Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets (Notes)

Goodwill and Intangible Assets (Notes)

12 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill

The Company is required to perform an evaluation of goodwill on an annual basis or more frequently if circumstances indicate a potential impairment. The annual test for impairment is conducted in the fourth quarter of each fiscal year. The Company performs a qualitative assessment of a reporting unit's fair value to determine whether it is more likely than not the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the two-step, quantitative, goodwill impairment test. The first step compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill to determine the amount of impairment loss. Fair value of a reporting unit is determined by using a both an income approach and a market approach, as this combination is considered to produce the most reasonable indication of the Company's fair value in an orderly transaction between market participants. Under the income approach, the Company determined fair value based on estimated future cash flows of a reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the level of risk inherent in a reporting unit and its associated estimates of future cash flows as well as the rate of return an experienced investor might expect to earn. Under the market approach, the Company utilized valuation multiples derived from publicly available information for guideline companies to provide an indication of how much a knowledgeable investor in the marketplace might be willing to pay for a company. The valuation multiples were applied to the reporting unit. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including estimates for revenue growth, operating expenses, gross margins, operating margins, discount rates and future market conditions, among others.

Prior to the relocation of Noran Tel production and revenue to Westell Inc., the Company's reporting units, for the purpose of evaluating goodwill, consisted of Noran Tel, Westell, and CNS. After the Noran Tel relocation, the Company evaluates the performance and goodwill for the combined reporting units consisting of Noran Tel and Westell. The combined unit is the same as the Westell segment. The CNS reporting unit does not carry any goodwill.

January 1, 2013 Evaluation

The Company performed its annual evaluation of goodwill as of January 1, 2013. The Company assessed whether it was more likely than not that combined Westell/Noran Tel fair value was less than its carrying amount including goodwill by considering the following factors: macroeconomic conditions, industry and market considerations, financial market considerations, and overall financial performance. Based on these factors, the Company determined it was necessary to perform a two-step goodwill impairment test. The first step of a two-step evaluation performed by the Company tested for impairment by applying a fair value-based test at the reporting unit level. The Company's step-one evaluation indicated impairment. Upon completing the step-two analysis, the Company determined that, pursuant to the standards applied, the full carrying amount of goodwill of $2.9 million was impaired. As a consequence, the Company recorded a charge during the fourth quarter of fiscal 2013 for the full carrying value of the goodwill. The Company did not recognize any impairment loss on goodwill in fiscal years 2012 or 2011.

Changes in the carrying amounts of goodwill by reporting units are as follows:



(in thousands)	ConferencePlus			ConferencePlus Global Services			Noran Tel			Westell			Total
Gross goodwill	$	1,052		$	322		$	1,890		$	9,651		$	12,915
Accumulated impairment	—			—			(1,381		)	(9,651		)	(11,032		)
Currency translation	—			—			314			—			314
April 1, 2011 balance, net	1,052			322			823			—			2,197
ConferencePlus sale	(1,052		)	(322		)	—			—			(1,374		)
Currency translation	—			—			(22		)	—			(22		)
March 31, 2012 balance, net	—			—			801			—			801
Noran Tel relocation	—			—			(798		)	798			—
ANTONE acquisition	—			—			—			2,086			2,086
Impairment	—			—			—			(2,884		)	(2,884		)
Currency translation	—			—			(3		)	—			(3		)
March 31, 2013 balance, net	$	—		$	—		$	—		$	—		$	—

Goodwill decreased $0.8 million during fiscal 2013 with a $2.1 million increase resulting from the ANTONE acquisition and with a $2.9 million decrease resulting from impairment. As of March 31, 2013, the Company had no goodwill.

Intangible Assets

The Company has an indefinite-lived intangible asset related to the Noran Tel trade name. To determine the fair value of the trade name, the Company calculates the present value of royalty income it could generate if the name was licensed in an arm’s length transaction to a third party. No impairment loss was recognized related to indefinite-lived assets in fiscal years 2013, 2012 or 2011.

Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives. If the Company were to determine that a change to the remaining estimated useful life of an intangible asset was necessary, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life. On an ongoing basis, the Company reviews intangible assets with a definite life and other long-lived assets other than goodwill for impairment whenever events and circumstances indicate that carrying values may not be recoverable. If such events or changes in circumstances occur, the Company will recognize an impairment loss if the undiscounted future cash flow expected to be generated by the asset is less than the carrying value of the related asset. Any impairment loss would adjust the asset to its implied fair value. In the fourth quarter of fiscal year 2013, indicators of impairment became present as a result of the Company's decision to write-down goodwill. The Company performed an evaluation to test intangible assets for recoverability and concluded that no impairment existed as of March 31, 2013. During the years ended March, 2013, 2012 and 2011, no impairment existed with respect to the Company's intangible assets with determinable lives and no significant changes to the remaining useful lives were necessary.

The following table presents details of the Company’s intangibles from historical acquisitions, including the fiscal year 2013 ANTONE acquisition:



	March 31,
(in thousands)	2013			2012
Gross intangible assets	$	42,190		$	39,062
Accumulated amortization	(13,458		)	(12,566		)
Impairment	(23,868		)	(23,868		)
Currency translation	199			202
ConferencePlus sale	—			(102		)
Net carrying amount	$	5,063		$	2,728

The finite-lived intangibles are being amortized over periods of five to ten years. Finite-lived intangible amortization expense from continuing operations was $0.9 million, $0.5 million and $0.5 million in fiscal years 2013, 2012 and 2011. The following is the expected future amortization by fiscal year:



(in thousands)	2014		2015		2016		2017		2018		thereafter
Intangible amortization expense	$	943	$	941	$	846	$	553	$	499	$	929

Net carrying amounts of intangible assets are as follows:



	March 31,
(in thousands)	2013		2012
Finite-lived intangible assets:
Product technology ⁽¹⁾	$	2,832	$	464
Customer relationships ⁽¹⁾	1,879		1,912
Total finite-lived intangible assets, net	$	4,711	$	2,376
Infinite-lived intangible assets:
Trade Name	352		352
Total intangible assets	$	5,063	$	2,728


(1)	Change due to amortization and adjustments due to foreign currency translation.

- 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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