Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. OPENTABLE INC (1125914) 10-Q published on May 02, 2014 at 4:14 pm
Reporting Period: Mar 30, 2014
Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives which range from one to four years. Amortization of intangible assets was $1.8 million and $0.9 million for the three months ended March 31, 2014 and 2013, respectively. Based on the current amount of intangibles subject to amortization, estimated future annual amortization expense is as follows: 2014 (remainder): $6.7 million; 2015: $6.0 million; 2016: $3.4 million; 2017: $1.1 million and 2018: $0.4 million. Intangible assets with indefinite lives are not amortized. Instead, they are reviewed for impairment annually, or whenever events or changes in circumstances indicate the carrying amount exceeds its fair value. The Company has defined its annual intangible impairment evaluation date as August 31. The Company performed its annual intangible impairment evaluation as of August 31, 2013 and determined that the carrying amount of the indefinite life intangible assets did not exceed the fair value. There was no impairment of indefinite life intangible assets as of December 31, 2013. In the first quarter of 2014, the Company made a decision to discontinue the use of the toptable brand name in the U.K. marketplace and transition to a single OpenTable brand internationally, beginning in April 2014. Accordingly, the Company determined that the indefinite-lived toptable trademark was impaired as of March 31, 2014, resulting in an impairment loss of $12.6 million.
During the three months ended March 31, 2014, the Company recorded income tax expense of $1.0 million which resulted in an effective tax rate of (39.5)%. During the three months ended March 31, 2013, the Company recorded income tax expense of $2.8 million which resulted in an effective tax rate of 28.1%. For the three months ended March 31, 2014, the Company's effective tax rate differed from the federal statutory rate primarily due to the $2.5 million of tax effects arising from the impairment loss of the toptable trademark as disclosed in Note 4. Excluding the tax effects of the impairment loss, the expected tax provision (derived from applying the federal statutory rate to the Company’s income before income tax provision for the three months ended March 31, 2014) did not significantly differ from the Company’s recorded income tax provision. The Company’s effective tax rate for the three months ended March 31, 2014 is not necessarily indicative of the effective tax rate that may be expected for fiscal year 2014.
During the three months ended March 31, 2014, we recorded income tax expense of $1.0 million, which resulted in an effective tax rate of (39.5)%. During the three months ended March 31, 2013, we recorded income tax expense of $2.8 million, which resulted in an effective tax rate of 28.1%. The tax provision and the effective tax rate for the three months ended
March 31, 2014 differed from the federal statutory rate primarily due to the tax effects of the loss recorded for the impairment of the toptable.co.uk Ltd. (now known as OpenTable International Limited), or toptable, trademark, as disclosed in Note 4 of the condensed consolidated financial statements. Our effective tax rate for the three months ended March 31, 2014 is not necessarily indicative of the effective tax rate that may be expected for fiscal year 2014.
Impairment of acquired intangibles increased $12.6 million, for the three months ended March 31, 2014 compared to the three months ended March 31, 2013. In the first quarter of 2014, we decided to discontinue the use of the toptable brand name in the U.K. marketplace and transition to a single OpenTable brand internationally, beginning in April 2014. Accordingly, we determined that the indefinite-lived toptable trademark was impaired as of March 31, 2014, resulting in an impairment loss of $12.6 million. Refer to Note 4 to the condensed consolidated financial statements for additional information on intangible assets
Income tax expense decreased $1.8 million, or 63%, for the three months ended March 31, 2014 compared to the three months ended March 31, 2013. This resulted in an effective tax rate of (39.5)% for the three months ended March 31, 2014 compared to an effective tax rate of 28.1% for the three months ended March 31, 2013. The tax provision and the effective tax rate for the three months ended March 31, 2014 differed from the federal statutory rate primarily due to the tax effects of the loss recorded for the impairment of the toptable trademark. Refer to Note 4 of the condensed consolidated financial statements. Our effective tax rate for the three months ended March 31, 2014 is not necessarily indicative of the effective tax rate that may be expected for fiscal year 2014.