Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

5. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 are as follows:



	Amount
	(In Thousands)
Balance at December 31, 2011	$	39,089
Reclassification to software intangible asset due to the finalization of purchase accounting for the acquisition made in 2011	(210		)
Sale of company acquired in 2011	$	(1,129	)
Balance at December 31, 2012	$	37,750
Acquisition of mobile development company in 2013	750
Balance at December 31, 2013	$	38,500

During the year ended December 31, 2013, the Company acquired a mobile development company for a total purchase price of $0.8 million. The Company concluded that there were no identifiable intangible assets that should be recorded as a result of this acquisition, and therefore the full purchase price was allocated to goodwill.

Goodwill impairment is determined using a two-step approach. The first step of the goodwill test compares the fair value of a reporting unit with its carrying amount, including goodwill. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that difference. The Company’s impairment tests are based on its single operating segment and reporting unit structure. The Company performed the required annual impairment evaluations and concluded that there was no impairment of its goodwill in any of the periods presented.

Other intangible assets consisted of the following:



	December 31, 2013							December 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Cost		Gross Carrying Amount		Accumulated Amortization			Net Cost
	(In Thousands)
Indefinite lived intangible assets:
Tradenames	$	480	$	—		$	480	$	715	$	—		$	715
URLs	127		—			127		121		—			121
Subtotal indefinite lived intangible assets	$	607	$	—		$	607	$	836	$	—		$	836
Definite lived intangible assets:
Customer and advertiser relationships	$	324	$	(251	)	$	73	$	324	$	(215	)	$	109
Developed technology and patents	523		(258		)	265		285		(196		)	89
Trademarks and tradenames	3,643		(1,278		)	2,365		4,824		(255		)	4,569
Service contracts and other	94		(47		)	47		94		(38		)	56
Subtotal definite lived intangible assets	$	4,584	$	(1,834	)	$	2,750	$	5,527	$	(704	)	$	4,823
Total intangible assets⁽¹⁾	$	5,191	$	(1,834	)	$	3,357	$	6,363	$	(704	)	$	5,660

⁽¹⁾ Amounts may not add due to rounding

The Company evaluates intangible assets annually for impairment, or more often if indicators of impairment exist. In order to complete its impairment analysis, the Company estimates fair value using multiple approaches. In its assessment of impairment of intangible assets, the Company considers whether events or changes in circumstances such as significant declines in revenues, earnings or material adverse changes in the business climate indicate that the carrying value of assets may be impaired. The Company performs impairment evaluations annually as of October 1; however, the existence of impairment indicators may cause the impairment review to occur earlier. The annual impairment analysis for the year ended December 31, 2013 resulted in the Company concluding that an indefinite-lived tradename from a prior year acquisition was impaired, primarily based on an analysis of future cash flows expected to be generated by this tradename. As a result, an impairment charge of $235,000, representing the full carrying value of the asset, was recorded.

During the year ended December 31, 2013, the Company concluded there were impairment indicators with respect to the WeddingChannel tradename, which was categorized as a definite-lived intangible asset as of December 31, 2012. Impairment indicators included continued declines in revenue, traffic and membership related to this site. As a result of its review, the Company recorded a non-cash impairment of $1.2 million to write down the value of the tradename. The resulting fair value measurement was considered to be a Level 3 measurement and was determined using a discounted cash flow methodology with assumptions for cash flows, royalty rate, and discount rate. The Company also evaluated the estimated useful life of this tradename asset, concluding that the remaining carrying value of the tradename should be amortized over a period of one year. The estimated annual amortization expense for this asset is reflected in the disclosure below.

During the the third quarter ended September 30, 2012, the Company concluded there were impairment indicators with respect to the WeddingChannel tradename. The impairment indicators included trending of lower overall e-commerce revenue, as well as lower advertising and registry services revenue attributable to this tradename. Based primarily on future cash flow projections for the lines of business most closely related to this tradename, the Company concluded that an impairment charge of $0.7 million was necessary in the third quarter of 2012. During the fourth quarter of 2012, the Company determined that, based on prior period impairment charges and management's evaluation of the estimated future cash flows associated with this intangible asset, the WeddingChannel tradename should be categorized as a definite-lived intangible asset and amortized over an estimated useful life of 5 years.

Additionally, during the year ended December 31, 2012, the Company determined that, based on prior period impairment charges, including $318,000 recorded during the year ended December 31, 2011, and management's evaluation of the estimated future cash flows associated with the tradename for an e-commerce company the Company acquired in May 2009 should be categorized as a definite-lived intangible asset and amortized over an estimated useful life of 3 years. These factors resulted in impairment charges of $0.2 million against the e-commerce company's tradename during the year ended December 31, 2012. The estimated annual amortization expense for this asset is reflected in the disclosure below.

During the year ended December 31, 2011, the Company concluded there were impairment indicators with respect to the WedSnap tradename and technology intangible assets due to Facebook's introduction of changes to its application programming interface for third party applications that made it impractical to continue maintaining the Wedding Buzz message boards, which were the primary component of Wedding Buzz (the WedSnap Facebook application). As a result, the Company decided to close the Wedding Buzz service and redirect Facebook users to message boards and other services on TheKnot.com and WeddingChannel.com. This resulted in the write-off of the tradename and technology intangible assets associated with WedSnap. The amount of the impairment charge was $398,000.

Amortization expense for definite-lived intangible assets was $1.1 million, $407,000 and $1.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. Estimated annual amortization expense is $2.3 million in 2014, $156,000 in 2015, $34,000 in 2016, $15,000 in 2017, and $100,000 thereafter.

- 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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