Goodwill and Other Intangible Assets

9 Months Ended

May 31, 2011

Goodwill and Other Intangible Assets [Abstract]

Note 7. Goodwill and Other Intangible Assets

The Company performs a goodwill impairment analysis using the two-step method on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability of goodwill is measured at the reporting unit level, which the Company has determined to be consistent with its operating segments, by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of loss, if any.

The Company completed its annual impairment test for goodwill during the fourth quarter of fiscal year 2010 and determined the fair values of the reporting units were substantially in excess of the carrying values and that no impairment existed as of the date of the impairment test. For each annual impairment test the Company consistently determines the fair value of its reporting units based on an average weighting of both projected discounted future results and the use of comparative market multiples. On September 1, 2010, the Company reorganized its business into the DMS, E&I and HVS segments. In doing so, the Company reassigned its goodwill to the new reporting units (which are deemed to be consistent with the new segments) and was required to perform an interim goodwill impairment test based on these new reporting units. Based on this interim goodwill impairment test, the Company determined that the fair values of its new reporting units were substantially in excess of the carrying values and that no impairment existed as of the date of the interim impairment test.

The following table presents the changes in goodwill allocated to the Company’s reportable segments during the nine months ended May 31, 2011 (in thousands):


	August 31, 2010									May 31, 2011
			Accumulated			Acquisitions		Foreign				Accumulated
	Gross		Impairment			&		Currency		Gross		Impairment
Reportable Segment	Balance		Balance			Adjustments		Impact		Balance		Balance			Net Balance
DMS	$	583,423	$	(558,768	)	$	—	$	554	$	583,977	$	(558,768	)	$	25,209
E&I		335,584		(331,784	)		4,128		806		340,518		(331,784	)		8,734
HVS		132,269		(132,269	)		—		—		132,269		(132,269	)		—

Total	$	1,051,276	$	(1,022,821	)	$	4,128	$	1,360	$	1,056,764	$	(1,022,821	)	$	33,943

Intangible assets consist primarily of contractual agreements and customer relationships, which are being amortized on a straight-line basis over periods of up to 10 years, intellectual property which is being amortized on a straight-line basis over a period of up to five years and a trade name which has an indefinite life. The Company completed its annual impairment test for its indefinite-lived intangible asset during the fourth quarter of fiscal year 2010 and determined that no impairment existed as of the date of the impairment test. Significant judgments inherent in this analysis included assumptions regarding appropriate revenue growth rates, discount rates and royalty rates. No significant residual value is estimated for the amortizable intangible assets. The value of the Company’s intangible assets purchased through business acquisitions is principally determined based on valuations of the net assets acquired. The following tables present the Company’s total purchased intangible assets at May 31, 2011 and August 31, 2010 (in thousands):


	Gross					Net
	carrying		Accumulated			carrying
May 31, 2011	amount		amortization			amount
Contractual agreements and customer relationships	$	85,283	$	(51,217	)	$	34,066
Intellectual property		80,561		(73,057	)		7,504
Trade name		53,567		—			53,567

Total	$	219,411	$	(124,274	)	$	95,137


	Gross					Net
	carrying		Accumulated			carrying
August 31, 2010	amount		amortization			amount
Contractual agreements and customer relationships	$	83,746	$	(43,698	)	$	40,048
Intellectual property		85,166		(68,989	)		16,177
Trade name		47,888		—			47,888

Total	$	216,800	$	(112,687	)	$	104,113

The weighted-average amortization period for aggregate net intangible assets at May 31, 2011 is 7.6 years, which includes a weighted-average amortization period of 9.4 years for net contractual agreements and customer relationships and a weighted-average amortization period of 5.0 years for net intellectual property.

The estimated future amortization expense is as follows (in thousands):


Fiscal year ending August 31,	Amount
2011 (remaining three months)	$	5,242
2012		13,470
2013		8,915
2014		7,684
2015		4,752
Thereafter		1,507

Total	$	41,570

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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