Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

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Goodwill and Intangible Assets
12 Months Ended
Mar. 31, 2013
Goodwill and Intangible Assets  
Goodwill and Intangible Assets

Note 6: Goodwill and Intangible Assets

        The following table highlights the Company's intangible assets (amounts in thousands):

 
  March 31, 2013   March 31, 2012  
 
  Carrying
Amount
  Accumulated
Amortization
  Carrying
Amount
  Accumulated
Amortization
 

Indefinite Lived Intangible Assets:

                         

Trademarks

  $ 7,207   $   $ 7,644   $  

Amortized Intangibles:

                         

Customer relationships, patents and other (3 - 18 years)

    43,227     11,788     43,813     9,930  
                   

 

  $ 50,434   $ 11,788   $ 51,457   $ 9,930  
                   

        In fiscal year 2013 the Company incurred a $0.3 million charge related to the write-off of certain intangible assets which are no longer utilized. The impairment charge is recorded on the Consolidated Statements of Operations line item "Write down of long-lived assets" in fiscal year 2013.

        For fiscal years ended March 31, 2013, 2012 and 2011 amortization related to intangibles was $2.3 million, $2.0 million and $2.3 million, respectively. The weighted average useful life of amortized intangibles was 16 years in the fiscal years ended March 31, 2013 and 2012. Estimated amortization of intangible assets for the each of the next five fiscal years is $2.4 million and thereafter amortization will total $19.2 million.

        The Company's annual goodwill and other indefinite-lived intangible asset impairment test was assessed as of May 31st. Due to reduced earnings and cash flows caused by macro-economic factors and excess capacity issues in our industry, the Company revised its earnings forecast; as a result, recorded a $1.1 million goodwill impairment charge, which represented all of the goodwill related to the KEMET Foil Manufacturing, LLC ("KEMET Foil") reporting unit.

        During fiscal year 2013, the Company voluntarily changed the test date of its annual goodwill and other indefinite-lived intangible asset impairment test from May 31st to January 1st. The Company determined that this change is preferable under the circumstances as it (1) better aligns with the Company's annual financial planning and budgeting process, (2) provides the Company with additional time to prepare and complete the impairment test, including measurement of any indicated impairment, as necessary, prior to filing of the Form 10-K and (3) the impairment testing will use financial information as of the beginning of a quarter, which will have been subject to the prior quarter's closing process. This voluntary change in accounting principle was not made to delay, accelerate or avoid an impairment charge. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require the application of significant estimates and assumptions with the use of hindsight. Accordingly, the change was applied prospectively.

        The Company completed its impairment test on goodwill and intangible assets with indefinite useful lives as of January 1, 2013 and concluded that no impairment existed.

        The changes in the carrying amount of goodwill for the years ended March 31, 2013 and 2012 are as follows (amounts in thousands):

 
  Fiscal Year
2013
  Fiscal Year
2012
 

Gross balance at beginning of fiscal year

  $ 36,676   $  

Acquisitions

        36,676  

Impairment charges

    (1,092 )    
           

 

  $ 35,584   $ 36,676