Annual report pursuant to Section 13 and 15(d)

Intangible Assets

v2.4.1.9
Intangible Assets
12 Months Ended
Jan. 31, 2015
Intangible Assets [Abstract]  
Intangible Assets
Intangible Assets
Intangible assets in the accompanying consolidated balance sheets consisted of the following:
 
 
Weighted
Average
Life
(Years)
 
January 31, 2015
 
February 1, 2014
 
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  NBCU trademark license - second renewal
 
 
$

 
$

 
$
6,830,000

 
$
(6,830,000
)
  EVINE trademark
 
15
 
1,103,000

 
(18,000
)
 

 

Total finite-lived intangible assets
 
 
 
$
1,103,000

 
$
(18,000
)
 
$
6,830,000

 
$
(6,830,000
)
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  FCC broadcast license
 
 
 
$
12,000,000

 
 
 
$
12,000,000

 
 

The Company annually reviews its FCC television broadcast license for impairment in the fourth quarter, or more frequently if an impairment indicator is present. As of January 31, 2015 and as of February 1, 2014, the Company had an intangible FCC broadcasting license with a carrying value and fair value of $12,000,000 and $13,100,000, respectively. The Company estimates 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 Company also considers comparable asset market and sales data for recent comparable market transactions for standalone television broadcasting stations to assist in determining fair value.
During the Company's annual fiscal 2012 fair value assessment and utilizing independent market data, assumptions in the Company's discounted cash flow models reflected declines in independent television station industry revenues and operating margins due to television station rating declines and reduced advertising purchases on local broadcast television stations. As a result, cash flows from our discounted cash flow model did not support recovery of the asset's carrying value and the Company recorded an $11.1 million non-cash impairment charge in the fourth quarter of fiscal 2012. The discounted cash flow models utilize a range of assumptions including revenues, operating profit margin, projected capital expenditures and an unobservable discount rate of 9.5%-10.5%. The Company concluded that the inputs used in its intangible FCC broadcasting license valuation at January 31, 2015 are Level 3 inputs related to this valuation.
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 November 18, 2014, the Company entered into an asset purchase agreement with Dollars Per Minute, Inc., a Delaware corporation ("DPM") to purchase certain assets of DPM, including the EVINE Live trademark. As consideration for the purchase of this trademark, the Company issued 178,842 unregistered shares of our common stock, which represented an aggregate value of $1,044,000 based on the closing price of our common stock on November 13, 2014, $20,000 in cash consideration and incurred $39,000 in professional fees associated with acquiring the asset.
On January 31, 2014, ShopNBC and ShopNBC.com officially transitioned to the brand, ShopHQ and ShopHQ.com. 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 paid an additional $2,830,000 on May 15, 2013.
Amortization expense in fiscal 2014, fiscal 2013 and fiscal 2012 was $18,000, $3,997,000 and $3,879,000, respectively. As of February 1, 2014, the Company's trademark license agreement with NBCU was fully amortized.