Memorex 2014 Annual Report Download - page 34

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29
Intangible Impairments
2014 Intangible Asset Analysis
During the first and third quarters of 2014, we performed interim goodwill impairment testing for our Storage
Solutions business due to lower than anticipated results. We determined these factors to be an event that warranted
interim tests as to whether our intangible assets associated with the Storage Solutions business were impaired.
Based on our impairment analysis performed in the first and third quarters of 2014, we concluded that we did not
have an impairment of our intangible assets in the Storage Solutions asset group at those times.
As a part of our annual goodwill impairment test for our Storage Solutions and Mobile Security reporting units,
we also tested for the impairment of long-lived assets, including intangible assets with the asset groups included in
our Mobile Security and Storage Solutions reporting units. In performing these tests, we compared the carrying
values of these asset groups with their estimated undiscounted future cash flows and determined that the
undiscounted cash flows expected to be generated by the asset groups significantly exceeded their carrying values
resulting in no impairment.
See Note 6 - Intangible Assets and Goodwill in our Notes to Consolidated Financial Statements for more
information on intangible assets including our valuation approach and assumptions.
2013 Intangible Asset Analysis
As a part of our annual goodwill impairment test for our Storage Solutions and Mobile Security reporting units
(as discussed above), we also tested for impairment the long-lived assets, including intangible assets, within the
asset groups included in our Mobile Security and Storage Solutions reporting units. In performing these tests, we
compared the carrying values of these asset groups with their estimated undiscounted future cash flows and
determined that the undiscounted cash flows expected to be generated by the asset groups exceeded their carrying
values resulting in no impairment. There were no interim triggering events that occurred during 2013 that warranted
an impairment test to be performed on our long-lived assets (including intangible assets) other than goodwill.
2012 Intangible Asset Analysis
During the second and third quarters of 2012, as noted above in our 2012 goodwill analysis discussion, we
performed interim goodwill impairment testing for our Mobile Security business (referred to as our Americas-Mobile
Security business in 2012) due to changes in the timing of expected cash flows and lower than expected short-term
revenues and gross margins. We also determined these factors to be an event that warranted interim tests as to
whether our intangible assets associated with the Mobile Security business were impaired. Based on our
impairment analysis performed in the second and third quarters of 2012, we concluded that we did not have an
impairment of our intangible assets in the Mobile Security asset group at those times.
During the fourth quarter of 2012, we determined that the results of our revised internal financial forecast, which
was finalized during the quarter and took into account the expected actions and outcomes associated with the
acceleration of our strategic transformation (as further described in Note 1 - Basis of Presentation in our Notes to
Consolidated Financial Statements), qualified as a triggering event for impairment testing. This required the
assessment of the recoverability of the long-lived assets (including definite-lived intangible assets) included in all of
our asset groups with the exception of the recent acquisition of Nexsan.
We compared the carrying value of our asset groups with their estimated undiscounted future cash flows and
determined that the carrying value of certain asset groups exceeded the undiscounted cash flows expected to be
generated by the asset group. For those asset groups, we then compared the carrying value of the asset group to
its estimated fair value to determine the amount by which our long-lived assets (primarily intangible assets) within
the asset group were impaired. As a result of these analyses, we recorded an impairment charge of $260.5 million
in our Consolidated Statements of Operations for the year ended December 31, 2012. During 2013, the impairment
charge of $8.7 million that related to our Memcorp Asset Group was reclassified to discontinued operations and thus
the 2012 impairment charge from continuing operations in our Consolidated Statement of Operations as of
December 31, 2013 is reported as $251.8 million. See Note 4 - Acquisitions and Divestitures in our Notes to
Consolidated Financial Statements for more information on our discontinued operations.
See Note 6 - Intangible Assets and Goodwill in our Notes to Consolidated Financial Statements for more
information on our impairment of intangible assets.
Litigation Settlement
A $2.5 million gain from a litigation settlement from a long-standing case in Brazil was recognized in 2013.