Goodwill and Other Intangibles

3 Months Ended

Aug. 31, 2012

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			Twelve months ended			Three months ended
	August 31, 2012			May 31, 2012			August 31, 2011
Gross beginning balance	$	178.5		$	175.0		$	175.0
Accumulated impairment		(20.8	)		(20.8	)		(20.8	)
Beginning balance	$	157.7		$	154.2		$	154.2
Additions due to acquisition		—			2.7			—
Impairment charge		—			—			—
Foreign currency translation		0.0			0.0			0.0
Other		—			0.8			—
Gross ending balance	$	178.5		$	178.5		$	175.0
Accumulated impairment		(20.8	)		(20.8	)		(20.8	)
Ending balance	$	157.7		$	157.7		$	154.2

On February 8, 2012, the Company acquired the business and certain assets of Weekly Reader, a publisher of weekly educational classroom magazines designed for children in grades Pre-K–12, for $2.0 in cash and $4.8 in assumed liabilities, which have been fulfilled by the Company. The Company utilized internally-developed discounted cash flow forecasts and market comparisons of royalty rates to determine the fair value of the assets acquired and the amount to be allocated to goodwill. As a result, the Company recognized $1.4 of goodwill and $5.4 of intangible assets. The results of operations of this business subsequent to the acquisition date are included in the Classroom and Supplemental Materials Publishing segment, and certain assets will benefit the Children’s Book Publishing and Distribution segment.

On January 3, 2012, the Company acquired Learners Publishing, a Singapore-based publisher of supplemental learning materials for English-Language Learners, for $2.8, net of cash acquired. 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 Learners Publishing business. As a result of this transaction, the Company recorded $1.3 of goodwill. The results of operations of this business subsequent to the acquisition date are included in the International segment.

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

	Three months ended			Twelve months ended			Three months ended
	August 31, 2012			May 31, 2012			August 31, 2011
Beginning balance - customer lists	$	4.3		$	0.7		$	0.7
Additions due to acquisition		0.1			3.8			—
Amortization expense		(0.2	)		(0.2	)		0.0
Foreign currency translation		0.0			0.0			0.0
Customer lists, net of accumulated amortization of $1.5, $1.3 and $1.1, respectively	$	4.2		$	4.3		$	0.7
Beginning balance - other	$	10.4		$	17.3		$	17.3
Additions due to acquisition		—			—			—
Impairment charge		—			(5.4	)		—
Amortization expense		(0.3	)		(1.4	)		(0.4	)
Other		0.1			(0.1	)		—
Other intangibles, net of accumulated amortization of $10.8, $10.5 and $4.5, respectively	$	10.2		$	10.4		$	16.9
Total other intangibles subject to amortization	$	14.4		$	14.7		$	17.6

Amortization expense for Total other intangibles was $0.5 and $0.4 for the three months ended August 31, 2012 and 2011, respectively. Intangible assets with definite lives consist principally of customer lists, covenants not to compete and publishing and trademark rights. Intangible assets with definite lives are amortized over their estimated useful lives. The weighted-average remaining useful lives of all amortizable intangible assets is 9 years.

In fiscal 2012, due to declining revenues associated with certain publishing and trademark rights in the Children’s Book Publishing and Distribution segment, the Company determined that the intangible assets associated with these rights were not fully recoverable and recognized an impairment in amortization expense of $4.9 based upon the difference between the carrying value and the fair value of the assets, and reduced the expected useful life of these assets. The Company employed Level 3 fair value measurement techniques to determine the fair value of these assets, including the relief from royalty method.

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

	August 31, 2012		May 31, 2012		August 31, 2011
Net carrying value by major class:
Trademarks and other	$	2.0	$	2.0	$	1.8
Total	$	2.0	$	2.0	$	1.8