Rosetta Stone 2013 Annual Report Download - page 88
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Table of Contents
The Company recorded depreciation expense for the years ended December 31, 2013, 2012 and 2011 in the amount of $7.8 million, $8.0 million, and
$8.6 million, respectively.
There were no impairment charges for the years ended December 31, 2013 and 2012.
The value of goodwill is primarily derived from the acquisition of Rosetta Stone Ltd. (formerly known as Fairfield & Sons, Ltd.) in January 2006, the
acquisition of certain assets of SGLC International Co. Ltd ("SGLC") in November 2009, the acquisition of Livemocha in April 2013 and the acquisition of
Lexia in August 2013.
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 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 Global Enterprise & Education. 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, 2013 and 2012 (in thousands):
Balance as of January 1, 2012
$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
13,499
2,199
19,198
34,896
Acquisition of Livemocha
4,472
—
720
5,192
Acquisition of Lexia
—
—
9,962
9,962
Effect of change in foreign currency rate
—
1
8
9
Balance as of December 31, 2013
$17,971
$2,200
$29,888
$50,059
Intangible assets consisted of the following items as of the dates indicated (in thousands):
Trade name/ trademark
$11,807
$ (158)
$11,649
$ 10,607
$ —
$ 10,607
Core technology
9,954
(3,207)
6,747
2,453
(2,453)
—
Customer relationships
22,152
(11,720)
10,432
10,850
(10,850)
—
Website
12
(12)
—
12
(12)
—
Patents
300
(122)
178
300
(82)
218
Total
$ 44,225
$(15,219)
$29,006
$ 24,222
$(13,397)
$10,825
The Company recorded intangible assets of $23.8 million, associated with the acquisition of Rosetta Stone Ltd. in January 2006, including our
indefinite-live Rosetta Stone trade name.
The Company recorded intangible assets of $5.5 million with the acquisition of Livemocha in April 2013, consisting of an online community,
enterprise relationships, technology platform and the Livemocha trade name. The estimated useful lives of these intangible assets range from two to five years.