SeaChange International, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

3 Months Ended

Apr. 30, 2012

Goodwill and Intangible Assets

6. Goodwill and Intangible Assets

Goodwill

Changes in the carrying amount of goodwill for the first three months of fiscal 2012 were as follows:

	Goodwill
	(in thousands)
Balance at January 31, 2012	$	44,414
Cumulative translation adjustment		190
Balance at April 30, 2012	$	44,604

In late April and early May of 2012, as we were nearing a pending business transaction to sell the ODG business, we performed an impairment test of goodwill and long-lived assets of the Media Services segment. Based on our evaluation and the final selling price as well as other deal terms that were agreed to in the final purchase agreement executed on May 21, 2012, the carrying amount of goodwill in our former Media Services business exceeded the implied fair value, and thus resulted in a $17 million impairment charge which we recorded as part of our discontinued operating results as of April 30, 2012.

The goodwill balance excludes $594,000 of goodwill assigned to the divestiture of our broadcast storage and servers business unit and $2.9 million of goodwill assigned to the divestiture of our Media Services business unit that are included in non-current assets related to discontinued operations.

Intangible Assets

Intangible assets consisted of the following:

			April 30, 2012							January 31, 2012
	Weighted average remaining life (Years)		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
			(in thousands)							(in thousands)
Finite-lived intangible assets:
Customer contracts		5.7	$	31,859	$	(16,560	)	$	15,299	$	31,758	$	(15,726	)	$	16,032
Non-compete agreements		1.3		2,689		(2,014	)		675		2,673		(1,869	)		804
Completed technology		4.4		11,312		(6,510	)		4,802		11,259		(6,048	)		5,211
Trademarks and other		1.3		1,718		(1,562	)		156		1,715		(1,530	)		185
Total finite-lived intangible assets			$	47,578	$	(26,646	)	$	20,932	$	47,405	$	(25,173	)	$	22,232
Infinite-lived intangible assets:
Trade names		Infinite	$	200	$	-		$	200		200				$	200
Total infinite-lived intangible assets			$	200	$	-		$	200	$	200	$	-		$	200
Total intangible assets			$	47,778	$	(26,646	)	$	21,132	$	47,605	$	(25,173	)	$	22,432

Estimated future amortization expenses related to the above intangible assets at April 30, 2012 are as follows:

Fiscal Year	(in thousands)
2013 (for the remaining nine months ending January 31, 2013)	$	4,248
2014		4,485
2015		4,168
2016		3,332
2017 and thereafter		4,699
Total	$	20,932

- 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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