Note 5 – Intangible Assets

Intangible assets consisted of the following at June 29, 2013 and December 29, 2012:

During the second quarter of 2013, the Company recognized impairment losses on product design intellectual property and certain domain and trade names for $838 and $407, respectively. The impairment charges were primarily the result of lower sales and gross margin. Given the indicators of impairment, the Company utilized the Royalty Savings method in determining the fair values. The decrease in future cash flows resulted in these assets being impaired, as their carrying values exceeded the fair value. The Company did not recognize impairment loss on product design intellectual property and domain and trade names for the twenty-six weeks ended June 30, 2012. Refer to “Note 1- Summary of Significant Accounting Policies and Nature of Operations” and “Note 3 – Fair Value Measurements” for additional details.

Intangible assets subject to amortization are expensed on a straight-line basis. Amortization expense relating to intangibles assets for the thirteen weeks ended June 29, 2013 and June 30, 2012 was $107 and $341, respectively. Amortization expense relating to intangibles assets for the twenty-six weeks ended June 29, 2013 and June 30, 2012 was $213 and $681, respectively.

The following table summarizes the future estimated annual amortization expense for these assets over the next five years: