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Acquisitions and Intangibles | 12 Months Ended
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Jan. 31, 2013
Acquisitions and Intangibles | NOTE D — ACQUISITIONS AND INTANGIBLES Acquisition of Vilebrequin In August 2012, the Company acquired all of the outstanding shares of Vilebrequin International SA, a Swiss corporation (“Vilebrequin”) for aggregate consideration consisting of (i) €70.5 million (approximately $87.6 million) in cash and (ii) €15.0 million (approximately $18.6 million) of unsecured promissory notes due December 31, 2017, with interest payable at the rate of 5% per year. In addition to the aggregate consideration paid at closing, the purchase agreement provides for contingent consideration of up to €22.5 million (approximately $27.9 million) based upon achieving certain performance objectives related to the growth of the Vilebrequin business over the three years ending December 31, 2015. At January 31, 2013, the estimated contingent consideration payable was $5.8 million. The dollar equivalents to the amounts in Euro set forth in the notes to these Consolidated Financial Statements are based on the exchange rate at the time of the acquisition (EURO equal to USD$1.242). Vilebrequin is a premier provider of status swimwear, resort wear and related accessories. Vilebrequin sells its products in over 50 countries around the world through a network of company owned and franchised specialty retail stores and shops, as well as through select wholesale distribution. The Company believes that Vilebrequin is capable of significant worldwide expansion. The total consideration was approximately $111.7 million, including the estimated fair value of the contingent consideration. The purchase price has been preliminarily allocated to the tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values, and is subject to adjustment when additional information concerning asset and liability valuations is finalized. The fair value of the contingent consideration is estimated as of the acquisition date based on the present value of the expected contingent payments, which are determined using weighted probabilities of possible payments. The preliminary allocation has resulted in goodwill and intangible assets in the aggregate amount of $101.0 million related to the acquisition of Vilebrequin. Such amounts could change upon finalization of the purchase accounting. The following table (in thousands) summarizes the components of the preliminary purchase price allocation for the acquisition of Vilebrequin:
Purchase price: |  |  |  |
Cash paid |  | $ | 87,573 |
Notes issued |  |  | 18,633 |
Fair value of contingent consideration |  |  | 5,452 |
|  | $ | 111,658 |
Allocation: |  |  |  |
Current assets |  | $ | 25,793 |
Property, plant and equipment |  |  | 5,724 |
Identifiable intangible assets |  |  | 68,847 |
Other non-current assets, net |  |  | 4,551 |
Assumed liabilities |  |  | (12,938 | )
Deferred income taxes |  |  | (12,515 | )
Goodwill |  |  | 32,196 |
|  | $ | 111,658 |
The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management using unobservable inputs reflecting the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available. The fair values of these identifiable intangible assets were determined using the discounted cash flow method and the Company classifies these intangibles as Level 3 fair value measurements. Identifiable intangible assets acquired include trademarks valued at $58.6 million with an indefinite life, franchise agreements valued at $7.4 million with an estimated useful life of 14 years, and customer relationships valued at $2.6 million with an estimated useful life of 8 years. The goodwill represents the future economic benefits expected to arise that could not be individually identified and separately recognized, including use of our existing infrastructure to expand sales of Vilebrequin products. The following unaudited pro forma information presents the results of operations of the Company as if the Vilebrequin acquisition had taken place on February 1, 2011:
|  | Year Ended January 31, |
|  | 2013 |  |  | 2012 |
|  | (In thousands, except per share amounts) |
Net sales |  | $ | 1,434,784 |  |  | $ | 1,294,161 |
Net income |  | $ | 59,105 |  |  | $ | 54,465 |
Net income per share: |  |  |  |  |  |  |  |
Basic |  | $ | 2.95 |  |  | $ | 2.75 |
Diluted |  | $ | 2.91 |  |  | $ | 2.70 |
