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, 2011

6. Goodwill and Intangible Assets

Goodwill

Goodwill allocated to the Company’s reportable segments and changes in the carrying amount of goodwill for the first nine months of fiscal 2012 were as follows:

	Goodwill
	Software			Servers & Storage		Media Services		Total
	(in thousands)
Balance at January 31, 2011	$	45,097		$	754	$	19,422	$	65,273
Reallocation of Broadcast software		(1,267	)		1,267		-		-
Cumulative translation adjustment		985			-		338		1,323
Balance at October 31, 2011	$	44,815		$	2,021	$	19,760	$	66,596

During its third fiscal quarter of 2012, the Company completed its annual impairment testing of goodwill associated with its three reporting units and determined there was no goodwill impairment. As of October 31, 2011, the Company considered possible impairment triggering events since the last impairment test such as comparing its market capitalization relative to the carrying value of its net assets. The Company concluded that there were no triggering events that would indicate a potential impairment of goodwill or other intangibles.

The goodwill reallocation shown in the table relates to the reclassification of the Broadcast software solutions from the Software segment to the Servers and Storage segment effective on February 1, 2011. The goodwill was allocated based on a relative fair value approach using management estimates of fair value of the Broadcast software solutions product line. No impairment was recorded as a result of the change in segments.

Intangible Assets

Intangible assets consisted of the following:

			October 31, 2011							January 31, 2011
	Weighted average remaining life (Years)		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
			(in thousands)							(in thousands)
Finite-lived intangible assets:
Customer contracts		5.8	$	35,140	$	(16,580	)	$	18,560	$	34,576	$	(14,291	)	$	20,285
Non-compete agreements		1.3		2,823		(1,778	)		1,045		2,742		(1,104	)		1,638
Completed technology		3.7		12,247		(6,388	)		5,859		11,976		(4,775	)		7,201
Trademarks and other		1.6		2,411		(2,176	)		235		2,384		(1,946	)		438
Total finite-lived intangible assets			$	52,621	$	(26,922	)	$	25,699	$	51,678	$	(22,116	)	$	29,562
Infinite-lived intangible assets:
Trade names		Infinite	$	200	$	-		$	200	$	200	$	-		$	200
In-process research and development		Infinite		566		-			566		544		-			544
Total infinite-lived intangible assets			$	766	$	-		$	766	$	744	$	-		$	744
Total intangible assets			$	53,387	$	(26,922	)	$	26,465	$	52,422	$	(22,116	)	$	30,306

Estimated future amortization expenses related to the above intangible assets at October 31, 2011 are as follows:

Fiscal Year	(in thousands)
2012 (for the remaining three months ending January 31, 2012)	$	1,503
2013		5,921
2014		4,746
2015		4,399
2016 and thereafter		9,130
Total	$	25,699

- 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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