SeaChange International, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

12 Months Ended

Jan. 31, 2014

Goodwill And Intangible Assets Disclosure [Abstract]

6. Goodwill and Intangible Assets

At January 31, 2014 and 2013, we had goodwill of $45.2 million and $45.1 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, 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
Cumulative translation adjustment		47		—			47

Balance at January 31, 2014	$	45,150	$	—		$	45,150

We performed our annual impairment tests of goodwill on August 1, 2013 and 2012, and determined that the fair value of our goodwill balance exceeded its carrying value and no impairment charge was necessary. While no impairment charges resulted from our analysis performed during the fourth quarter of fiscal 2014, impairment charges may occur in the future as a result of changes in projected growth and other factors.

At January 31, 2014 and 2013, the balances in net intangible assets of $12.9 million and $17.5 million, respectively, consist of patents, customer contracts, non-compete agreements, completed technology and trademarks.

Intangible assets, net, consisted of the following:


			January 31, 2014							January 31, 2013
	Weighted average remaining life (Years)		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
			(Amounts in thousands)
Finite-lived intangible assets:
Customer contracts		6.0	$	32,593	$	(22,344	)	$	10,249	$	32,568	$	(18,756	)	$	13,812
Non-compete agreements		1.0		2,772		(2,632	)		140		2,769		(2,375	)		394
Completed technology		5.1		11,461		(9,195	)		2,266		11,448		(8,437	)		3,011
Trademarks, patents and other		—		7,151		(7,151	)		—		7,151		(7,054	)		97

Total finite-lived intangible assets			$	53,977	$	(41,322	)	$	12,655	$	53,936	$	(36,622	)	$	17,314

Indefinite-lived intangible assets:
Trade names		Indefinite		200		—			200		200		—			200

Total indefinite-lived intangible assets			$	200	$	—		$	200	$	200	$	—		$	200

Total intangible assets			$	54,177	$	(41,322	)	$	12,855	$	54,136	$	(36,622	)	$	17,514

Amortization expense for intangible assets was $4.6 million, $6.4 million and $6.3 million for fiscal 2014, 2013 and 2012, respectively. In fiscal 2014, 2013 and 2012, $1.3 million, $2.4 million, and $2.5 million respectively, was charged to cost of product revenues. In fiscal 2014, 2013 and 2012, $3.3 million, $4.0 million and $3.8 million, respectively, was charged to operating expense.

The total amortization expense for each of the next five fiscal years is as follows (amounts in thousands):


For the Fiscal Years Ended January 31,	Estimated Amortization Expense
2015	$	4,318
2016		3,530
2017		2,406
2018		1,445
2019		739
Fiscal 2020 and thereafter		217

Total Future Amortization	$	12,655

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.

- 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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