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

9 Months Ended

Oct. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

6. Goodwill and Intangible Assets

Goodwill

Changes in the carrying amount of goodwill for the first nine months of fiscal 2013 were as follows (amounts in thousands):

	Goodwill

Balance at January 31, 2012	$	44,414
Acquisition goodwill		110
Cumulative translation adjustment		(395	)
Balance at October 31, 2012	$	44,129

We are required to perform impairment tests related to our goodwill annually, which we perform as of August 1^st of each fiscal year. During the third quarter of fiscal 2013, we completed our annual impairment testing of goodwill associated with continuing operations and determined there was no goodwill impairment. For further information on our annual impairment test of goodwill for fiscal 2013, see “Critical Accounting Policies and Significant Judgment and Estimates – Goodwill,” in Item 2., Part I of this Form 10-Q. As of October 31, 2012, we considered possible impairment triggering events since the last impairment test such as comparing our market capitalization relative to the carrying value of our net assets. We concluded that there were no triggering events that would indicate a potential impairment of goodwill or other intangible assets.

We performed an impairment test of goodwill and long-lived assets of the Media Services segment as result of the sale of Media Services segment during the first quarter of fiscal 2013. 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 $17.0 million impairment charge which we recorded as part of our discontinued operating results during our first quarter of fiscal 2013.

Intangible Assets

Intangible assets consisted of the following:

	Weighted
	average
	remaining		As of October 31, 2012							As of January 31, 2012
	life				Accumulated							Accumulated
	(Years)		Gross		Amortization			Net		Gross		Amortization			Net
			(amounts in thousands)
Finite-lived intangible assets:
Customer contracts		6.0	$	31,999	$	(17,737	)	$	14,262	$	31,758	$	(15,726	)	$	16,032
Non-compete agreements		1.0		2,681		(2,137	)		544		2,673		(1,869	)		804
Completed technology		5.0		11,149		(7,789	)		3,360		11,259		(6,048	)		5,211
Trademarks and other		1.0		1,708		(1,586	)		122		1,715		(1,530	)		185
Total finite-lived intangible assets			$	47,537	$	(29,249	)	$	18,288	$	47,405	$	(25,173	)	$	22,232
Indefinite-lived intangible assets:
Trade names		Infinite	$	200	$	-		$	200	$	200	$	-		$	200
Total indefinite-lived intangible assets				200		-			200		200		-			200
Total intangible assets			$	47,737	$	(29,249	)	$	18,488	$	47,605	$	(25,173	)	$	22,432

As of October 31, 2012, the estimated future amortization expense for our finite-lived intangible assets for the remainder of fiscal year 2013, the four succeeding fiscal years and thereafter is as follows (amounts in thousands):

Fiscal Year Ended January 31,
2013 (for the remaining three months)	$	1,534
2014		4,709
2015		4,078
2016		3,280
2017 and thereafter		4,687
Total	$	18,288

- 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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