Goodwill And Other Intangible Assets

12 Months Ended

Aug. 31, 2011

Goodwill And Other Intangible Assets

Goodwill And Other Intangible Assets

6. 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 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 2011 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 following three segments: Diversified Manufacturing Services ("DMS"), Enterprise & Infrastructure ("E&I") and High Velocity Systems ("HVS"). In doing so, the Company reassigned its goodwill to the new reporting units 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.

Based upon a combination of factors, including a significant and sustained decline in the Company's market capitalization below the Company's carrying value, the deteriorating macro-economic environment, which resulted in a significant decline in customer demand, and the illiquidity in the overall credit markets, the Company concluded that sufficient indicators of impairment existed and accordingly performed an interim goodwill impairment analysis, during the first quarter and again in the second quarter of fiscal year 2009. As a result of those analyses, the Company determined that the goodwill related to the Company's former Consumer and Electronic Manufacturing Services ("EMS") reporting units were fully impaired and recorded a non-cash goodwill impairment charge of approximately $1.0 billion during the 12 months ended August 31, 2009. After recognition of the non-cash goodwill impairment charge, no goodwill remained with either the Consumer or EMS reporting units.

The following tables present the changes in goodwill allocated to the Company's reportable segments during the years ended August 31, 2011 and 2010 (in thousands):

	August 31, 2010										August 31, 2011
Reportable Segment	Gross Balance		Accumulated Impairment Balance			Acquisitions		Foreign Currency Impact			Gross Balance		Accumulated Impairment  Balance			Net Balance
DMS	$	583,423	$	(558,768	)	$	—	$	595		$	584,018	$	(558,768	)	$	25,250
E&I		335,584		(331,784	)		6,311		838			342,733		(331,784	)		10,949
HVS		132,269		(132,269	)		—		—			132,269		(132,269	)		—
Total	$	1,051,276	$	(1,022,821	)	$	6,311	$	1,433		$	1,059,020	$	(1,022,821	)	$	36,199
	August 31, 2009										August 31, 2010
Reportable Segment	Gross Balance		Accumulated Impairment Balance			Acquisitions		Foreign Currency Impact			Gross Balance		Accumulated Impairment  Balance			Net Balance
DMS	$	583,888	$	(558,768	)	$	—	$	(465	)	$	583,423	$	(558,768	)	$	24,655
E&I		331,784		(331,784	)		3,800		—			335,584		(331,784	)		3,800
HVS		132,269		(132,269	)		—		—			132,269		(132,269	)		—
Total	$	1,047,941	$	(1,022,821	)	$	3,800	$	(465	)	$	1,051,276	$	(1,022,821	)	$	28,455

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 2011 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 August 31, 2011 and August 31, 2010 (in thousands):

August 31, 2011	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Contractual agreements and customer relationships	$	85,131	$	(53,365	)	$	31,766
Intellectual property		79,550		(75,102	)		4,448
Trade names		52,892		—			52,892
Total	$	217,573	$	(128,467	)	$	89,106
August 31, 2010	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Contractual agreements and customer relationships	$	83,746	$	(43,698	)	$	40,048
Intellectual property		85,166		(68,989	)		16,177
Trade names		47,888		—			47,888
Total	$	216,800	$	(112,687	)	$	104,113

The weighted-average amortization period for aggregate net intangible assets at August 31, 2011 is 7.6 years, which includes a weighted-average amortization period of 9.5 years for net contractual agreements and customer relationships and a weighted-average amortization period of 5.0 years for net intellectual property.

Intangible asset amortization for fiscal years 2011, 2010 and 2009 was approximately $22.1 million, $25.9 million, and $31.0 million, respectively. The estimated future amortization expense is as follows (in thousands):

Fiscal Year Ending August 31,	Amount
2012	$	13,390
2013		8,889
2014		7,674
2015		4,750
2016		1,511
Total	$	36,214