Goodwill and Identifiable Intangible Assets

12 Months Ended

Nov. 03, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identifiable Intangible Assets

Goodwill

The Company's annual measurement date for its goodwill impairment test is the first day of its fourth quarter. The Company also tests for impairment if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. As discussed in Note 1, the Company reorganized its reportable segments in the third quarter of 2012. This realignment had no impact on the classification of goodwill at the reporting unit level.

The assumptions, inputs and judgments used in performing the valuation analysis are inherently subjective and reflect estimates based on known facts and circumstances at the time the Company performs the valuation. These estimates and assumptions primarily include, but are not limited to, the discount rate, terminal growth rate, EBITDA (earnings before interest, taxes, depreciation and amortization) and capital expenditure forecasts. The use of different assumptions, inputs and judgments or changes in circumstances could materially affect the results of the valuation. Due to the inherent uncertainty involved in making these estimates, actual results could differ from the Company's estimates. The following is a description of the valuation methodologies the Company used to derive and test the reasonableness of the fair value of the reporting units:

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Income approach: To determine fair value, the Company discounted the expected cash flows of the reporting units. The Company calculated expected cash flows using forecasted annual revenue growth rates between approximately 3% - 14% for each reporting unit over the next five years. The Company used discount rates between approximately 13% - 14%, which represent the estimated weighted average cost of capital and reflect the overall level of inherent risk involved in the respective operations and the rate of return expected by market participants. To estimate cash flows beyond the final year of the forecast of five years, the Company used terminal growth rates of between approximately 2% - 3% and incorporated the present value of the resulting terminal value into its estimate of fair value.

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Guideline public company multiples: The Company used the guideline public company method to select reasonably similar/guideline publicly traded companies for each of the Company's reporting units. Using the guideline public company method, the Company calculated EBITDA multiples for each of the public companies using both historical and forecasted EBITDA figures. By applying these multiples to the appropriate historical and forecasted EBITDA figures for each reporting unit, fair value estimates were calculated.

The Company weighted the discounted cash flow method by 100% in the valuation of each reporting unit and relied upon fair value estimates for each reporting unit using the public company and transaction multiples to test the reasonableness of the fair value estimates under the discounted cash flow method.

In the fourth quarter of 2012, the Company concluded that the fair value of its Packaging Technologies reporting unit requires no impairment. Packaging Technologies has a goodwill balance of $47,466 and is the only reporting unit with a goodwill balance as of fiscal year-end 2012. Packaging Technologies fair value exceeded its carrying amount of total assets by approximately 12%. The fair value is based on growth assumptions and certain market conditions which may differ from actual results and potentially have a negative effect on the fair value estimate. In the fourth quarter of 2011, the Company concluded that the fair value of its Custom Sheet and Rollstock reporting unit was significantly below its carrying amount and that all of this reporting unit's goodwill was impaired. The $40,455 impairment was caused by a lower aggregate market capitalization as well as lower 2011 earnings for this business. The Company's estimated goodwill fair value of zero for this business was based upon third-party valuations and internal estimates of discounted cash flows. In the fourth quarter of 2010, the Company concluded that the fair value of goodwill in its Packaging Technologies and Color and Specialty Compounds reporting units were significantly below their carrying amounts and recorded goodwill impairments of $44,800 and $11,349, respectively. The impairments were caused by lower earnings in these businesses and a difference between the Company's enterprise value and book value. The Company measured the impairments based upon a third-party valuations and internal estimates of discounted cash flows. Changes in the carrying amount of goodwill for the years ended November 3, 2012 and October 29, 2011 are as follows:



	Custom Sheet and Rollstock			Packaging Technologies		Color and Specialty Compounds		Total
Goodwill balance as of October 30, 2010	$	40,455		$	47,466	$	—	$	87,921
Impairment	(40,455		)	—		—		(40,455		)
Goodwill balance as of October 29, 2011	—			47,466		—		47,466
Impairment	—			—		—		—
Goodwill balance as of November 3, 2012	$	—		$	47,466	$	—	$	47,466

Identifiable Intangible Assets

As of November 3, 2012 and October 29, 2011, the Company had amortizable intangible assets as follows:



	2012							2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer contracts / relationships	$	5,460	$	(3,395	)	$	2,065	$	5,460	$	(2,975	)	$	2,485
Product formulations / trademarks	19,943		(10,826		)	9,117		19,943		(9,556		)	10,387
	$	25,403	$	(14,221	)	$	11,182	$	25,403	$	(12,531	)	$	12,872

Amortization expense for intangible assets totaled $1,689, $1,689 and $3,774 in 2012, 2011 and 2010, respectively. Amortization expense for amortizable intangible assets over the next five years is estimated to be:



Year Ended	Intangible Amortization
2013	$	1,689
2014	1,677
2015	1,546
2016	1,546
2017	1,239
Thereafter	3,485
	$	11,182

The Company performs annual impairment analyses pursuant to ASC 360, Property, Plant, and Equipment, for certain other intangible assets that had indications that the carrying amount may not be recoverable. Based on the Company's impairment analyses using the expected present value of future cash flows, the Company determined that certain intangible assets were either fully or partially impaired in 2010. Accordingly, the Company recorded $10,013 of impairments to write down these intangible assets to fair value in 2010. Intangible asset impairments of $204, $7,020, and $2,789 were recorded in the Custom Sheet and Rollstock, Packaging Technologies, and Color and Specialty Compounds segments, respectively.

- 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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