Acquired Intangible Assets and Goodwill

12 Months Ended

Oct. 31, 2015

Acquired Intangible Assets and Goodwill [Abstract]

Note 9. Acquired Intangible Assets and Goodwill

	2015				2014
	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		1,393,228		2,451,073		1,271,130
Other		564,946		564,946		564,946		564,946
		4,016,019		2,958,174		4,016,019		2,836,076

Unamortizable intangible assets:
Goodwill		1,737,763		507,278		1,737,763		507,278
		1,737,763		507,278		1,737,763		507,278

Total goodwill and other intangibles	$	5,753,782	$	3,465,452	$	5,753,782	$	3,343,354

In the fourth quarter of 2015 the Company performed the two-step quantitative assessment as prescribed by ASC 350 to test its goodwill for impairment. Step 1 of the impairment test used a discounted cash flow model based on income of the office products and office furniture reporting unit to compare fair value to the unit’s carrying value. After consideration of the Step 1 results, the Company’s Management felt that the discounted cash flow model was not indicative of value that would be exchanged in an arm’s length transaction. Given this, Step 2 of the quantitative assessment was performed. Step 2 compares the implied fair value of the reporting unit to its carrying value to determine impairment using methods common in business combinations. After considering the results of Step 2, the Company’s management determined that no impairment of the office products and office furniture reporting unit’s goodwill existed at October 31, 2015.

The Company’s Management will continue to monitor this reporting unit’s performance and will test for impairment as warranted. Further declines in revenue and income could ultimately require impairment charges to be incurred that would be material to the Company’s financial position and results of operation to the extent of the carrying amount of goodwill.

During the first quarter of 2013, as part of a process of addressing the Company’s debt status with its Previous Secured Lenders as well as first quarter 2013 performance to 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 in the first quarter of 2013. The Step 2 test results were completed in the second quarter of 2013 with the assistance of a third party valuation specialist and supported the conclusion to record an impairment charge in the first quarter of 2013 of $2.2 million.

Subsequent reversal of previously recognized goodwill impairment losses is prohibited once the measurement of that loss is recognized, in accordance with applicable standards.

Amortization expense for the years ended October 31, 2015, 2014 and 2013 was $122,000, $128,000 and $140,000 respectively. Customer relationships related to the acquisition of Syscan in 2004 are being amortized over a period of 20 years. The weighted average remaining life of the Company's amortizable intangible assets was approximately 5 years at October 31, 2015. Estimated amortization expense for each of the following five years and thereafter is:

2016	$	122,098
2017		122,098
2018		122,098
2019		122,098
2020		122,098
Thereafter		447,355
	$	1,057,845

Amortizing Intangible Assets (net of amortization expense):

	Printing		Office Products and Furniture		Total

Balance at October 31, 2013:
Amortizing Intangible Assets (net of amortization expense)	$	442,317	$	865,932	$	1,308,249
Accumulated Impairment losses		-		-		-
		442,317		865,932		1,308,249
Amortizing Intangible Assets (net of amortization expense) acquired Fiscal 2014		-		-		-
Impairment losses Fiscal 2014		-		-		-
Amortization expense		47,111		81,195		128,306

Balance at October 31, 2014:
Amortizing Intangible Assets (net of amortization expense)		395,206		784,737		1,179,943
Accumulated Impairment Losses		-		-		-
		395,206		784,737		1,179,943
Amortizing intangible acquired in Fiscal 2015		-		-		-
Impairment losses Fiscal 2015		-		-		-
Amortization expense		40,903		81,195		122,098

Balance at October 31, 2015:
Amortizing intangible		354,303		703,542		1,057,845
Accumulated Impairment losses		-		-		-
	$	354,303	$	703,542	$	1,057,845

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

		2015		2014		2013

Goodwill	$	-	$	-	$	2,226,837
Other intangibles		-		-		-
	$	-	$	-	$	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