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Goodwill and Other Intangibles
6 Months Ended
Nov. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]

7. Goodwill and Other Intangibles


The Company assesses goodwill and other intangible assets with indefinite lives annually or more frequently if impairment indicators are such that the goodwill is more likely than not impaired. The Company continues to monitor impairment indicators in light of reduced earnings, changes in market conditions, near and long-term demand for the Company’s products and other relevant factors.


In the current quarter, the Company recognized an impairment of $13.4 of goodwill associated with the book clubs reporting unit in the Children’s Book Publishing and Distribution segment. In the second quarter of fiscal year 2014, expected revenues for the reporting unit declined, resulting in an impairment indicator. Revenues in the first fiscal quarter are not significiant for this reporting unit as schools are not in session. As of November 30, 2013, the fair value of the reporting unit was approximately $13.0 less than the carrying value of $66.9. The Company used forecasted cash flows, which were adjusted from those used in the latest annual valuation to reflect the revised outlook for the reporting unit, and to a lesser extent, observable revenue multiples for comparable companies, in determining its fair value. Management revised its outlook for the reporting unit as revenues did not meet expectations during the period, and future revenue expectations were revised consistent with the current period decline. A discount rate of 15.5% and a perpetual growth rate of 3.0% were employed for the discounted cash flow analysis and multiples of 0.4 times historical revenues were employed for market comparisons. The reporting unit is dependent upon internally developed intangible assets including trade names and customer lists which have no carrying value, but have substantial fair value. Upon finalization of step two of the goodwill impairment process, inclusion of these intangible assets is expected to render 100% of the goodwill impaired.


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


    Six months ended
November 30, 2013
    Twelve months ended
May 31, 2013
    Six months ended
November 30, 2012
 
                   
Gross beginning balance   $ 178.7     $ 178.5     $ 178.5  
Accumulated impairment     (20.8 )     (20.8 )     (20.8 )
                         
Beginning balance   $ 157.9     $ 157.7     $ 157.7  
Impairment charge     (13.4 )     -       -  
Foreign currency translation     0.0       0.0       0.1  
Other     -       0.2       -  
Gross ending balance   $ 178.7     $ 178.7     $ 178.6  
Accumulated impairment     (34.2 )     (20.8 )     (20.8 )
Ending balance   $ 144.5     $ 157.9     $ 157.8  

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


    Six months ended
November 30, 2013
    Twelve months ended
May 31, 2013
    Six months ended
November 30, 2012
 
                   
                         
Beginning balance - customer lists   $ 3.4     $ 4.3     $ 4.3  
Additions     -       0.1       0.1  
Amortization expense     (0.5 )     (1.0 )     (0.5 )
Foreign currency translation     0.0       0.0       0.0  
                         
Customer lists, net of accumulated amortization of $2.7, $2.3 and $1.8, respectively   $ 2.9     $ 3.4     $ 3.9  
                         
Beginning balance - other intangibles   $ 9.2     $ 10.4     $ 10.4  
Additions     -       0.2       -  
Amortization expense     (0.7 )     (1.5 )     (0.8 )
Foreign currency translation     0.0       -       -  
Other     -       0.1       0.1  
Other intangibles, net of accumulated amortization of $12.7, $12.0 and $11.3, respectively   $ 8.5     $ 9.2     $ 9.7  
Total other intangibles subject to amortization   $ 11.4     $ 12.6     $ 13.6  
Trademarks and other   $ 2.0     $ 2.0     $ 2.0  
Total other intangibles not subject to amortization   $ 2.0     $ 2.0     $ 2.0  
Total other intangibles   $ 13.4     $ 14.6     $ 15.6  

Amortization expense for Total other intangibles was $1.2 and $1.3 for the six months ended November 30, 2013 and 2012, respectively. Intangible assets with definite lives consist principally of customer lists, covenants not to compete 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 7 years.