Purchased Intangible Assets

12 Months Ended

Jan. 31, 2012

Purchased Intangible Assets [Abstract]

PURCHASED INTANGIBLE ASSETS

NOTE 11 – PURCHASED INTANGIBLE ASSETS

In connection with the acquisitions of GPS and SMC, the Company recorded substantial amounts of goodwill and other purchased intangible assets including contractual and other customer relationships, non-compete agreements and trade names. The goodwill included in the balance sheets at January 31, 2012 and 2011 in the amount of $18.5 million relates entirely to the acquisition of GPS. For income tax reporting purposes, goodwill allocated to GPS in the approximate amount of $12.3 million is being amortized on a straight-line basis over periods of 15 years. The remaining amount of the Company’s goodwill is not amortizable for income tax reporting purposes. The Company’s other purchased intangible assets with balances as of January 31, 2012 or 2011 consisted of the following:

Trade Names – The Company determined the fair values of the GPS and SMC Trade Names using a relief-from-royalty methodology. The Company also considered recognition by potential customers of a trade name such as GPS. The Company believes that the useful life of the GPS Trade Name is fifteen years, the period over which the Trade Name is expected to contribute to future cash flows. Management concluded that the useful life of the SMC Trade Name was indefinite since it is expected to contribute directly to future cash flows in perpetuity.

Non-Compete Agreements – The fair value amounts of three non-compete agreements with the former owners of acquired businesses were determined at the time of the acquisitions by discounting the estimated reductions in the cash flows that would be expected if the key employees were to leave the Company. The Company amortized the fair value amounts ascribed to the non-compete agreements over five years, the contractual length of each non-compete agreement.

The changes in the carrying amounts of the other purchased intangible assets for the years ended January 31, 2012 and 2011 were as follows.

	Useful	February 1,							January 31,
Description	Lives	2010		Additions		Amortization			2011
Non-compete – GPS	5 years	$	198,000	$	—	$	(107,000	)	$	91,000
Trade name – GPS	15 years		2,879,000		—		(243,000	)		2,636,000
Trade name – SMC	Indefinite		181,000		—		—			181,000
Totals		$	3,258,000	$	—	$	(350,000	)	$	2,908,000

	Useful	January 31,							January 31,
Description	Lives	2011		Additions		Amortization			2012
Non-compete – GPS	5 years	$	91,000	$	—	$	(91,000	)	$	—
Trade name – GPS	15 years		2,636,000		—		(243,000	)		2,393,000
Trade name – SMC	Indefinite		181,000		—		—			181,000
Totals		$	2,908,000	$	—	$	(334,000	)	$	2,574,000

As of January 31, 2012, the amount of accumulated amortization associated with the trade name of GPS was $1,250,000.

The estimated amounts of amortization expense related to the trade name of GPS for the next five fiscal years are presented below:

2013	$	243,000
2014		243,000
2015		243,000
2016		243,000
2017		243,000
Thereafter		1,178,000
Total	$	2,393,000