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Intangible Assets
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Feb. 02, 2013
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| Intangible Assets |
Intangible Assets
Intangible assets in the accompanying consolidated balance sheets consisted of the following:
The Company annually reviews its FCC television broadcast license for impairment in the fourth quarter, or more frequently if an impairment indicator is present. The Company estimated the fair value of its FCC television broadcast license primarily by using income-based discounted cash flow models with the assistance of an independent outside fair value consultant. The discounted cash flow models utilize a range of assumptions including revenues, operating profit margin, projected capital expenditures and a discount rate. Utilizing independent market data, assumptions in our discounted cash flow models reflect declines in independent television station industry revenues and operating margins resulting from television station rating declines and reduced advertising purchases on local broadcast television stations. These changes in assumptions resulted in cash flows that did not support recovery of the $23.1 million asset carrying value. As a result, the Company recorded an $11.1 million non-cash impairment charge in the fourth quarter of fiscal 2012 to reduce the asset carrying value to fair value which is reflected in the caption "FCC license impairment" in the accompanying consolidated statement of operations. The Company also considered recent comparable asset market data and the depressed sales levels for recent comparable market transactions for standalone television broadcasting stations to assist in determining fair value.
While the Company believes that its estimates and assumptions regarding the valuation of the license are reasonable, different assumptions or future events could materially affect its valuation. In addition, due to the illiquid nature of this asset, the Company's valuation for this license could be materially different if it were to decide to sell it in the short term which, upon revaluation, could result in a future impairment of this asset.
On May 11, 2012, the Company amended its trademark license agreement for the use of the ShopNBC brand name with NBCU, extending the term of the license agreement through January 2014. As consideration for the amendment, the Company paid NBCU $4,000,000 upon execution and will pay an additional $2,830,000 on May 15, 2013, which is included in accrued liabilities in the accompanying February 2, 2013 consolidated balance sheet. NBCU also has the right to terminate the trademark license agreement if the Company were to be in default on its Credit Facility (as defined below), unless waived or cured within 90 days of default, or if unrestricted cash plus credit availability on the facility were to fall below $8 million. On May 16, 2011, the Company issued 689,655 shares of the Company's common stock as consideration for a one year renewal of the same trademark license agreement. Shares issued were valued at $6.04 per share, representing the fair market value of the Company's stock on the date of issuance.
Amortization expense in fiscal 2012, fiscal 2011 and fiscal 2010 was $4,048,000, $3,879,000 and $3,226,000, respectively. Estimated amortization expense for fiscal 2013 will be approximately $3,997,000.
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