Goodwill and Intangible Assets

12 Months Ended

Sep. 30, 2014

10. Goodwill and Intangible Assets

The changes in the carrying amounts of goodwill by operating segment for the fiscal years 2013 and 2014 are as follows (in thousands):

	Sally Beauty Supply			Beauty Systems Group			Total
Balance at September 30, 2012	$	89,855		$	442,476		$	532,331
Acquisitions		501			5,047			5,548
Foreign currency translation		2,298			(1,899	)		399

Balance at September 30, 2013	$	92,654		$	445,624		$	538,278
Acquisitions		—			2,600			2,600
Foreign currency translation		(1,322	)		(3,215	)		(4,537	)

Balance at September 30, 2014	$	91,332		$	445,009		$	536,341

As described in Note 17, during the fiscal year 2013, $3.1 million of the increase in BSG's goodwill was attributable to the Company's acquisition of certain assets and business operations of Essential Salon Products, Inc. ("Essential Salon"), a professional-only distributor of beauty products operating in the northeastern region of the United States. The remaining increase in consolidated goodwill in the amount of $2.0 million was attributable to acquisitions which were not individually material and to purchase price adjustments.

The Company completed its annual assessment of goodwill for impairment during the quarter ended March 31, 2014. No impairment losses were recognized in the current or prior periods presented in connection with the Company's goodwill.

The Company also completed its annual assessment of intangible assets, other than goodwill and including indefinite-lived intangible assets, for impairment during the quarter ended March 31, 2014. No material impairment losses were recognized in the current or prior periods presented in connection with the Company's intangible assets.

The following table provides the carrying value for intangible assets with indefinite lives, excluding goodwill, and the gross carrying value and accumulated amortization for intangible assets subject to amortization by operating segment at September 30, 2014 and 2013 (in thousands):

	Sally Beauty Supply			Beauty Systems Group			Total
Balance at September 30, 2014:
Intangible assets with indefinite lives:
Trade names	$	21,882		$	27,471		$	49,353

Intangible assets subject to amortization:
Gross carrying amount		30,691			121,020			151,711
Accumulated amortization		(14,920	)		(71,400	)		(86,320	)

Net value		15,771			49,620			65,391

Total intangible assets, excluding goodwill, net	$	37,653		$	77,091		$	114,744


Balance at September 30, 2013:
Intangible assets with indefinite lives:
Trade names	$	27,968		$	27,465		$	55,433

Intangible assets subject to amortization:
Gross carrying amount		26,809			119,614			146,423
Accumulated amortization		(12,177	)		(59,582	)		(71,759	)

Net value		14,632			60,032			74,664

Total intangible assets, excluding goodwill, net	$	42,600		$	87,497		$	130,097

In connection with the Company's periodic review of its indefinite-lived intangible assets, including the Company's annual assessment of intangible assets for impairment, during the fiscal year ended September 30, 2014, a trade name of the Sally Beauty Supply segment with a gross book value of approximately $5.5 million was determined to now have a finite useful life. This change was driven by recent events and circumstances involving the underlying product line. In connection with the change, this intangible asset is being amortized prospectively over the estimated remaining useful life of the product line. Additionally, as described in Note 17, during the fiscal year ended September 30, 2013, intangible assets subject to amortization in the amount of $9.1 million were recorded by BSG in connection with the Company's acquisition of certain assets and business operations of Essential Salon and $4.0 million in connection with individually immaterial acquisitions completed in the year.

Amortization expense totaled $14.5 million, $12.8 million and $13.7 million for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. As of September 30, 2014, future amortization expense related to intangible assets subject to amortization is estimated to be as follows (in thousands):

Fiscal Year:
2015	$	14,021
2016		12,677
2017		10,613
2018		9,380
2019		7,961
Thereafter		10,739

	$	65,391

The weighted average amortization period remaining for intangible assets subject to amortization is approximately 5.9 years.

- 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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