Goodwill and Other Intangibles

12 Months Ended

Sep. 28, 2013

G. Goodwill and Other Intangibles

The Company evaluates possible impairment annually at the end of its fiscal year or whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable (a “triggering event”). These tests are performed at the reporting unit level, which is the operating segment or one level below the operating segment. The goodwill impairment test is a two-step test. There were no such events or changes in circumstances in the period ended September 28, 2013.

During the third quarter of fiscal 2013, the Company acquired FastPencil (see Note I). The acquisition of FastPencil was recorded by allocating the fair value of consideration of the acquisition to the identified assets acquired, including intangible assets and liabilities assumed, based on their estimated fair value at the acquisition date. The excess of the fair value of consideration of the acquisition over the net amounts assigned to the fair value of the assets acquired and liabilities assumed was recorded as goodwill of $5.9 million. In addition, the Company recorded intangibles related to technology and customer lists totaling $2.8 million.

In the third quarter of fiscal 2011, the Company recorded a pre-tax impairment charge of $8.4 million, representing all of REA’s goodwill. In addition, an impairment charge of approximately $200,000 for prepublication costs was recorded in the third quarter of fiscal 2011 relating to underperforming titles (see Note A).

The following table reflects the components of “Goodwill” for each period presented:

	(000’s omitted)
	Book Manufacturing			Publishing			Total
Goodwill	$	16,289		$	41,102		$	57,391
Accumulated impairment charges	—			(32,694		)	(32,694		)
Balance at September 25, 2010	16,289			8,408			24,697
Impairment charge and other	(264		)	(8,408		)	(8,672		)
Balance at September 24, 2011	16,025			—			16,025
Deferred tax adjustment	(37		)	—			(37		)
Balance at September 29, 2012		15,988		—				15,988
Acquisition of FastPencil (Note I)	5,875			—			5,875
Deferred tax adjustment	(43		)	—			(43		)
Balance at September 28, 2013	$	21,820		—			$	21,820

The following table reflects the components of “Other intangibles,” all within the book manufacturing segment, for each period presented:

	Trade Name			Customer Lists			Technology & Other			Total
Balance at September 25, 2010	$	931		$	726		$	1,055		$	2,712
Amortization expense	—			(164		)	(246		)	(410		)
Balance at September 24, 2011	931			562			809			2,302
Amortization expense	—			(164		)	(246		)	(410		)
Balance at September 29, 2012	931			398			563			1,892
Acquisition (Note I)	240			290			2,240			2,770
Amortization expense	(7		)	(183		)	(439		)	(629		)
Balance at September 28, 2013	$	1,164		$	505		$	2,364		$	4,033

“Other intangibles” at September 28, 2013 included customer lists related to Moore-Langen Printing Company, Inc. (“Moore Langen”), which are being amortized over a 10-year period, as well as customer lists, technology and other intangibles related to the acquisition of Highcrest Media, which are being amortized over a 5-year period. In addition, the Company recorded technology, trade name and other intangibles related to the acquisition of FastPencil, Inc. (“FastPencil”), which are being amortized over periods ranging from three to fifteen years (see Note I). “Other intangibles” also include trade names with indefinite lives which are not subject to amortization. Amortization expense was $629,000 in fiscal 2013, $410,000 in fiscal 2012, and $410,000 in fiscal 2011. Annual amortization expense over the next five years will be $925,000 in fiscal 2014, $651,000 in fiscal 2015, $519,000 in fiscal 2016, $503,000 in fiscal 2017 and $302,000 in fiscal 2018. At September 28, 2013, “other intangibles” were net of accumulated amortization of $1.8 million for the book manufacturing segment.

- 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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