Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2013

NOTE D — GOODWILL AND INTANGIBLE ASSETS

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


	Year Ended December 31,
	2013							2012
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Goodwill	$	5,085	$	—		$	5,085	$	5,085	$	—		$	5,085
Indefinite-lived intangible assets:
Trade names		18,364		—			18,364		18,364		—			18,364
Finite-lived intangible assets:
Licenses		15,847		(7,551	)		8,296		15,847		(7,096	)		8,751
Trade names		10,056		(2,677	)		7,379		10,056		(1,800	)		8,256
Customer relationships		18,406		(2,736	)		15,670		18,406		(1,409	)		16,997
Patents		584		(229	)		355		584		(195	)		389

Total	$	68,342	$	(13,193	)	$	55,149	$	68,342	$	(10,500	)	$	57,842

The Company performed its 2013 annual impairment tests for its indefinite-lived intangible assets as of October 1, 2013. 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 average annual growth rate of 2.0%-3.5%. The result of the assessment of the Company’s indefinite-lived intangibles indicated that the fair values exceeded the carrying values as of October 1, 2013. In addition, as of October 1, 2013 and December 31, 2013, the Company assessed the carrying value of its goodwill and determined based on qualitative factors that no impairment existed.

During 2012, the Company’s home décor products line experienced a significant decline in sales. 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.

A summary of the activities related to the Company’s intangible assets for the year ended December 31, 2013 consists of the following (in thousands):


	Intangible Assets			Goodwill		Total Intangible Assets and Goodwill
Goodwill and Intangible Assets, December 31, 2011	$	44,264		$	2,673	$	46,937
Acquisition of trade names		3,940			—		3,940
Acquisition of customer relationships		7,240			—		7,240
Goodwill from F&F acquisition		—			2,412		2,412
Impairment of Elements^® trade name		(1,069	)		—		(1,069	)
Amortization		(1,618	)		—		(1,618	)

Goodwill and Intangible Assets, December 31, 2012		52,757			5,085		57,842
Amortization		(2,693	)		—		(2,693	)

Goodwill and Intangible Assets, December 31, 2013	$	50,064		$	5,085	$	55,149

The weighted-average amortization periods for the Company’s finite-lived intangible assets as of December 31, 2013 are as follows:


	Years
Trade names		15
Licenses		33
Customer relationships		14
Patents		17

Estimated amortization expense for each of the five succeeding fiscal years is as follows (in thousands):


Year ending December 31,
2014			2,692
2015			2,688
2016			2,685
2017			2,552
2018			2,552

Amortization expense for the years ended December 31, 2013, 2012 and 2011 was $2.7 million, $1.6 million and $0.8 million, respectively.

- 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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