Goodwill and intangible assets

12 Months Ended

Jul. 31, 2016

10. Goodwill and intangible assets

Goodwill

The gross and carrying value of our goodwill at July 31, 2016 and 2015 was $73.9 million and $57.5 million, respectively. The difference between the two periods relates to goodwill associated with the acquisition of Oncura of $16.4 million. Please refer to Note 3. Business Combinations for more information on the acquisition of Oncura. We determined that our goodwill was not impaired in 2016, 2015 or 2014.

The total amount of goodwill that is deductible for tax purposes was $10.5 million for fiscal year 2016 and $4.0 million for fiscal year 2015.

Intangible assets

Intangible assets include the value assigned to intellectual property and other technology, patents, customer contracts and relationships, trade names, and in-process research and development. The estimated useful lives for our finite-lived intangible assets are between 1 to 14 years. Indefinite-lived intangibles consist of trade names acquired in business combinations. The carrying values of our indefinite-lived intangible assets relating to trade names were $7.6 million at both July 31, 2016 and 2015.

Finite-lived intangible assets at July 31, 2016 and 2015 consisted of the following:


			As of July 31, 2016						As of July 31, 2015
(in millions)	Weighted Average Amortization Period		Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Developed technologies		10 years	$	29.9	$	15.1	$	14.8	$	30.2	$	12.3	$	17.9
Customer relationships		13 years		47.1		25.2		21.9		44.2		20.3		23.9
Trade names		3 years		1.9		1.0		0.9		1.0		0.9		0.1

Total finite-lived intangible assets			$	78.9	$	41.3	$	37.6	$	75.4	$	33.5	$	41.9

Amortization expense related to finite-lived intangible assets was $8.4 million, $8.9 million, and $7.8 million for fiscal years 2016, 2015 and 2014, respectively. Amortization expense related to customer relationships and trade names is recognized in operating expenses in and amortization expense related to developed technologies is recognized in cost of sales in our Consolidated Statement of Operations.

The estimated future amortization expenses related to intangible assets for succeeding fiscal years is expected to be as follows:


(in millions)	Estimated Future Amortization Expense
2017	$	7.9
2018		6.9
2019		5.7
2020		5.3
2021		4.8
Thereafter		7.0

	$	37.6

We performed the annual impairment test for our goodwill and other intangible assets with indefinite lives as of December 31, 2015. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value and as a basis for determining whether it is necessary to perform the quantitative impairment test. Alternatively, we may elect to bypass the qualitative assessment and proceed to the two-step quantitative impairment test. Our quantitative impairment assessment considered both the market approach and income approach to calculate the fair value of a reporting unit, with different weighting assigned to each. Under the market approach, the fair value of the reporting unit is based on trading multiples of a peer group of companies, which was determined based on an analysis of the selected guideline public companies’ business enterprise value (“BEV”) plus a control premium, which was determined based on an analysis of control premiums for recent relevant acquisitions. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows, which are determined based upon the Company’s most recent strategic operating plan and considering market participant assumptions. The income approach is dependent on a number of significant management assumptions including estimates of future revenues, costs and expenses, and a number of significant valuation inputs including discount rates, working capital rates and tax rates. We completed our assessment of goodwill as of December 31, 2015 and determined that there was no impairment of goodwill. Please refer toNote 16. Segment and Geographic Information for more information on the carrying amount of goodwill by reportable segment for the years ended July 31, 2016 and 2015.

We compared the fair value of a tradename that has an indefinite life using the relief from royalty approach to its carrying value as of December 31, 2015. The relief from royalty approach utilized an after-tax royalty rate and a discount rate. The after-tax royalty rate was determined based on royalty research and margin analysis, while the discount rate was determined after consideration of market rates of return on debt and equity capital, the weighted average return on invested capital, and the risk associated with achieving forecasted sales for the tradename. We determined that the fair value of the tradename was in excess of its carrying value.

The current economic environment and the uncertainties regarding its impact on our business and our estimates for forecasted revenue and spending levels, made for purposes of our goodwill and trade name impairment testing during the second quarter of fiscal year 2016 may not be accurate predictions of the future. If our assumptions regarding forecasted revenue or margin growth rates of the reporting unit and trade name are not achieved, we may be required to record an impairment charge for the goodwill and trade name in future periods, whether in connection with our next annual impairment testing in the second quarter of the fiscal year ending July 31, 2017, or prior to that if any such change constitutes a triggering event outside of the quarter from when the annual goodwill and trade name impairment test is performed. As of July 31, 2016, we estimated that the fair value of each reporting unit significantly exceeded its corresponding carrying value. Changes in our forecasts, or decreases in the value of our common stock could cause book values of certain operations to exceed their fair values which may result in goodwill impairment charges in future periods. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

- 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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