Note E - Intangible Assets

12 Months Ended

Dec. 31, 2011

Intangible Assets Disclosure [Text Block]

NOTE E - INTANGIBLE ASSETS

Intangible assets as of December 31 consist of the following (in thousands):

	2011			2010
Goodwill	$	0		$	5,118
Trademarks		12,569			15,774
Less accumulated amortization		(1,087	)		(2,680	)
Total intangible assets	$	11,482		$	18,212

The change in the carrying amount of goodwill and intangible assets during year ended December 31, 2011 and 2010 was as follows (in thousands):

	2011			2010
Beginning Balance	$	18,212		$	15,259
Trademarks acquired (Note Q)		0			3,150
Goodwill acquired (Note Q)		0			539
Impairment losses – trademarks (Note Q)		(3,150	)		0
Impairment losses – goodwill (Note Q)		(539	)		0
Impairment losses – K•Swiss goodwill		(2,986	)		0
Foreign currency translation effects		(55	)		(736	)
Ending Balance	$	11,482		$	18,212

During the year ended December 31, 2010, the Company acquired trademarks of $3,150,000 and goodwill of $539,000 as a result of the acquisition of Form Athletics.  During the second quarter of 2011, after a review of sales, backlog, cash flows and marketing strategy, the Company determined that its investment in the Form Athletics goodwill and trademarks was impaired.  As a result, the Company evaluated the future discounted net cash flows and recognized impairment losses of $3,689,000, which represents a 100% impairment of the Form Athletics goodwill and trademarks, for the year ended December 31, 2011.  During the third quarter of 2011, the Company decided to no longer pursue operating the Form Athletics line of business, see discussion in Note Q.

Goodwill impairment of $2,986,000 was recognized on the K•Swiss brand for 2011.  During the latter part of 2011 the Company experienced a significant decline in its market capitalization due to a decline in the stock price.  As such, the implied fair value of goodwill was less than the carrying amount of goodwill and it was determined that goodwill was fully impaired.

The Company has performed the annual reassessment and impairment test as of October 1, 2011 of its Palladium intangible assets related to trademarks and determined there was no impairment of its intangible assets.

Other than goodwill, the Company’s other significant intangible assets are its trademarks.  The Company’s trademark registrations are renewable every 10 years for minimal cost.  The Company continually renews its trademark registrations and evidence supports it has the ability to continue to do so.  The Company believes that its trademarks have an indefinite useful life because it intends to renew its trademarks indefinitely.