Note E - Intangible Assets

12 Months Ended

Dec. 31, 2012

Intangible Assets Disclosure [Text Block]

NOTE E - INTANGIBLE ASSETS

Intangible assets at December 31 were as follows (in thousands):

	2012			2011
Trademarks	$	12,649		$	12,569
Less accumulated amortization		(1,087	)		(1,087	)
Total intangible assets	$	11,562		$	11,482

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

	2012		2011
Beginning Balance	$	11,482	$	18,212
Trademarks acquired		35		0
Impairment losses – trademarks (Note P)		0		(3,150	)
Impairment losses – goodwill (Note P)		0		(539	)
Impairment losses – K•Swiss goodwill		0		(2,986	)
Foreign currency translation effects		45		(55	)
Ending Balance	$	11,562	$	11,482

During 2012, the Company purchased a foreign country trademark right which it did not own for the Palladium brand.

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 a full impairment loss of $3,689,000 on 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 P.

Goodwill impairment of $2,986,000 was recognized on the K•Swiss brand for the year ended December 31, 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, 2012 of its Palladium intangible assets related to trademarks and determined there was no impairment of its intangible assets.

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.