Rosetta Stone 2012 Annual Report Download - page 99
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Table of Contents
The value of goodwill is primarily derived from the acquisition of Rosetta Stone Ltd. (formerly known as Fairfield & Sons, Ltd.) in January 2006
and the acquisition of certain assets of SGLC in November 2009. The Company tests goodwill for impairment annually on June 30 of each year at the
reporting unit level using a fair value approach, in accordance with the provisions of ASC topic 350, ("ASC 350") or
more frequently, if impairment indicators arise. The Company's annual testing resulted in no impairments of goodwill since the dates of acquisition.
Beginning in the fourth quarter of 2012, the Company began reporting its results in three reportable segments, which resulted in three reporting units for
goodwill impairment purposes—North America Consumer, ROW Consumer, and Institutional. The table below has been updated to present the current
reporting units and the change in the allocation of goodwill.
The following table represents the balance and changes in goodwill for the years ended December 31, 2012 and 2011 (in thousands):
Intangible assets consisted of the following items as of the dates indicated (in thousands):
The Company recorded intangible assets of $23.8 million, associated with the acquisition of Rosetta Stone Ltd. in January 2006, and $0.1 million
with the acquisition of certain assets of SGLC in November 2009. During 2010, the Company recorded the purchase of two patents associated with the
development of new products in the amount of $0.3 million. The estimated lives of the acquired core technology and customer relationships are between
18 to 36 months. The intangible asset associated
F-22
Balance as of January 1, 2011 — 15,669 19,150 34,819
Effect of change in foreign currency rate — 10 12 22
Balance as of December 31, 2011 — 15,679 19,162 34,841
Effect of change in foreign currency rate — 17 23 40
Balance as of October 30, 2012 — 15,696 19,185 34,881
Change in reporting units 2,197 (2,197) — —
Effect of change in foreign currency rate 2 — 13 15
Balance as of December 31, 2012 2,199 13,499 19,198 34,896
Trade name/
trademark $ 10,607 $ — $ 10,607 $ 10,608 $ — $ 10,608
Core
technology 2,453 (2,453) — 2,453 (2,453) —
Customer
relationships 10,850 (10,850) — 10,842 (10,842) —
Website 12 (12) — 12 (12) —
Patents 300 (82) 218 300 (43) 257
Total $ 24,222 $ (13,397) $ 10,825 $ 24,215 $ (13,350) $ 10,865