Build-A-Bear Workshop 2012 Annual Report Download - page 62

BUILD-A-BEAR WORKSHOP, INC. 2012 FORM 10-K
Notes to Consolidated Financial Statements (continued)
termination charges, severance charges and other charges.
The Company recorded asset impairment charges of
$0.4 million in the fourth quarter of fiscal 2011 and
$0.6 million in the fourth quarter of fiscal 2010.
(5) GOODWILL
Goodwill is accounted for in accordance with ASC
Section 350-20 and is reported as a component of the
Company’s Retail segment. The following table summarizes
the Company’s goodwill (in thousands):
Balance as of January 1, 2011 $32,407
Effect of foreign currency translation (101)
Balance as of December 31, 2011 32,306
Effect of foreign currency translation 1,364
Impairment (33,670)
Balance as of December 29, 2012 $—
Due primarily to the decline in the market value of the
Company’s share price at the impairment testing date of
December 29, 2012, the fair value related to the UK
reporting unit was less than its carrying amount which resulted
in an impairment charge of $33.7 million. This represented
the entire balance of the Company’s goodwill.
There was no tax-deductible goodwill as of
December 29, 2012 or December 31, 2011.
(6) OTHER INTANGIBLE ASSETS
Other intangible assets consist of the following (in thousands):
2012 2011
Trademarks and other intellectual property $12,151 $11,516
Less accumulated amortization 11,518 10,861
Total, net $ 633 $ 655
Trademarks and intellectual property are amortized over
three years. Amortization expense related to trademarks and
intellectual property was $0.7 million, $0.9 million and
$1.4 million in 2012, 2011 and 2010, respectively.
(7) OTHER NON-CURRENT ASSETS
In 2010, certain other non-current assets were obtained
through a series of wholesale transactions whereby the
Company exchanged $6.4 million of inventory, at cost, with a
third-party vendor for $4.9 million of credits for future media
purchases and $1.5 million in cash. The transaction was
accounted for based upon the fair values of the assets
involved in the transaction. In accordance with Accounting
Standards Codification (ASC) Section 845-10, in an
exchange transaction for trade credits, the fair value of the
asset being surrendered cannot exceed its carrying value,
meaning that the sale of the inventory was recorded at its cost
in the Commercial segment. The trade credits expire in 2015.
The Company evaluated its trade credits to determine if
an impairment existed at December 29, 2012. Based on
current utilization expectations, the Company determined that
the full value of the asset was not recoverable. Accordingly,
the carrying value of the trade credits was reduced to fair
value, calculated as the expected present value of estimated
future utilization. An impairment charge of $2.2 million was
recorded in the fiscal 2012 fourth quarter and is included in
selling, general and administrative expenses as a component
of net loss before income taxes in the Commercial segment.
The inputs used to determine the fair value of the asset are
level 3 inputs as defined by ASC 820-10. As of
December 29, 2012 and December 31, 2011, $0.7 million
was included in prepaid expenses and other current assets
and $1.2 million and $3.9 million, respectively, was included
in other assets, net, related to these credits.
(8) ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
2012 2011
Accrued wages, bonuses and related
expenses $ 5,455 $ 5,200
Sales tax payable 5,216 5,678
Accrued rent and related expenses 811 454
Current income taxes payable 88 796
$11,570 $12,128
(9) INCOME TAXES
The components of the provision for income taxes are as
follows (in thousands):
2012 2011 2010
Current:
Federal $— $ — $ (171)
State 165 (439) 31
Foreign 790 906 859
Deferred:
Federal —11,592 (1,965)
State (928) 2,281 (1,205)
Foreign 839 70 (125)
Income tax expense (benefit) $ 866 $14,410 $(2,576)
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