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Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets (Notes)
12 Months Ended
Jul. 31, 2014
Goodwill and Other Intangible Assets [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]
Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill by reportable segment for the years ended July 31, 2014 and 2013, were as follows:
 
IDS
 
WPS
 
Die-Cut
 
Total
Balance as of July 31, 2012
$
367,893

 
$
276,941

 
$
31,957

 
$
676,791

Current year acquisitions
170,180

 

 

 
170,180

Current year divestitures
(2,882
)
 

 

 
(2,882
)
Reclassification to assets held for sale
(4,129
)
 

 
(33,218
)
 
(37,347
)
Impairment charge
(18,225
)
 
(172,280
)
 

 
(190,505
)
Translation adjustments
4,192

 
(4,454
)
 
1,261

 
999

Balance as of July 31, 2013
$
517,029

 
$
100,207

 
$

 
$
617,236

Impairment charge
(100,412
)
 

 

 
(100,412
)
Purchase accounting adjustments
(2,168
)
 

 

 
(2,168
)
Translation adjustments
(2,160
)
 
2,508

 

 
348

Balance as of July 31, 2014
$
412,289

 
$
102,715

 
$

 
$
515,004



Goodwill decreased by $102,232 during fiscal 2014. The decline in the balance consisted of an impairment charge of $100,412 recognized on the Company's PeopleID reporting unit, and purchase accounting adjustments of $2,168 for the deferred tax impact primarily related to the release of escrow from the fiscal 2013 acquisition of Precision Dynamics Corporation ("PDC"). These decreases were partially offset by the positive effects of foreign translation of $348.

Goodwill at July 31, 2014 included $118,637 and $172,280 of accumulated impairment losses within the IDS and WPS segments, respectively, for a total of $290,917. Goodwill at July 31, 2013 included $18,225 and $172,280 of accumulated impairment losses within the IDS and WPS segments, respectively, for a total of $190,505.

The annual impairment testing performed on May 1, 2014, in accordance with ASC 350, “Intangibles - Goodwill and Other” (“Step One”) indicated that each of the following reporting units had a fair value substantially in excess of its carrying value: IDS Americas & Europe, IDS APAC, WPS Americas, WPS Europe, and WPS APAC. The results of the Step One analysis completed over the Company's People ID reporting unit indicated that it was potentially impaired.

PeopleID Goodwill Impairment
The PeopleID reporting unit consists primarily of the Company's acquisition of PDC from fiscal 2013, as well as the existing Brady PeopleID business. Organic sales within the PDC business declined in the low single digit percentages from fiscal 2013 to fiscal 2014. Hospital admission rates are the primary driver of PDC's sales under its existing strategy, and there was a decline of approximately 2% in these rates during fiscal 2014. Management has revisited its planned growth and profit for the PDC business and concluded that the growth may not materialize as expected given slower than anticipated industry growth and fewer sales synergies than originally planned.
Management believes that strategy modifications will improve organic sales and profit within the PeopleID business in future years, but there is inherent risk in the revised strategy and the changing healthcare industry. As such, the Company's annual goodwill impairment analysis ("Step One") reflected the risk in the strategy and the decline in fiscal 2014 sales and profitability, which occurred during a period of time in which hospital admission rates were declining. In addition, the PDC business fell short of internal forecasts, resulting in the conclusion that the PeopleID reporting unit failed Step One as the resulting fair value was less than the carrying value of the reporting unit.
The Company proceeded to measure the amount of the potential impairment ("Step Two") with the assistance of a third party valuation firm utilizing a discounted cash flow model and market multiples approach. In Step Two of the goodwill impairment test, the Company determined the implied fair value of the goodwill and compared it to the carrying value. The Company allocated the fair value of the PeopleID reporting unit to its assets and liabilities as if the reporting unit had been acquired in a business combination. The excess fair value of the reporting unit over the fair value of its identifiable assets and liabilities was the implied fair value of goodwill. Upon completion of the assessment, the Company recognized a goodwill impairment charge of $100,412 during fiscal 2014.
Other Intangible Assets

Other intangible assets include patents, tradenames, customer relationships, non-compete agreements and other intangible assets with finite lives being amortized in accordance with the accounting guidance for other intangible assets. The net book value of these assets was as follows:

 
July 31, 2014
 
July 31, 2013
 
Weighted
Average
Amortization
Period
(Years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted
Average
Amortization
Period
(Years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
Amortized other intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Patents
5
 
$
11,656

 
$
(10,160
)
 
$
1,496

 
5
 
$
11,053

 
$
(9,597
)
 
$
1,456

Tradenames and other
5
 
15,366

 
(10,706
)
 
4,660

 
5
 
15,289

 
(8,398
)
 
6,891

Customer relationships
7
 
168,525

 
(114,363
)
 
54,162

 
8
 
261,076

 
(144,620
)
 
116,456

Non-compete agreements and other
4
 
10,089

 
(9,622
)
 
467

 
4
 
14,942

 
(14,215
)
 
727

Unamortized other intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tradenames
N/A
 
30,229

 

 
30,229

 
N/A
 
31,321

 

 
31,321

Total
 
 
$
235,865

 
$
(144,851
)
 
$
91,014

 
 
 
$
333,681

 
$
(176,830
)
 
$
156,851


The value of goodwill and other intangible assets in the consolidated balance sheets at July 31, 2014 and 2013, differs from the value assigned to them in the original allocation of purchase due to the effect of fluctuations in foreign exchange rates. In conjunction with the goodwill impairment test of the PeopleID reporting unit, finite and indefinite-lived other intangible assets associated with the reporting unit were written down to fair value. As a result, the Company recognized an impairment charge of $48,139 during fiscal 2014.
Amortization expense on intangible assets during fiscal 2014, 2013, and 2012 was $17,871, $17,148 and $10,576, respectively. The amortization over each of the next five fiscal years is projected to be $12,474, $10,267, $7,747, $6,850 and $6,305 for the fiscal years ending July 31, 2015, 2016, 2017, 2018 and 2019, respectively.