5. INTANGIBLES AND OTHER ASSETS

Intangibles and other assets consist of the following:

	VERSO PAPER				VERSO HOLDINGS
	December 31,				December 31,
(Dollars in thousands)	2011		2010		2011			2010
Amortizable intangible assets:
Customer relationships, net of accumulated amortization of $6.7 million
on December 31, 2011, and $5.7 million on December 31, 2010	$	6,620	$	7,570	$	6,620	$	7,570
Patents, net of accumulated amortization of $0.6 million on
December 31, 2011, and $0.5 million on December 31, 2010		526		641		526		641
Total amortizable intangible assets		7,146		8,211		7,146		8,211
Unamortizable intangible assets:
Trademarks		21,473		21,473		21,473		21,473
Other assets:
Financing costs, net of accumulated amortization of $17.8 million on
December 31, 2011, and $19.9 million on December 31, 2010, for
Verso Paper, and net of accumulated amortization of $16.1 million
on December 31, 2011, and $18.5 million on December 31, 2010,
for Verso Holdings		24,483		25,550		24,093		24,800
Deferred major repair		12,294		12,009		12,294		12,009
Deferred software cost, net of accumulated amortization of $0.8 million
on December 31, 2011, and December 31, 2010		725		414		725		414
Replacement parts, net		4,257		4,535		4,257		4,535
Loan to affiliate		-		-		23,305		23,305
Restricted cash		3,560		27,399		3,560		27,399
Other		6,097		5,204		6,097		5,204
Total other assets		51,416		75,111		74,331		97,666
Intangibles and other assets	$	80,035	$	104,795	$	102,950	$	127,350

Amounts reflected in depreciation, amortization, and depletion expense related to intangibles and other assets are as follows:

	Year Ended December 31,
(Dollars in thousands)	2011		2010		2009
Intangible amortization	$	1,065	$	1,265	$	1,415
Software amortization	$	483		940		1,880

The estimated future amortization expense for intangible assets over the next five years is as follows:

(Dollars in thousands)
2012	$	915
2013		815
2014		715
2015		615
2016		567

During the fiscal quarter ended September 30, 2011, based on a combination of factors, including the difficult market conditions which have resulted in a decline in customer demand and excess capacity in the coated paper markets and high raw material, energy, and distribution costs which have challenged the profitability of our products, we concluded that sufficient indicators existed to require us to perform an interim goodwill impairment analysis as of September 30, 2011. Based on Verso Paper’s deficit equity position, we were required to perform step two of the fair-value-based goodwill impairment analysis. Due to the complexities of the step two analysis which involves an allocation of the fair value, management was unable to make a good faith estimate of the impairment during the third quarter of 2011. During the fourth quarter of 2011, we completed the second step of the goodwill impairment test by comparing the fair value of the reporting unit to the fair value of its identifiable assets and liabilities to determine the implied fair value of goodwill. Upon finalizing our analysis, we determined that the carrying value of the ‘Coated’ reporting unit exceeded its fair value, and Verso Paper recognized a goodwill impairment loss of $18.7 million and Verso Holdings recognized a goodwill impairment charge of $10.5 million. The fair value of the reporting unit was estimated using the expected present value of the reporting unit’s future cash flows, public company trading multiples and comparable transaction multiples for recent industry transactions. Inputs into these methods use information that is not generally observable (level 3 inputs). The present value of our future cash flows was based on our estimates of future revenue, expected manufacturing and operating costs including changes in working capital and capital expenditures. These assumptions were determined by management utilizing our internal operating plan, growth rates for revenues and operating expenses and margin assumptions. An additional key assumption under this approach is the discount rate, which was derived from our analysis of the weighted average cost of capital of representative public companies. Public company trading multiples and comparable recent transaction multiples are based on information derived from public company data and business acquisitions that would be considered representative of the industry. The results of these methods are weighted based on management’s evaluation of the relevance of each approach, with the income approach receiving the greatest weighting. Also as part of the second step of the goodwill impairment test, we estimated the fair value of the identifiable assets and liabilities of the reporting unit, which involves the use of unobservable inputs. The more significant estimates relate to machinery and equipment and identifiable intangible assets. The fair value of machinery and equipment was developed based on estimated replacement cost less depreciation factors for deterioration. Fair values of the identifiable intangible assets include our customer relationship assets and trade names and are based on future cash flows attributed to these assets discounted to their present value.

We may also be required to periodically measure certain other assets at fair value on a nonrecurring basis, including long-lived assets and other intangible assets. During the year ended December 31, 2011, we did not record any impairment charges on long-lived assets or other intangible assets as no significant events occurred requiring non-financial assets and liabilities, other than goodwill, to be measured at fair value (subsequent to initial recognition). During the years ended December 31, 2010 and 2009, we did not record any impairment charges on long-lived assets, goodwill, or other intangible assets as no significant events requiring non-financial assets and liabilities to be measured at fair value occurred.