Goodwill And Other Intangible Assets

9 Months Ended

Sep. 29, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

We had intangible assets with a net book value of $68.5 million and $75.0 million as of September 29, 2013 and December 30, 2012, respectively.

The following table reflects the components of intangible assets as of September 29, 2013 and December 30, 2012:



		September 29, 2013				December 30, 2012
(amounts in thousands)	Amortizable Life (years)	Gross Amount		Gross Accumulated Amortization		Gross Amount		Gross Accumulated Amortization
Finite-lived intangible assets:
Customer lists	6 to 20	$	82,562	$	54,969	$	81,895	$	50,215
Trade name	1 to 30	30,928		19,985		30,414		19,143
Patents, license agreements	3 to 14	61,319		53,228		60,682		50,826
Other	2 to 6	7,133		6,733		7,178		6,546
Total amortized finite-lived intangible assets		181,942		134,915		180,169		126,730

Indefinite-lived intangible assets:
Trade name		21,514		—		21,511		—
Total identifiable intangible assets		$	203,456	$	134,915	$	201,680	$	126,730

Amortization expense for the three and nine months ended September 29, 2013 was $2.2 million and $6.7 million, respectively.

Amortization expense for the three and nine months ended September 23, 2012 was $2.5 million and $7.6 million, respectively.

Estimated amortization expense for each of the five succeeding years is anticipated to be:



(amounts in thousands)
2013	⁽¹⁾	$	8,800
2014		$	8,311
2015		$	8,150
2016		$	7,888
2017		$	6,868


⁽¹⁾	The estimated amortization expense for the remainder of 2013 is anticipated to be $2.1 million.

Historically, we have reported our results of operations in three segments: Shrink Management Solutions (SMS), Apparel Labeling Solutions (ALS), and Retail Merchandising Solutions (RMS). During the third quarter of 2013, we adjusted the product allocation between our SMS and ALS segments, renamed the SMS segment Merchandise Availability Solutions (MAS) and began reporting our segments as: Merchandise Availability Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions.

The changes in the carrying amount of goodwill are as follows:



(amounts in thousands)	Merchandise Availability Solutions			Apparel Labeling Solutions			Retail Merchandising Solutions			Total
Balance as of December 25, 2011	$	161,811		$	62,584		$	61,708		$	286,103
Purchase accounting adjustment	—			1,624			—			1,624
Discontinued operations	(3,263		)	—			—			(3,263		)
Impairment losses	—			(64,437		)	(38,278		)	(102,715		)
Translation adjustments	483			229			280			992
Balance as of December 30, 2012	$	159,031		$	—		$	23,710		$	182,741
Segment reallocation	(2,116		)	2,116			—			—
Translation adjustments	1,202			—			502			1,704
Balance as of September 29, 2013	$	158,117		$	2,116		$	24,212		$	184,445

The following table reflects the components of goodwill as of September 29, 2013 and December 30, 2012:



	September 29, 2013						December 30, 2012
(amounts in thousands)	Gross Amount		Accumulated Impairment Losses		Goodwill, Net		Gross Amount		Accumulated Impairment Losses		Goodwill, Net
Merchandise Availability Solutions	$	206,207	$	48,090	$	158,117	$	208,835	$	49,804	$	159,031
Apparel Labeling Solutions	86,565		84,449		2,116		84,059		84,059		—
Retail Merchandising Solutions	136,665		112,453		24,212		133,707		109,997		23,710
Total goodwill	$	429,437	$	244,992	$	184,445	$	426,601	$	243,860	$	182,741

On January 28, 2011, we entered into a Master Purchase Agreement to acquire the equity and/or assets of the Shore to Shore businesses. The acquisition was settled on May 16, 2011 for approximately $78.7 million, net of cash acquired of $1.9 million and the assumption of debt of $4.2 million.

The purchase price included a payment to escrow of $17.5 million related to the 2010 performance of the acquired business. This amount is subject to adjustment pending final determination of the 2010 performance and could result in an additional purchase price payment of up to $6.3 million. We are currently involved in an arbitration process in order to require the seller to provide audited financial information related to the 2010 performance. When this information is received, the final adjustment to the purchase price will be recognized through earnings.

Acquisition costs incurred in connection with the transaction including legal and other arbitration-related costs, are recognized within acquisition costs in the Consolidated Statement of Operations and approximate $0.3 million and $0.7 million for the three and nine months ended September 29, 2013 and $17 thousand and $0.1 million for the three and nine months ended September 23, 2012.

We perform an assessment of goodwill by comparing each individual reporting unit’s carrying amount of net assets, including goodwill, to their fair value at least annually during the October month-end close and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. There were no impairment indicators in the third quarter of 2013.

During the second quarter of 2012, we experienced deterioration in revenues and gross margins in each of our segments. Due to the declines in operating results in our segments, a change in management, and a revised strategic focus, we determined that impairment triggering events had occurred and that an assessment of goodwill was warranted. This resulted in the Company's assessment that the carrying value of the Apparel Labeling Solutions reporting unit exceeded its fair value. The basis of the fair value was determined by projecting future cash flows using assumptions concerning future operating performance and economic conditions that may differ from actual cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from our market capitalization plus a suitable control premium at the date of the evaluation. The financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital that we use to determine our discount rate and through our stock price that we use to determine our market capitalization. As a result of our interim impairment test, a $64.4 million non-cash impairment charge was recorded as of June 24, 2012 in our Apparel Labeling Solutions segment. The goodwill impairment expense was due to the decline in estimated future Apparel Labeling Solutions cash flow impacted by our plan to refocus the business, coupled with recent declines in revenue and profitability. The impairment charge was recorded in goodwill impairment on the Consolidated Statement of Operations. While we currently believe that our projected results will not result in future impairment, a continued deterioration in results could trigger a future impairment in our reporting units.

- 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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