 2011, respectively, resulted from earn-out amounts that we were required to pay in connection with the acquisition of our PFNWR facility in 2007 (See “Note 14 – “Commitments and Contingencies – Earn-Out Amount – Perma-Fix Northwest, Inc. (“PFNW”) and Perma-Fix Northwest Richland, Inc. (“PFNWR”)” for information regarding this earn-out amount). During the fourth quarter of 2011, we recorded $10,893,000 in goodwill within our Services Segment resulting from the acquisition of SEC on October 31, 2011.  As a result of the acquisition of SEC on October 31, 2011, during the fourth quarter of 2011, the Company made structure and reporting changes to its internal organization and changes to its operating segments, resulting in changes to its reporting units.  As a result of these changes, we reassigned approximately $3,637,000 of the $14,840,000 goodwill from our treatment operations reporting unit (in our Treatment Segment) to our CHPRC reporting unit (in our Services Segment) using a relative fair value approach in accordance with ASC 350, Intangibles – Goodwill and Other” (see “Note 2 – Summary of Significant Accounting Policies – Goodwill and Other Intangible Assets” for further information regarding this reassignment).

Goodwill (amounts in thousands)
 
Treatment
  
Services
  
Total
 
Balance as of December 31, 2008
 $9,990  $1,330  $11,320 
Additional Goodwill Recorded as Result of PFNWR Acquisition
  298   ¾   298 
Goodwill Recorded in connection with PFNWR Earn-Out
  734   ¾   734 
Balance as of December 31, 2009
 $11,022  $1,330  $12,352 
Goodwill Recorded in connection with PFNWR Earn-Out
  2,978   ¾   2,978 
Balance as of December 31, 2010
 $14,000  $1,330  $15,330 
Goodwill Recorded in connection with PFNWR Earn-Out
  840   ¾   840 
Goodwill Recorded in connection with SEC Acqusition
  ¾   10,893   10,893 
Reassignment of goodwill from change in reporting unit
  (3,637)  3,637   ¾ 
Balance as of December 31, 2011
 $11,203  $15,860  $27,063 

The following table summarizes changes in the carrying amount of permits.  No permit exists at our Services Segment.  In the first quarter of 2010, we reclassified approximately $384,000 in costs from permit in process to permit at PFF.  These costs were incurred for the expansion of our operating permit at the facility.  The Company currently has only one definite-lived permit, which is at our DSSI facility. This permit of approximately $545,000 was capitalized in 2009 in connection with the authorization issued by the U.S. EPA to our DSSI facility to commercially store and dispose of radioactive PCBs. This permit is being amortized over a ten year period in accordance with its estimated useful life.
 
Permit (amount in thousands)
 
Treatment
 
Balance as of December 31, 2008
 $16,741 
Permits capitalized in connection with PCB at DSSI
  545 
PCB permit amortized
  (45)
Permits in progress
  (352)
Balance as of December 31, 2009
 $16,889 
PCB permit amortized
  (55)
Permit enhancement at PFF
  384 
Permits in progress
  (355)
Balance as of December 31, 2010
 $16,863 
PCB permit amortized
  (55)
Permits in progress
  46 
Balance as of December 31, 2011
 $16,854 

The following table summarizes information relating the Company's Other intangible assets:

      
December 31, 2011
  
December 31, 2010
 
   
Useful Lives
(Years)
  
Gross Carrying
Amount
  
Accumulated 
Amortization
  
Net Carrying 
Amount
  
Gross Carrying
Amount
  
Accumulated 
Amortization
  
Net Carrying 
Amount
 
Intangibles (amount in thousands)
                     
Patent
  8-18  $402  $(77) $325  $245  $(55) $190 
Software
  3   158   (66)  92   102   (21)  81 
Non-compete agreement
  5   265   (9)  256   ¾   ¾   ¾ 
Customer contracts
  .5   445   (144)  301   ¾   ¾   ¾ 
Customer relationships
  12   3,370   (86)  3,284   ¾   ¾   ¾ 
Total
     $4,640  $(382) $4,258  $347  $(76) $271 

Intangible assets recorded as a result of the acquisition of SEC on October 31, 2011 included a non-compete agreement, customer relationships, customer contracts, and software ($4,000) which were recorded at fair market value of approximately $4,084,000 (see “Note 7 –Business Acquisition” for the purchase price allocation of SEC).  The intangible assets acquired are amortized on a straight-line basis over their useful lives with the exception of customer relationships which are being amortized using an accelerated method.  The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets, which includes the one definite-lived permit noted above.

 
Year
 
Amount
(In thousands)
 
     
2012
 $940 
2013
  575 
2014
  519 
2015
  471 
2016
  429 
   $2,934 

Amortization expense relating to intangible asset for the Company was $386,000, $79,000, and $70,000 for the years ended December 31, 2011, 2010, and 2009, respectively.