The unaudited pro forma results shown above reflect the assumption that the Company would have financed the acquisition under identical terms and conditions as the actual financing and do not reflect any anticipated cost savings that may result from combining the entities. The unaudited pro forma results of operations have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the Vilebrequin acquisition occurred as of February 1, 2011. The operating results of Vilebrequin have been included in the Company’s financial statements since August 7, 2012, the date of acquisition, and are reported on a calendar year basis (as noted in Note A.1, Vilebrequin is presented in the consolidated financial statements on a one month lag). Net sales attributable to Vilebrequin since the date of acquisition through December 31, 2012 were $19.1 million. Intangible assets consist of:
|  |  |  | January 31, |
|  | Estimated Life |  | 2013 |  |  | 2012 |
|  |  |  | (In thousands) |
Gross carrying amounts |  |  |  |  |  |  |  |  |  |
Licenses |  | 14 years |  | $ | 20,432 |  |  | $ | 12,573 |
Trademarks |  | 8 - 12 years |  |  | 2,193 |  |  |  | 2,194 |
Customer relationships |  | 8 - 15 years |  |  | 8,620 |  |  |  | 5,900 |
Other |  | 3 - 10 years |  |  | 1,994 |  |  |  | 1,058 |
Subtotal |  |  |  |  | 33,239 |  |  |  | 21,725 |
Accumulated amortization |  |  |  |  |  |  |  |  |  |
Licenses |  |  |  |  | 12,798 |  |  |  | 12,533 |
Trademarks |  |  |  |  | 1,595 |  |  |  | 1,374 |
Customer relationships |  |  |  |  | 2,995 |  |  |  | 2,359 |
Other |  |  |  |  | 1,393 |  |  |  | 1,058 |
Subtotal |  |  |  |  | 18,781 |  |  |  | 17,324 |
Net |  |  |  |  |  |  |  |  |  |
Licenses |  |  |  |  | 7,634 |  |  |  | 40 |
Trademarks |  |  |  |  | 598 |  |  |  | 820 |
Customer relationships |  |  |  |  | 5,625 |  |  |  | 3,541 |
Other |  |  |  |  | 601 |  |  |  | — |
Subtotal |  |  |  |  | 14,458 |  |  |  | 4,401 |
Unamortized intangible assets |  |  |  |  |  |  |  |  |  |
Goodwill (Deductible for tax purposes) |  |  |  |  | 60,396 |  |  |  | 26,100 |
Trademarks |  |  |  |  | 75,464 |  |  |  | 13,210 |
Subtotal |  |  |  |  | 135,860 |  |  |  | 39,310 |
Total intangible assets, net |  |  |  | $ | 150,318 |  |  | $ | 43,711 |
Intangible amortization expense amounted to approximately $1.2 million, $0.9 million and $1.3 million for the years ended January 31, 2013, 2012 and 2011, respectively. The estimated intangible amortization expense for the next five years is as follows:
Year Ending January 31, |  | Amortization Expense |
|  | (In thousands) |
2014 |  | $ | 1,523 |
2015 |  |  | 1,523 |
2016 |  |  | 1,394 |
2017 |  |  | 1,350 |
2018 |  |  | 1,324 |
Goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method. The Company reviews and tests its goodwill and intangible assets with indefinite lives for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may be impaired. We perform our test in the fourth fiscal quarter of each year using a combination of a discounted cash flow analysis and a market approach. The discounted cash flow approach requires that certain assumptions and estimates be made regarding industry economic factors and future profitability. The market approach estimates the fair value based on comparisons with the market values and market multiples of earnings and revenues of similar public companies. Trademarks and customer relationships having finite lives are amortized over their estimated useful lives and measured for impairment when events or circumstances indicate that the carrying value may be impaired. Goodwill has been allocated to the reporting segments based upon the relative fair values of the licenses (licensed product segment) and trademarks (non-licensed product segment) acquired. For the year ended January 31, 2013, the carrying amount of goodwill was $26.1 million and $34.3 million in the licensed and non-licensed product segments, respectively, including $2.0 million in exchange differences arising during the period. For the year ended January 31, 2012, the carrying amount of goodwill was $26.1 million and was included in the licensed product segment.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1392-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1490-128463 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6927-128479 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1383-128463 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1486-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1500-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph F4 -Subparagraph e -Appendix F Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1497-128463 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479 + Details
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