Goodwill And Other Intangibles

11 Months Ended

Dec. 31, 2011

Goodwill And Other Intangibles [Abstract]

Note 9. Goodwill and Other Intangibles

Goodwill is subject to an assessment for impairment using a two-step fair value-based test and, as such, other intangibles are also subject to impairment reviews, which must be performed at least annually or more frequently if events or circumstances indicate that goodwill or other indefinite- lived intangibles might be impaired.

In the second quarter of the year ended January 31, 2010, the ViSalus business, within the Direct Selling segment, revised downward its revenues forecast for the current fiscal year as a result of lower demand for its product reflecting lower consumer spending attributed to the domestic economic recession and a higher than anticipated attrition rate in its promoter base. These factors together required management to focus its efforts on stabilizing its promoter base and curtailing its international expansion plans. Accordingly, management reduced its short-term and long-term forecasts in response to the weakening demand for its products. The impairment analysis performed indicated that the goodwill in ViSalus was fully impaired, as its fair value was less than its carrying value, including goodwill. Accordingly, the Company recorded a non-cash pre-tax goodwill impairment charge of $13.2 million, during the second quarter of the year ended January 31, 2010.

The gross value of goodwill was $15.5 million in the Direct Selling segment. As of December and January 31, 2011, the carrying amount of the Company's goodwill within the Direct Selling segment was $2.3 million.

Other intangible assets include indefinite-lived trade names and trademarks and customer relationships related to the Company's acquisition of Miles Kimball, Walter Drake and As We Change, which are reported in the Catalog and Internet segment; and other intangible assets of ViSalus, which is reported in the Direct Selling segment.

In connection with the ViSalus goodwill impairment analysis performed for the second quarter of the year ended January 31, 2010, the Company also analyzed and recorded additional impairment charges totaling $3.1 million, for certain of the Company's trade names. This impairment was the result of a downward revision of its revenue forecast, lower consumer spending and higher than anticipated attrition rate in its distributor base.

During the year ended January 31, 2011, the Exposures brand under the Miles Kimball business, within the Catalog & Internet segment, experienced substantial declines in revenues when compared to its forecasts and prior years. The Company believes this shortfall in revenue was primarily attributable to decreased consumer spending, due to changes in the business environment and adverse economic conditions. As a result of the impairment analysis performed, the indefinite-lived trade name in this brand was determined to be partially impaired, as the fair value of this brand was less than its carrying value. Accordingly, the Company recorded a non-cash pre-tax impairment charge of $0.3 million resulting in a carrying value of $1.4 million.

During the eleven months ended December 31, 2011, The Home Marketplaces catalog under the Miles Kimball business, within the Catalog & Internet segment, was discontinued. Accordingly, the Company recorded a non-cash pre-tax impairment charge of $0.2 million to eliminate the carrying value of the intangible.

The indefinite-lived trade names and trademarks were valued at $8.5 million and $8.6 million as of December 31, 2011 and January 31, 2011, respectively. The Company does not amortize the indefinite-lived trade names and trademarks, but rather tests for impairment annually as of January 31, and upon the occurrence of a triggering event.

The gross value of all indefinite-lived trade names and trademarks by segment was $28.1 million in the Catalog & Internet segment and $4.2 million in the Direct Selling segment. The gross value of all customer relationships by segment was $15.4 million in the Catalog & Internet segment and $0.3 million in the Direct Selling segment.

Other intangible assets include the following:


		Direct Selling Segment		Catalog & Internet Segment					Total
				Indefinite-lived trade					Indefinite-lived trade
		Indefinite-lived trade names and		names and		Customer			names and		Customer
(In thousands)		trademarks		trademarks		relationships			trademarks		relationships
Other intangibles at January 31, 2010	$	1,100	$	7,850	$	3,226		$	8,950	$	3,226
Amortization		-		-		(1,084	)		-		(1,084	)
Impairments		-	(300)	-				(300)	-
Other intangibles at January 31, 2011	$	1,100	$	7,550	$	2,142		$	8,650	$	2,142
Amortization		-		-		(671	)		-		(671	)
Impairments		-	(150)	-				(150)	-
Other intangibles at December 31, 2011	$	1,100	$	7,400	$	1,471		$	8,500	$	1,471

Amortization expense is recorded on an accelerated basis over the estimated lives of the customer lists ranging from 5 to 12 years. For the eleven month period ended December 31, 2011 and the year ended January 31, 2011, amortization expense was $0.7 million and $1.1 million, respectively. Estimated amortization expense for the next four years, beginning with December 31, 2012 is as follows: $0.6 million, $0.6 million, $0.2 million and an insignificant amount to be amortized in 2015. The weighted average remaining life of the Company's customer lists was 2.7 years at December 31, 2011.

- 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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