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Goodwill and Other Intangibles
6 Months Ended
Nov. 30, 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:


 

 

 

 

 

 

 

 

 

 

 









 

 

Six months ended
November 30, 2011

 

Twelve months ended
May 31, 2011

 

Six months ended
November 30, 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

 

 

 

 

1.0

 

 

7.1

 

Impairment charge

 

 

 

 

(3.4

)

 

 

Other

 

 

0.9

 

 

 

 

 












Gross ending balance

 

$

175.9

 

$

175.0

 

$

181.1

 

Accumulated impairment

 

 

(20.8

)

 

(20.8

)

 

(17.4

)












Ending balance

 

$

155.1

 

$

154.2

 

$

163.7

 













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 $8.0, net of cash. The Company has integrated this business with its existing educational technology businesses. 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 $1.7 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 Total other intangibles subject to amortization for the periods indicated:


 

 

 

 

 

 

 

 

 

 

 









 

 

Six months ended
November 30, 2011

 

Twelve months ended
May 31, 2011

 

Six months ended
November 30, 2010

 









 

 

 

 

 

 

 

 

 

 

 

Beginning balance - Customer lists

 

$

0.7

 

$

0.8

 

$

0.8

 

Amortization expense

 

 

(0.1

)

 

(0.2

)

 

(0.1

)

Foreign currency translation

 

 

0.0

 

 

0.1

 

 

0.1

 












Customer lists, net of accumulated amortization of $1.2, $1.1 and $1.0, respectively

 

$

0.6

 

$

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

 

 

10.7

 

Amortization expense

 

 

(0.8

)

 

(1.2

)

 

(0.5

)












Other intangibles, net of accumulated amortization of $5.0, $4.2 and $3.5, respectively

 

$

16.5

 

$

17.3

 

$

12.4

 












 












Total other intangibles subject to amortization

 

$

17.1

 

$

18.0

 

$

13.2

 













Amortization expense for Total other intangibles was $0.9 for the six months ended November 30, 2011, $1.4 for the twelve months ended May 31, 2011 and $0.6 for the six months ended November 30, 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 weighted-average remaining useful lives of all amortizable intangible assets is 15.2 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.


In the three month period ended November 30, 2010, the Company determined that certain intangible assets associated with publishing and trademark rights, which were previously accounted for as indefinite-lived assets, were no longer indefinite-lived. Accordingly, the Company assessed these assets for impairment as of September 1, 2010, and subsequently commenced amortization of the assets. The Company determined that the fair value of the assets exceeded their carrying value as of September 1, 2010, and therefore no impairment was recognized. The Company employed Level 3 fair value measurement techniques to determine the fair value of these assets as of September 1, 2010.


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


 

 

 

 

 

 

 

 

 

 

 









 

 

November 30, 2011

 

May 31, 2011

 

November 30, 2010

 









Net carrying value by major class:

 

 

 

 

 

 

 

 

 

 

Trademarks and Other

 

$

1.8

 

$

1.8

 

$

1.8

 












Total

 

$

1.8

 

$

1.8

 

$

1.8