Intangible Assets and Goodwill

12 Months Ended

Oct. 31, 2011

Intangible Assets and Goodwill [Abstract]

Intangible Assets and Goodwill

Note 6 — Intangible Assets and Goodwill

A summary of intangible assets is as follows:

	October 31,
	2011							2010
In thousands	Gross Amount		Amorti- zation			Net Book Value		Gross Amount		Amorti- zation			Net Book Value
Amortizable trademarks	$	20,174	$	(9,782	)	$	10,392	$	19,752	$	(8,308	)	$	11,444
Amortizable licenses		14,380		(12,822	)		1,558		13,219		(10,465	)		2,754
Other amortizable intangibles		9,029		(5,987	)		3,042		8,386		(5,318	)		3,068
Non-amortizable trademarks		123,151		—			123,151		123,301		—			123,301
	$	166,734	$	(28,591	)	$	138,143	$	164,658	$	(24,091	)	$	140,567

The change in non-amortizable trademarks is due primarily to foreign currency exchange fluctuations. Other amortizable intangibles primarily include non-compete agreements, patents and customer relationships. These amortizable intangibles are amortized on a straight-line basis over their estimated useful lives. Certain trademarks and licenses will continue to be amortized using estimated useful lives of 10 to 25 years with no residual values. Intangible amortization expense for the fiscal years ended October 31, 2011, 2010 and 2009 was $3.0 million, $3.2 million and $3.2 million, respectively. Annual amortization expense, based on the Company’s amortizable intangible assets as of October 31, 2011, is estimated to be approximately $3.0 million in the fiscal year ending October 31, 2012, approximately $2.0 million in each of the fiscal years ending October 31, 2013 and October 31, 2014 and approximately $1.5 million in each of the fiscal years ending October 31, 2015 and October 31, 2016.

Due to the natural disasters that occurred throughout the Asia/Pacific region and their resulting impact on the Company’s business, the Company remeasured the value of its intangible assets in its Asia/Pacific segment in accordance with Accounting Standards Codification (“ASC”) 350. As a result, the Company noted that the carrying value of these assets was in excess of their estimated fair value, and therefore, the Company recorded related goodwill impairment charges of approximately $74.1 million during fiscal 2011. The fair value of assets was estimated using a combination of a discounted cash flow approach and market approach. The value implied by the test was affected by (1) a reduction in near-term future cash flows expected for the Asia/Pacific segment, (2) the discount rates which were applied to future cash flows, and (3) current market estimates of value. The projected future cash flows, discount rates applied and current estimates of market value have all been impacted by the aforementioned natural disasters that occurred throughout the Asia/Pacific region, contributing to the estimated decline in value. Goodwill in the Asia/Pacific segment arose primarily from the acquisition of the Company’s Australian and Japanese distributors in fiscal 2003, including subsequent earnout payments to the former owners of these businesses, and the acquisition of certain Australian retail store locations in fiscal 2005.

Goodwill recorded by the Company arose primarily from the acquisitions of Quiksilver Europe, Quiksilver Asia/Pacific and DC Shoes, Inc. (see note 14 for information on goodwill by segment). Goodwill decreased approximately $63.9 million during the fiscal year ended October 31, 2011, which was primarily due to the goodwill impairment charge of $74.1 million in the Asia/Pacific segment. This decrease was partially offset by an increase of approximately $4.6 million related to the effect of changes in foreign currency exchange rates and an increase of approximately $5.6 million related to acquisitions. For the fiscal years ended October 31, 2010 and 2009, goodwill decreased approximately $1.3 million and increased approximately $34.4 million, respectively, due to the effect of changes in foreign currency exchange rates.