Acquired Intangible Assets and Goodwill

12 Months Ended

Oct. 31, 2011

Acquired Intangible Assets and Goodwill [Abstract]

11. Acquired Intangible Assets and Goodwill

	2011				2010
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Amortizable intangible assets:
Non-compete agreement	$	1,000,000	$	1,000,000	$	1,000,000	$	880,952
Customer relationships		2,451,073		904,837		2,451,073		782,739
Advertising and subscriber base		4,989,768		1,804,660		4,989,768		1,656,997
Other		564,946		518,238		564,946		489,738
		9,005,787		4,227,735		9,005,787		3,810,426

Unamortizable intangible assets:
Goodwill		13,475,533		507,278		15,839,561		507,278
Trademark and masthead		3,648,972		-		10,001,812		-
		17,124,505		507,278		25,841,373		507,278

Total goodwill and other intangibles	$	26,130,292	$	4,735,013	$	34,847,160	$	4,317,704

In connection with our annual impairment testing of goodwill and other intangible assets conducted in the fourth quarter of 2009, we recorded a charge of $41.1 million ($25.5 million, net of deferred tax benefit) for impairment of the value of the goodwill and other intangible assets, which resulted from the 2007 acquisition of The Herald-Dispatch daily newspaper in Huntington, WV. This charge resulted in impairment charges of trademark and masthead of $8.5 million, subscriber base asset of $2.2 million, advertiser base asset $6.8 million and goodwill $23.6 million. The associated deferred tax benefit of these charges approximated $15.6 million. There were no impairment charges as a result of our annual impairment testing in 2010.

In connection with our annual impairment testing of goodwill and other intangible assets conducted in the fourth quarter of 2011, we recorded a charge of $8.7 million ($5.4 million, net of deferred tax benefit) for impairment of the value of the goodwill and other intangible assets, which resulted from the 2007 acquisition of The Herald-Dispatch daily newspaper in Huntington, WV. This charge resulted in impairment charges of trademark and masthead of $6.3 million and goodwill of $2.4 million. The associated deferred tax benefit of these charges approximated $3.3 million. There were no impairment charges as a result of our annual impairment testing in 2010.

The Company determined that it should perform impairment testing of goodwill and intangible assets during the fourth quarter of 2011 and 2009, due, in part, to declines in our stock price, increased volatility in operating results and declines in market transactions in the industry. The valuation methodology utilized to estimate the fair value of the newspaper operating segment was based on both the market and income approach. The implied fair values of goodwill and other intangibles for this reporting unit was less than the carrying amount for both 2011 and 2009 based on the analysis by the Company and with assistance of third party valuation specialists, and therefore an impairment charge was taken. The Valuation Specialist considered three approaches to value referred to as the income approach, the market approach, and the cost approach. The income approach was based on a discounted cash flow methodology, in which expected future free net cash flows to invested capital are discounted to present value, using an appropriate after-tax weighted average cost of capital. The market approach using guideline company analysis weighs empirical evidence from shares of comparable companies sold in minority transactions on stock exchanges and merger and acquisition analysis, which analyses sales of newspapers in control transactions. The cost approach was not employed due to the fact it was not deemed relevant. The goodwill and other intangible assets will continue to be amortized for tax purposes over its remaining life in accordance with applicable internal revenue service standards.

During 2009, the U.S. recession had a negative impact on the Company's operations across multiple segment lines. The newspaper operating segment reflected lower operating revenues in both advertising and circulation. In response to this difficult operating environment the Company initiated a cost reduction plan and eliminated 24 employee positions, or approximately 15% of the workforce, at the Champion Publishing subsidiary.

The Company has other reporting units with Goodwill. The Company evaluated these reporting units during the fourth quarter of 2011 and 2010, and while the estimated fair value of these reporting units declined from 2008, the estimated carrying value of each of our other reporting units exceeded their carrying values in 2011 and 2010. As a result, no additional testing or impairment charges were necessary.

