Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

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Goodwill and Intangible Assets
12 Months Ended
Jan. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]

8. Goodwill and Intangible Assets

 

At January 31, 2013 and 2012, we had goodwill of $45.1 million and $44.4 million, respectively. The change in the carrying amount of goodwill for the years ended January 31, 2013 and 2012 are as follows:

 

    Software     Media Services     Total  
                   
Balance at January 31, 2011   $ 45,257     $ 19,422     $ 64,679  
Cumulative translation adjustment     (842 )     (197 )     (1,039 )
                         
Balance at January 31, 2012     44,415       19,225       63,640  
                         
Acquisition of goodwill - Flashlight     10               10  
Goodwill related to discontinued operations     -       (19,225 )     (19,225 )
Cumulative translation adjustment     678       -       678  
Balance at January 31, 2013   $ 45,103     $ -     $ 45,103  

 

The goodwill balance excludes $0.6 million of goodwill assigned, based on a relative fair value calculation, to the divestiture of the Broadcast Servers and Storage business unit and is included in non-current assets related to discontinued operations in the consolidated balance sheets.

 

We perform our annual impairment test of goodwill annually on August 1st and have determined that the fair value of our goodwill balance exceeded its carrying value. Accordingly, since no impairment indicator existed as of August 1, 2012 and the fair value of the goodwill exceeded the carrying value, we determined that goodwill was appropriately stated as of August 1, 2012 and no impairment charge was necessary. For more information on the goodwill impairment test see “MD&A – Critical Accounting Policies and Significant Judgments and Estimates,” located in Part II, Item 7., of this Form 10-K.

 

At January 31, 2013 and 2012, the balances in net intangible assets of $17.5 million and $22.4 million, respectively, consist of patents, customer contracts, non-compete agreements, completed technology and trademarks.

 

Intangible assets, net, consisted of the following:

 

          January 31, 2013     January 31, 2012  
    Weighted average
remaining life
(Years)
    Gross     Accumulated
Amortization
    Net     Gross     Accumulated
Amortization
    Net  
          (Amounts in thousands)  
Finite-lived intangible assets:                                                        
Customer contracts     6.1     $ 32,568     $ (18,756 )   $ 13,812     $ 31,758     $ (15,726 )   $ 16,032  
Non-compete agreements     0.7       2,769       (2,375 )     394       2,673       (1,869 )     804  
Completed technology     5.2       11,448       (8,437 )     3,011       11,259       (6,048 )     5,211  
Trademarks and other     0.8       1,726       (1,629 )     97       1,715       (1,530 )     185  
Total finite-lived intangible assets           $ 48,511     $ (31,197 )   $ 17,314     $ 47,405     $ (25,173 )   $ 22,232  
                                                         
Infinite-lived intangible assets:                                                        
Trade names     Infinite       200       -       200       200       -       200  
Total indefinte-lived intangible assets           $ 200     $ -     $ 200     $ 200     $ -     $ 200  
Total intangible assets           $ 48,711     $ (31,197 )   $ 17,514     $ 47,605     $ (25,173 )   $ 22,432  

 

Estimated useful lives and the amortization basis for the intangible assets are as follows:

 

     Estimated Useful Life and Amortization Basis 
Customer contracts     1 - 8 years using economic consumption life basis
Non compete agreements   2 - 3 years economic life of the agreement
Completed technology     4 - 6 years using economic consumption life basis
Trademarks and other     5 years using economic consumption life basis
Trade names   indefinite life

 

Amortization expense for intangible assets was $6.4 million, $6.3 million and $5.1 million for fiscal 2013, 2012 and 2011, respectively. In fiscal 2013, 2012 and 2011, $2.4 million, $2.5 million, and $2.0 million respectively, were charged to cost of product revenues. In fiscal 2013, 2012 and 2011, $4.0 million, $3.8 million and $3.1 million, respectively, were charged to operating expense. The total amortization expense for each of the next five fiscal years is as follows (amounts in thousands):

 

    Estimated  
    Amortization  
For the Fiscal Years Ended January 31,   Expense  
2014   $ 4,948  
2015     4,191  
2016     3,339  
2017     2,359  
2018     1,551  
Fiscal 2019 and thereafter     926  
Total Future Amortization   $ 17,314  

 

Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization, or other events.