Crown Crafts, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Goodwill, Customer Relationships and Other Intangible Assets

Note 4 - Goodwill, Customer Relationships and Other Intangible Assets

3 Months Ended

Jul. 01, 2012

Goodwill and Intangible Assets Disclosure [Text Block]

Note 4 – Goodwill, Customer Relationships and Other Intangible Assets

Goodwill: The Company reported goodwill of $1.1 million at July 1, 2012 and April 1, 2012. The Company tests the fair value of the goodwill, if any, within its reporting units annually as of the first day of the Company’s fiscal year. An additional interim impairment test is performed during the year whenever an event or change in circumstances occurs that suggests that the fair value of the goodwill of either of the reporting units of the Company has more likely than not (defined as having a likelihood of greater than 50%) fallen below its carrying value. The annual or interim impairment test is performed by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If such qualitative factors so indicate, then the impairment test is continued in a two-step approach. The first step is the estimation of the fair value of each reporting unit to ensure that its fair value exceeds its carrying value. If step one indicates that a potential impairment exists, then the second step is performed to measure the amount of an impairment charge, if any. In the second step, these estimated fair values are used as the hypothetical purchase price for the reporting units, and an allocation of such hypothetical purchase price is made to the identifiable tangible and intangible assets and assigned liabilities of the reporting units. The impairment charge is calculated as the amount, if any, by which the carrying value of the goodwill exceeds the implied amount of goodwill that results from this hypothetical purchase price allocation.

The annual impairment test of the fair value of the goodwill of the reporting units of the Company was performed as of April 2, 2012, and the Company concluded that the fair value of the goodwill of the Company’s reporting units substantially exceeded their carrying values as of that date.

Other Intangible Assets: Other intangible assets at July 1, 2012 consisted primarily of the capitalized costs of recent acquisitions, other than tangible assets, goodwill and assumed liabilities. The carrying amount and accumulated amortization of the Company’s other intangible assets as of July 1, 2012, their estimated useful life, the amortization expense for the three months ended July 1, 2012 and July 3, 2011 and the classification of such amortization expense within the accompanying consolidated statements of income are as follows (in thousands):

			Estimated			Amortization Expense
	Carrying		Useful	Accumulated		Three-Month Periods Ended
	Amount		Life	Amortization		July 1, 2012		July 3, 2011

Kimberly Grant Acquisition on December 29, 2006:
Tradename	$	466	15 years	$	171	$	8	$	8
Existing designs		36	1 year		36		-		-
Non-compete covenant		98	15 years		36		2		2
Total Kimberly Grant Acquisition		600	14 years *		243		10		10

Springs Baby Products Acquisition on November 5, 2007:
Licenses & existing designs		1,655	2 years		1,655		-		-
Licenses & future designs		1,847	4 years		1,847		-		115
Non-compete covenant		115	4 years		115		-		7
Customer relationships		3,781	10 years		1,764		94		95
Total Springs Baby Acquisition		7,398	7 years *		5,381		94		217

Neat Solutions Acquisition on July 2, 2009:
Trademarks		892	15 years		179		15		15
Designs		33	4 years		25		2		2
Non-compete covenant		241	5 years		144		12		12
Customer relationships		1,302	16 years		244		21		20
Total Neat Solutions Acquisition		2,468	14 years *		592		50		49

Bibsters® Acquistion on May 27, 2010:
Trademarks		629	15 years		87		10		10
Patents		553	10 years		115		14		14
Customer relationships		328	14 years		49		6		6
Total Bibsters® Acquistion		1,510	13 years *		251		30		30
Internally developed intangible assets		547	20 years		17		3		2
Total other intangible assets	$	12,523		$	6,484	$	187	$	308

* Weighted-Average

Classification within the accompanying consolidated statements of income:
Cost of products sold						$	16	$	138
Marketing and administrative expenses							171		170
Total amortization expense						$	187	$	308

- 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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