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Intangible Assets
 9 Months Ended
Sep. 30, 2012
Intangible Assets

NOTE C — INTANGIBLE ASSETS

The Company’s intangible assets, all of which are included in the Wholesale segment, consist of the following (in thousands):

 

     September 30, 2012      December 31, 2011  
            Accumulated                   Accumulated        
     Gross      Amortization     Net      Gross      Amortization     Net  

Goodwill

    $ 2,673       $ —        $ 2,673       $ 2,673       $ —        $ 2,673   

Indefinite-lived intangible assets:

                

Trade names

      18,364         —          18,364         19,433         —          19,433   

Finite-lived intangible assets:

                

Licenses

      15,847         (6,982 )      8,865         15,847         (6,641 )      9,206   

Trade names

      6,116         (1,693 )      4,423         6,116         (1,400 )      4,716   

Customer relationships

      11,166         (1,221 )      9,945         11,166         (681 )      10,485   

Patents

      584         (186 )      398         584         (160 )      424   
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Total

    $ 54,750       $ (10,082 )    $ 44,668       $ 55,819       $ (8,882 )    $ 46,937   
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

 

A summary of the activities related to the Company’s intangible assets for the nine months ended September 30, 2012 consists of the following (in thousands):

 

Goodwill and Intangible Assets, December 31, 2011

    $ 46,937   

Impairment of trade name

      (1,069 ) 

Amortization

      (1,200 ) 
  

 

 

  

Goodwill and Intangible Assets, September 30, 2012

    $ 44,668   
  

 

 

  

The Company performed its 2012 annual impairment test for its goodwill and indefinite-lived intangible assets as of October 1, 2012. The test, which is required to be performed annually, involved the assessment of the fair market value of the Company’s indefinite-lived intangible assets based on Level 2 observable inputs, using a discounted cash flow approach, assuming a discount rate of 12.5%-14.0% and an annual growth rate of 2.0%-4.0%. The result of the assessment of the Company’s indefinite-lived intangibles indicated that the carrying amount of the Elements® trade name exceeded its fair value.

During the past twelve months, the Company’s home décor products category has experienced a significant decline in sales and profit. The Company believes the most significant factor was the reduction in retail space allocated to the category which has also contributed to pricing pressure. While the Company believes this market condition is not permanent, following a strategic review of the business, it has decided to re-brand a portion of the home décor products under the Mikasa® and Pfaltzgraff® trade names. As a result of these factors, the Company recorded an impairment charge of $1.1 million in its statement of operations in the third quarter of 2012 which reduced the book value of its Elements® trade name.