Goodwill and Intangible Assets

12 Months Ended

Jun. 30, 2013

(12) Goodwill and Intangible Assets

(a)

Cology LLC

As a result of our acquisition of a substantial portion of the operating assets of the Cology Sellers in October 2012, we recorded a customer list intangible asset of $5.7 million for the approximately 250 credit union and other lender clients that the Cology Sellers did business with as of the acquisition date along with $518 thousand of goodwill. Our customer list intangible asset will be amortized over a 15-year period on a straight line basis. We expect amortization expense related to the Cology LLC intangible asset to be approximately $377 thousand per year. We expect amortization of the intangible asset and goodwill to be fully deductible for income tax purposes over a 15 year period. We recorded no goodwill or intangible asset impairment during fiscal 2013.

(b)

TMS

We completed our acquisition of TMS during fiscal 2011. We recorded goodwill of $22.2 million at the acquisition date. On June 30, 2011, TMS sold a portfolio of contracts with K-12 schools to Nelnet Business Solutions, Inc. in a transaction that eliminated a portion of goodwill by $2.6 million and decreased our customer list intangible asset by $4.1 million. As a result, $19.5 million of goodwill remained at June 30, 2013 and 2012 and the adjusted cost basis of our customer list intangible was $17.9 million. We recorded no goodwill or intangible asset impairment during fiscal 2013 or fiscal 2012.

(c)

Impairment Review of Goodwill

In fiscal 2013, we evaluated our goodwill for impairment on May 31, 2013, which is our annual impairment testing date, and concluded that the fair market value of the TMS and Cology LLC reporting units were in excess of our recorded book value and, therefore, were not impaired as of that date. In determining whether impairment exists, we assess impairment at the level of the TMS and Cology LLC reporting units. There have been no indicators of impairment since that date.

(d)

Intangible Assets

Intangible assets at June 30, 2013 include the following:


	Amortization period		Adjusted cost basis		Accumulated amortization			Net
	(in years)		(dollars in thousands)
Intangible assets:
Customer list		15	$	23,600	$	(3,274	)	$	20,326
Technology		6		4,400		(2,158	)		2,242
Tradename		15		1,950		(325	)		1,625

Total intangible assets at June 30, 2013			$	29,950	$	(5,757	)	$	24,193

Amortization expense recorded for fiscal 2013 and fiscal 2012 was $2.4 million and $2.3 million, respectively.

Estimated annual amortization expense for each of the fiscal years subsequent to June 30, 2013 and thereafter is as follows:


	Customer list		Technology		Tradename		Total
	(dollars in thousands)
Estimated amortization expense:
2014	$	1,573	$	721	$	130	$	2,424
2015		1,573		608		130		2,311
2016		1,573		608		130		2,311
2017		1,573		305		130		2,008
2018		1,573		—		130		1,703
Thereafter		12,461		—		975		13,436

Total	$	20,326	$	2,242	$	1,625	$	24,193

- 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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