Acquired Intangible Assets and Goodwill

3 Months Ended

Jan. 31, 2013

Acquired Intangible Assets and Goodwill [Abstract]

11. Acquired Intangible Assets and Goodwill

	January 31, 2013				October 31, 2012
	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	$	1,000,000
Customer relationships		2,451,073		1,057,460		2,451,073		1,026,935
Advertising and subscriber base		4,989,768		1,989,238		4,989,768		1,952,322
Other		564,946		545,611		564,946		541,236
		9,005,787		4,592,309		9,005,787		4,520,493

Unamortizable intangible assets:
Goodwill		1,307,267		76,782		3,964,600		507,278
Trademark and masthead		2,091,022		-		2,091,022		-
		3,398,289		76,782		6,055,622		507,278

Total goodwill and other intangibles	$	12,404,076	$	4,669,091	$	15,061,409	$	5,027,771

During the second quarter of 2013 as part of a process of addressing the Company's debt status with its secured lenders as well as First Quarter 2013 perfornance budget, the Company performed a comprehensive reassessment of its initial fiscal year 2013 budget. The Company as part of this process identified at least one customer in the printing segment from which it anticipated a substantial revenue decline in the second quarter of 2013 and beyond and associated profitability declines in 2013 and beyond. As a result of this process, it was determined that an impairment test between annual impairment tests was warranted for the printing segment as a result of the potential near term challenges facing the Company, anticipated customer specific revenue decreases and softness in the Company's core West Virginia market. The Company performed Step 1 of the Goodwill impairment test for the printing segment with the assistance of a third party valuation specialist using the income approach and the testing indicated a value less than the carrying value of the segment at January 31, 2013.

As a result of the Step 1 test, the Company determined it was required to proceed to Step 2 of Goodwill Impairment testing for the printing segment. The Company believes that an impairment loss is probable and based on a preliminary estimate after consultation with a third party valuation specialist, the Company recognized an impairment charge of the remaining goodwill of $2.2 million associated with the printing segment. This measurement of impairment loss is an estimate as of January 31, 2013 and upon completion of the measurement of the impairment in accordance with the Step 2 requirements, the initial charge may reflect a modification of the initial impairment estimate upon completion of testing of the measurement of the impairment loss in the subsequent reporting period. Subsequent reversal of a previously recognized goodwill impairment loss is prohibited once the measurement of that loss is recognized, in accordance with applicable standards.

Amortization expense for the three months ended January 31, 2013 and 2012 was $71,816 and $74,564 respectively. Customer relationships are being amortized over a period of 20 years, 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 16 years.

Estimated amortization expense for each of the following years is:

2013	$	215,445
2014		275,970
2015		269,761
2016		269,761
2017		269,761
Thereafter		3,112,780
	$	4,413,478

The changes in the carrying amount of goodwill, trademark and masthead and other amortizing intangibles for the three months ended January 31, 2013 were:

Goodwill:

	Printing			Office Products and Furniture		Newspaper			Total

Balance at October 31, 2012
Goodwill	$	2,226,837			1,230,485		35,437,456			38,894,778
Accumulated impairment losses		-			-		(35,437,456	)		(35,437,456	)
		2,226,837		$	1,230,485	$	-		$	3,457,322

Goodwill acquired three months ended January 31, 2013		-			-		-			-
Impairment losses three months ended January 31, 2013		(2,226,837	)		-		-			(2,226,837	)

Balance at January 31, 2013
Goodwill		2,226,837			1,230,485		35,437,456			38,894,778
Accumulated impairment losses		(2,226,837	)		-		(35,437,456	)		(37,664,293	)
	$	-		$	1,230,485	$	-		$	1,230,485

Trademark and Masthead:

	Printing		Office Products and Furniture		Newspaper			Total

Balance at October 31, 2012
Trademark and masthead	$	-	$	-	$	18,515,316		$	18,515,316
Accumulated impairment losses		-		-		(16,424,294	)		(16,424,294	)
		-		-		2,091,022			2,091,022

Trademark & masthead acquired three months ended January 31, 2013		-		-		-			-
Impairment losses three months ended January 31, 2013		-		-		-			-

Balance at January 31, 2013
Trademark & masthead		-		-		18,515,316			18,515,316
Accumulated impairment losses		-		-		(16,424,294	)		(16,424,294	)
	$	-	$	-	$	2,091,022		$	2,091,022

Amortizing Intangible Assets (net of amortization expense):

	Printing		Office Products and Furniture		Newspaper			Total

Balance at October 31, 2012
Amortizing intangible		500,721		947,127		12,088,930			13,536,778
Accumulated impairment losses		-		-		(9,051,484	)		(9,051,484	)
	$	500,721	$	947,127	$	3,037,446		$	4,485,294

Amortizing intangible acquired three months ended January 31, 2013		-		-		-			-
Impairment losses three months ended January 31, 2013		-		-		-			-
Amortization expense		14,601		20,299		36,916			71,816

Balance at January 31, 2013
Amortizing intangible		486,120		926,828		12,052,014			13,464,962
Accumulated impairment losses		-		-		(9,051,484	)		(9,051,484	)
	$	486,120	$	926,828	$	3,000,530		$	4,413,478

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

	Three Months Ended January 31,
	2013		2012

Goodwill	$	2,226,837	$	-
Other intangibles		-		-
Trademark & masthead		-		-
	$	2,226,837	$	-

- 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.

+ References+ Details