Amortization expense for the years ended October 31, 2011, 2010 and 2009 was $422,000, $450,000, and $1,034,000 respectively. A non-compete agreement is being amortized over a period of seven years and the customer relationships are being amortized over a period of 20 years. These items are both related to the acquisition of Syscan in 2004. The advertising and subscribers bases related to the acquisition of The Herald-Dispatch are being amortized over 25 and 20 years respectively. The trademark and masthead associated with the acquisition of The Herald-Dispatch are non-amortizing assets. The weighted average remaining life of the Company's amortizable intangible assets was approximately 17 years. Estimated amortization expense for each of the following years is:

2012	$	292,760
2013		287,261
2014		275,970
2015		269,761
2016		269,761
Thereafter		3,382,539
	$	4,778,052

The changes in the carrying amount of goodwill, trademark and masthead and other amortizing intangibles for the years ended October 31, 2011 and 2010 were:

Goodwill:

	Printing		Office Products and Furniture		Newspaper			Total

Balance as of October 31, 2009
Goodwill	$	2,226,837	$	1,230,485	$	35,437,456		$	38,894,778
Accumulated impairment losses		-		-		(23,562,495	)		(23,562,495	)
		2,226,837		1,230,485		11,874,961			15,332,283
Goodwill acquired Fiscal 2010		-		-		-			-
Impairment losses Fiscal 2010		-		-		-			-
Balance at October 31, 2010
Goodwill		2,226,837		1,230,485		35,437,456			38,894,778
Accumulated Impairment losses		-		-		(23,562,495	)		(23,562,495	)
		2,226,837		1,230,485		11,874,961			15,332,283
Goodwill acquired Fiscal 2011		-		-		-			-
Impairment losses Fiscal 2011		-		-		(2,364,028	)		(2,364,028	)
Balance at October 31, 2011
Goodwill		2,226,837		1,230,485		35,437,456			38,894,778
Accumulated Impairment Losses		-		-		(25,926,523	)		(25,926,523	)
	$	2,226,837	$	1,230,485	$	9,510,933		$	12,968,255

Trademark and Masthead:

	Printing		Office Products and Furniture		Newspaper			Total

Balance as of October 31, 2009
Trademark and Masthead	$	-	$	-	$	18,515,316		$	18,515,316
Accumulated impairment losses		-		-		(8,513,504	)		(8,513,504	)
		-		-		10,001,812			10,001,812
Trademark and Masthead acquired Fiscal 2010		-		-		-			-
Impairment losses Fiscal 2010		-		-		-			-
Balance at October 31, 2010
Trademark and Masthead		-		-		18,515,316			18,515,316
Accumulated Impairment losses		-		-		(8,513,504	)		(8,513,504	)
		-		-		10,001,812			10,001,812
Trademark and Masthead acquired Fiscal 2011		-		-		-			-
Impairment losses Fiscal 2011		-		-		(6,352,840	)		(6,352,840	)
Balance at October 31, 2011
Trademark and Masthead		-		-		18,515,316			18,515,316
Accumulated Impairment Losses		-		-		(14,866,344	)		(14,866,344	)
	$	-	$	-	$	3,648,972		$	3,648,972

Amortizing Intangible Assets (net of amortization expense):

	Printing		Office Products and Furniture		Newspaper			Total

Balance as of October 31, 2009
Amortizing Intangible Assets (net of amortization expense)	$	799,841	$	1,364,803	$	12,531,918		$	14,696,562
Accumulated impairment losses		-		-		(9,051,484	)		(9,051,484	)
		799,841		1,364,803		3,480,434			5,645,078
Amortizing Intangible Assets (net of amortization expense) acquired Fiscal 2010		-		-		-			-
Impairment losses Fiscal 2010		-		-		-			-
Amortization expense		125,862		176,195		147,660			449,717
Balance at October 31, 2010
Amortizing Intangible Assets (net of amortization expense)		673,979		1,188,608		12,384,258			14,246,845
Accumulated Impairment losses		-		-		(9,051,484	)		(9,051,484	)
		673,979		1,188,608		3,332,774			5,195,361
Amortizing Intangible Assets (net of amortization expense) acquired Fiscal 2011		-		-		-			-
Impairment losses Fiscal 2011		-		-		-			-
Amortization expense		109,281		160,362		147,666			417,309
Balance at October 31, 2011
Amortizing Intangible Assets (net of amortization expense)		564,698		1,028,246		12,236,592			13,829,536
Accumulated Impairment Losses		-		-		(9,051,484	)		(9,051,484	)
	$	564,698	$	1,028,246	$	3,185,108		$	4,778,052

A summary of impairment charges is included in the table below:

		2011		2010		2009

Goodwill	$	2,364,028	$	-	$	23,562,495
Other intangibles		-		-		9,051,484
Trademark & masthead		6,352,840		-		8,513,504
	$	8,716,868	$	-	$	41,127,483

- 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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