Goodwill And Intangibles |
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Goodwill And Intangibles |
Note 6—Goodwill and Intangibles The following table summarizes the change in our goodwill during the thirty-nine weeks ended October 1, 2011 as follows (in thousands):
During the thirty-nine weeks ended October 1, 2011, the Company recorded goodwill adjustments of $1.7 million related to the immaterial balance sheet reclassification of WAG's $1.5 million accounts receivable and the settlement amount of $0.2 million received from the shareholders of WAG for the negative working capital of WAG on the date of the Acquisition. See "Note 5 – Business Combination" for details on the goodwill adjustments. The Company evaluates goodwill for impairment on an annual basis or more frequently if events or circumstances occur that would indicate a reduction in fair value. As of October 31, 2010, the Company performed its annual impairment test and the excess of fair value estimates over carrying value for our reporting unit was approximately $187 million. Based on its analysis, there would have to be a 65% decrease in the fair value of the reporting unit to fail step 1. During the thirty-nine weeks ended October 1, 2011, there was no change to the Company's reporting unit and no events or circumstances occurred that would indicate an impairment of goodwill based on the excess of fair value over carrying value for our reporting unit. The accumulated impairment loss on goodwill was $4.4 million as of October 1, 2011 and January 1, 2011. Intangibles subject to amortization are expensed on a straight-line basis. Amortization expense relating to intangibles totaled $0.3 million and $3.3 million for the thirteen and thirty-nine weeks ended October 1, 2011, respectively. Amortization expense relating to intangibles totaled $1.0 million and $1.2 million for the thirteen and thirty-nine weeks ended October 2, 2010, respectively. During the thirteen and thirty-nine weeks ended October 1, 2011, the Company purchased certain domain and trade names for a purchase price of $15,000 and $63,000, respectively. All of these assets were allocated to intangible assets not subject to amortization. During the thirteen and thirty-nine weeks ended October 2, 2010, the Company purchased certain websites and domain names for a purchase price of $1.0 million, of which $0.8 million was allocated to amortizable intangibles. In addition, associated with the Acquisition, approximately $8.2 million of the total purchase price had been allocated to trade name assets with an indefinite life and $9.2 million had been allocated to amortizable intangible assets during the third quarter of fiscal 2010 as noted in the table below. Intangibles, excluding goodwill, consisted of the following at October 1, 2011 and January 1, 2011 (in thousands):
The following table summarizes the future estimated amortization expense for these assets over the next five years (in thousands):
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