XML 23 R12.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Goodwill and Other Intangibles
3 Months Ended
Aug. 31, 2011
Goodwill and Intangible Assets Disclosure [Text Block]

7. Goodwill and Other Intangibles


Goodwill and other intangible assets with indefinite lives are reviewed annually for impairment or more frequently if impairment indicators arise.


The following table summarizes the activity in Goodwill for the periods indicated:


 

 

 

 

 

 

 

 

 

 

 









 

 

Three months ended
August 31, 2011

 

Twelve months ended
May 31, 2011

 

Three months ended
August 31, 2010

 









Gross beginning balance

 

$

175.0

 

$

174.0

 

$

174.0

 

Accumulated impairment

 

 

(20.8

)

 

(17.4

)

 

(17.4

)












 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

154.2

 

$

156.6

 

$

156.6

 

Additions due to acquisition

 

 

 

 

1.0

 

 

 

Impairment charge

 

 

 

 

(3.4

)

 

 












Gross ending balance

 

 

175.0

 

 

175.0

 

 

174.0

 

Accumulated impairment

 

 

(20.8

)

 

(20.8

)

 

(17.4

)












Ending balance

 

$

154.2

 

$

154.2

 

$

156.6

 













On September 9, 2010, the Company purchased the assets of Math Solutions, an education resources and professional development company focusing on K-12 math instruction, for $8.2, net of cash acquired. The Company has integrated this business with its Educational Technology and Services segment. The Company utilized Level 3 fair value measurement inputs, using its own assumptions, including internally-developed discounted cash flow forecasts, to determine the fair value of the assets acquired and the amount of goodwill to be allocated to the Math Solutions business. As a result, the Company recognized $0.8 of goodwill and $5.6 of amortizable intangible assets. In the second quarter of fiscal 2011, the Company also recognized $0.2 of goodwill associated with a previously acquired international entity.


As of May 31, 2011, the Company determined the carrying value of its Scholastic Library Publishing and Classroom Magazines business within the Classroom and Supplemental Materials Publishing segment exceeded the fair value of this reporting unit. The Company employed internally-developed discounted cash flow forecasts and market comparisons to determine the fair value of the reporting unit and the implied fair value of the reporting unit’s assets and liabilities. Accordingly, the Company recognized an impairment charge of $3.4 at May 31, 2011.


The following table summarizes the activity in Other intangibles subject to amortization for the periods indicated:


 

 

 

 

 

 

 

 

 

 

 









 

 

Three months ended
August 31, 2011

 

Twelve months ended
May 31, 2011

 

Three months ended
August 31, 2010

 









 

 

 

 

 

 

 

 

 

 

 

Beginning balance - Customer lists

 

$

0.7

 

$

0.8

 

$

0.8

 

Amortization expense

 

 

0.0

 

 

(0.2

)

 

(0.1

)

Foreign currency translation

 

 

0.0

 

 

0.1

 

 

0.1

 












Customer lists, net of accumulated amortization of $1.1, $1.1 and $1.0, respectively

 

$

0.7

 

$

0.7

 

$

0.8

 












 

 

 

 

 

 

 

 

 

 

 

Beginning balance - Other intangibles

 

$

17.3

 

$

2.2

 

$

2.2

 

Additions due to acquisition

 

 

 

 

5.6

 

 

 

Reclassified from indefinite-lived intangible assets

 

 

 

 

10.7

 

 

 

Amortization expense

 

 

(0.4

)

 

(1.2

)

 

(0.1

)












Other intangibles, net of accumulated amortization of $4.5, $4.2 and $3.1, respectively

 

$

16.9

 

$

17.3

 

$

2.1

 












 

 

 

 

 

 

 

 

 

 

 












Total other intangibles subject to amortization

 

$

17.6

 

$

18.0

 

$

2.9

 













Amortization expense for Other intangibles totaled $0.4 for the three months ended August 31, 2011, $1.4 for the twelve months ended May 31, 2011, and $0.2 for the three months ended August 31, 2010. Intangible assets with definite lives consist principally of customer lists and covenants not to compete. Intangible assets with definite lives are amortized over their estimated useful lives. The average remaining useful lives of all amortizable intangible assets is 7 years.


In fiscal 2011, the Company recognized $5.6 of amortizable intangible assets as a result of the Math Solutions acquisition. The Company utilized Level 3 fair value measurement inputs, using its own assumptions including internally-developed discounted cash flow forecasts and market comparisons, to determine the fair value of the intangible assets acquired.


The following table summarizes Other intangibles not subject to amortization at the dates indicated:


 

 

 

 

 

 

 

 

 

 

 









 

 

August 31, 2011

 

May 31, 2011

 

August 31, 2010

 









Net carrying value by major class:

 

 

 

 

 

 

 

 

 

 

Trademarks and Other

 

$

1.8

 

$

1.8

 

$

12.5

 












Total

 

$

1.8

 

$

1.8

 

$

12.5