Acquired Intangible Assets and Goodwill

6 Months Ended

Apr. 30, 2012

Acquired Intangible Assets and Goodwill [Abstract]

11. Acquired Intangible Assets and Goodwill

	April 30, 2012				October 31, 2011
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Amortizable intangible assets:
Non-compete agreement	$	1,000,000	$	1,000,000	$	1,000,000	$	1,000,000
Customer relationships		2,451,073		965,886		2,451,073		904,837
Advertising and subscriber base		4,989,768		1,878,490		4,989,768		1,804,660
Other		564,946		532,488		564,946		518,238
		9,005,787		4,376,864		9,005,787		4,227,735

Unamortizable intangible assets:
Goodwill		3,964,600		507,278		13,475,533		507,278
Trademark and masthead		3,648,972		-		3,648,972		-
		7,613,572		507,278		17,124,505		507,278

Total goodwill and other intangibles	$	16,619,359	$	4,884,142	$	26,130,292	$	4,735,013

During the second quarter of 2012 as part of a restructuring plan submitted to the Company's secured lenders, the Company authorized its investment bankers to initiate an open market transaction process to determine potential alternative transactions in relation to certain asset sales and the sale of a business segment. As a result of this process, it was determined that an impairment test between annual impairment tests was warranted as a result of this transaction analysis. This resulted in the Company's assessment that the carrying value of the newspaper segment exceeded the fair value of the newspaper segment. The basis of the fair value was a mid-point of value attained as a result of the open market process assessment based on a non- binding letter of intent attained in this process. This resulted in an impairment charge in the second quarter of 2012 of the remaining goodwill of the newspaper segment of approximately $9.5 million on a pre-tax, non-cash basis. As a result of the interim impairment indicators the Company also assessed the recoverability of property, plant and equipment and amortizing intangibles under the provisions of ASC 360 and determined that there were no charges required as a result of this assessment. The Company also assessed the non-amortizing intangibles of trademark and masthead with assistance from a third party valuation specialist using an income approach based on the relief from royalty valuation methodology. There was no impairment of this asset at April 30, 2012 as a result of the assessment.

Goodwill and other intangible assets are measured on a non-recurring basis using Level 3 inputs. Goodwill and non-amortizing intangible assets are also subject to an annual impairment test.

Amortization expense for the three and six months ended April 30, 2012 was $74,565 and 149,129, and for the three and six months ended April 30, 2011 was $110,279 and $220,557, respectively. A non-compete agreement is being amortized over a period of seven years and the customer relationships are being amortized over a period of 20 years. These items are both related to the acquisition of Syscan in 2004. The advertising and subscribers bases related to the acquisition of The Herald-Dispatch are being amortized over 25 and 20 years respectively. The trademark and masthead associated with the acquisition of The Herald-Dispatch are non-amortizing assets. The weighted average remaining life of the Company's amortizable intangible assets was approximately 17 years at April 30, 2012. Estimated amortization expense for each of the following fiscal years at April 30, 2012:

Ending October 31,
2012	$	143,630
2013		287,261
2014		275,970
2015		269,761
2016		269,761
Thereafter		3,382,540
	$	4,628,923

The changes in the carrying amount of goodwill, trademark and masthead and other amortizing intangibles for the six months ended April 30, 2012 are as follows:

Goodwill:

	Printing		Office Products and Furniture		Newspaper			Total

Balance as of October 31, 2011
Goodwill	$	2,226,837	$	1,230,485	$	35,437,456		$	38,894,778
Accumulated impairment losses		-		-		(25,926,523	)		(25,926,523	)
		2,226,837		1,230,485		9,510,933			12,968,255
Goodwill acquired six months ended April 30, 2012		-		-		-			-
Impairment losses six months ended April 30, 2012		-		-		(9,510,933	)		(9,510,933	)
Balance at April 30, 2012
Goodwill		2,226,837		1,230,485		35,437,456			38,894,778
Accumulated impairment losses		-		-		(35,437,456	)		(35,437,456	)
	$	2,226,837	$	1,230,485	$	-		$	3,457,322

Trademark and Masthead:

	Printing		Office Products and Furniture		Newspaper			Total

Balance as of October 31, 2011
Trademark and masthead	$	-	$	-	$	18,515,316		$	18,515,316
Accumulated impairment losses six months ended April 30,2012		-		-		(14,866,344	)		(14,866,344	)
		-		-		3,648,972			3,648,972
Trademark and masthead acquired six months ended April 30, 2012		-		-		-			-
Impairment losses six months ended April 30, 2012		-		-		-			-
Balance at April 30, 2012
Trademark and masthead		-		-		18,515,316			18,515,316
Accumulated impairment losses		-		-		(14,866,344	)		(14,866,344	)
	$	-	$	-	$	3,648,972		$	3,648,972

Amortizing Intangible Assets (net of amortization expense):

	Printing		Office Products and Furniture		Newspaper			Total

Balance as of October 31, 2011
Amortizing intangible assets (net of amortization expense)	$	564,698	$	1,028,246	$	12,236,592		$	13,829,536
Accumulated impairment losses		-		-		(9,051,484	)		(9,051,484	)
		564,698		1,028,246		3,185,108			4,778,052
Amortizing intangible assets acquired six months ended April 30, 2012		-		-		-			-
Impairment losses six months ended April 30, 2012		-		-		-			-
Amortization expense six months ended April 30, 2012		54,847		20,451		73,831			149,129
Balance at April 30, 2012
Amortizing intangible assets (net of amortization expense)		509,851		1,007,795		12,162,761			13,680,407
Accumulated impairment losses		-		-		(9,051,484	)		(9,051,484	)
	$	509,851	$	1,007,795	$	3,111,277		$	4,628,923

A summary of impairment charges is included in the table below:

		Six months end April 30,
		2012		2011

Goodwill	$	9,510,933	$	-
Other intangibles		-		-
Trademark & masthead		-		-
	$	9,510,933	$	-

- 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.

+ References+ Details