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Intangible Assets, Net and Goodwill | 6 Months Ended
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Dec. 31, 2012
Intangible Assets, Net and Goodwill | 6. Intangible Assets, Net and Goodwill Intangible assets, net balances, excluding goodwill, consisted of the following:
|  | December 31, 2012 |  |  | June 30, 2012 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Customer/publisher/advertiser relationships |  | $ | 37,049 |  |  | $ | (26,237 | ) |  | $ | 10,812 |  |  | $ | 37,045 |  |  | $ | (23,017 | ) |  | $ | 14,028 |
Content |  |  | 62,095 |  |  |  | (38,933 | ) |  |  | 23,162 |  |  |  | 62,076 |  |  |  | (34,430 | ) |  |  | 27,646 |
Website/trade/domain names |  |  | 31,622 |  |  |  | (15,202 | ) |  |  | 16,420 |  |  |  | 31,615 |  |  |  | (12,815 | ) |  |  | 18,800 |
Acquired technology and others |  |  | 36,411 |  |  |  | (25,079 | ) |  |  | 11,332 |  |  |  | 31,477 |  |  |  | (19,507 | ) |  |  | 11,970 |
|  | $ | 167,177 |  |  | $ | (105,451 | ) |  | $ | 61,726 |  |  | $ | 162,213 |  |  | $ | (89,769 | ) |  | $ | 72,444 |
Amortization of intangible assets was $8.8 million and $15.7 million in the three and six months ended December 31, 2012, respectively, and $6.2 million and $11.9 million in the three and six months ended December 31, 2011, respectively. The Company licensed certain patents for $4.9 million during the three months ended December 31, 2012, and these patents are recorded in other intangible assets, net on the condensed consolidated balance sheet. Based on the Company’s analysis, using a relief from royalty method, the Company determined that a portion of the license fee for these patents represents the cumulative cost relating to prior years. As such, the Company recorded $2.4 million as a charge to cost of revenue during the three months ended December 31, 2012. The remaining amount will be amortized over the remaining life of the patents, and $0.1 million was amortized during the three months ended December 31, 2012. Future amortization expense for the Company’s intangible assets as of December 31, 2012 was as follows (in thousands):
Year Ending June 30, |  | Amortization |
2013 (remaining six months) |  | $ | 11,192 |
2014 |  |  | 19,539 |
2015 |  |  | 12,343 |
2016 |  |  | 8,779 |
2017 |  |  | 6,060 |
Thereafter |  |  | 3,813 |
|  | $ | 61,726 |
The change in the carrying amount of goodwill for the Company’s Direct Marketing Services (DMS) and Direct Selling Services (DSS) segments, discussed in Note 11, for the six months ended December 31, 2012 was as follows (in thousands):
|  | DMS |  |  | DSS |  |  | Total |
Balance at June 30, 2012 |  | $ | 241,818 |  |  | $ | 1,231 |  |  | $ | 243,049 |
Additions |  |  | — |  |  |  | — |  |  |  | — |
Impairment |  |  | (92,350 | ) |  |  | — |  |  |  | (92,350 | )
Other |  |  | (267 | ) |  |  | — |  |  |  | (267 | )
Balance at December 31, 2012 |  | $ | 149,201 |  |  | $ | 1,231 |  |  | $ | 150,432 |
In the six months ended December 31, 2012, there were no additions to goodwill as the Company did not complete any acquisitions during such period. Any change in goodwill amounts resulting from foreign currency translation are presented as “Other” in the above table. Goodwill is tested for impairment at the reporting unit level on an annual basis and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows and determining appropriate discount rates, growth rates, an appropriate control premium and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit which could trigger impairment. The Company has determined that DMS and DSS constitute two separate reporting units. The Company performs its annual goodwill impairment review during its fourth fiscal quarter or when indicators of impairment arise. The Company’s public market capitalization sustained a decline after December 31, 2012, to a value below the net book carrying value of the Company’s equity. As a result, the Company determined that this triggered the necessity to conduct an interim goodwill impairment test. The Company first tested the long-lived assets related to the DMS reporting unit as of December 31, 2012 and, based on the undiscounted cash flows, determined that these assets were not impaired. A two-step process was then required to test goodwill impairment. The first step is to determine if there is an indication of impairment by comparing the estimated fair value to its carrying value including goodwill. Goodwill is considered impaired if the carrying value exceeds the estimated fair value. Upon indication of impairment, a second step is performed to determine the amount of the impairment by comparing the implied fair value of the reporting unit’s goodwill with its carrying value. To estimate the fair value for step one, the Company utilized a combination of income and market approaches evenly weighted to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit’s estimated cost of equity and debt (“cost of capital”) derived using, both known and estimated, customary market metrics. The Company performed sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected peer companies; evaluated and adjusted, if necessary, based on the Company’s strengths and weaknesses relative to the selected peer companies; and applied to the appropriate historical and/or projected operating data to arrive at a fair value. The Company completed step one of the impairment analysis for each of its reporting units and concluded that as of December 31, 2012, the fair value of its DMS reporting unit was below its carrying value, including goodwill. As such, step two of the impairment test was initiated. The Company was unable to complete the step two analysis prior to filing its condensed consolidated financial statements for the three months ended December 31, 2012, in this quarterly report due to the time consuming nature of such analysis and the complexities of determining the implied fair value of goodwill for the DMS reporting unit, but based on the work performed as of the filing date, the Company recorded an estimated goodwill impairment charge of $92.4 million in the financial statements as of and for the three and six months ended December 31, 2012. Any material difference between this estimate and the final amount determined in the step two evaluation, either positive or negative, will be recorded in the third quarter of fiscal 2013.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7658586&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7658586&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7658586&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 142 -Paragraph 42, 43, 44, 45, 46, 47 -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 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=14024403&loc=d3e13854-109267 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=14024403&loc=d3e13816-109267 + Details
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