Diamond Foods Inc | 2013 | FY |

(6) Intangible Assets and Goodwill

The changes in the carrying amount of goodwill were as follows:

 

		Snacks				Nuts				Total
Balance as of August 1, 2011
Goodwill										$	409,735
Accumulated impairment losses											—
											409,735
Goodwill acquired during the year
Impairment losses											—
Translation adjustments											(6,577	)
Balance as of July 31, 2012
Goodwill											403,158
Accumulated impairment losses											—
										$	403,158
Balance as of August 1, 2012
Goodwill			—				—				403,158
Accumulated impairment losses			—				—				—
											403,158
Goodwill acquired during the year			—				—				—
Impairment losses			—				—				—
Translation adjustments			(2,033	)			—				(2,033	)
Balance as of July 31, 2013
Goodwill			328,490				72,635				401,125
Accumulated impairment losses			—				—				—
		$	328,490			$	72,635			$	401,125

Other intangible assets consisted of the following at July 31:

 

		2013				2012
Brand intangibles (not subject to amortization):		$	297,577			$	298,952
Intangible assets subject to amortization:
Customer contracts and related relationships			157,838				159,882
Total other intangible assets, gross			455,415				458,834
Less accumulated amortization on intangible assets:
Customer contracts and related relationships			(29,771	)			(21,813	)
Less asset impairments:
Brand intangibles			(36,000	)			—
Customer contracts and related relationships			(1,560	)			—
Total other intangible assets, net		$	388,084			$	437,021

Identifiable intangible asset amortization expense in each of the five succeeding years will amount to approximately $7.7 million. For fiscal 2013, 2012 and 2011, the amortization period for identifiable intangible assets was approximately 20 years with amortization expense of approximately $8.0 million, $8.0 million and $8.1 million recognized, respectively.

 

The Company also performed its 2013 annual impairment test of goodwill and non-amortizing intangible assets required by ASC 350 as of June 30, 2013. There was no goodwill impaired during fiscal 2013, 2012 and 2011. There were no non-amortizing assets impaired during fiscal 2012 and 2011. In fiscal 2013, the Company determined that the Kettle U.S. trade name within the Snacks segment was impaired based on a decrease in forecasted future revenues. The Company recorded a $36.0 million impairment charge within the asset impairment line on the consolidated statement of operations. The inputs used to measure the fair value of the Kettle U.S. trade name were largely unobservable, and accordingly, this measure was classified as Level 3. The fair value of the Kettle U.S. trade name was estimated based on the relief from royalty method, which models the cash flows from the brand intangibles assuming royalties were received under a licensing arrangement. This discounted cash flow analysis, uses inputs such as forecasted future revenues attributable to the brand, assumed royalty rates and a risk-adjusted discount rate that approximates the estimated cost of capital. The unobservable inputs used in this valuation included projected revenue growth rates, royalty rates, and the discount rate. The Company used a discount rate of 11%.

In fiscal 2013, the Company also recorded an intangible asset impairment charge of $1.6 million, within asset impairments, associated with customer contacts and related relationships. This impairment charge represents a write down of the total net book value of the intangible asset as of April 30, 2013, and is included within the Nuts reportable segment. This impairment charge was recognized as a result of management’s decision to cease production and shipment of products with the brand associated with these customer contracts and related relationships.