Goodwill and Other Intangible Assets

9 Months Ended

May 31, 2012

8. Goodwill and Other Intangible Assets

The following table presents the changes in goodwill recorded to the Company’s reportable segments during the nine months ended May 31, 2012 (in thousands):


	August 31, 2011										May 31, 2012
Reportable Segment	Gross Balance		Accumulated Impairment Balance			Acquisitions & Adjustments		Foreign Currency Impact			Gross Balance		Accumulated Impairment Balance			Net Balance
DMS	$	584,018	$	(558,768	)	$	60,942	$	(1,845	)	$	643,115	$	(558,768	)	$	84,347
E&I		342,733		(331,784	)		—		(1,013	)		341,720		(331,784	)		9,936
HVS		132,269		(132,269	)		—		—			132,269		(132,269	)		—

Total	$	1,059,020	$	(1,022,821	)	$	60,942	$	(2,858	)	$	1,117,104	$	(1,022,821	)	$	94,283

Finite lived intangible assets are amortized on a straight-line basis and consist primarily of contractual agreements and customer relationships, which are being amortized over periods of up to 15 years, intellectual property which is being amortized over periods of up to nine years and a trade name which is being amortized over two years. No significant residual value is estimated for the amortizable intangible assets. Indefinite lived intangible assets consist of a trade name. 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, 2012 and August 31, 2011 (in thousands):


May 31, 2012	Gross carrying amount		Accumulated amortization			Net carrying amount
Contractual agreements and customer relationships	$	122,340	$	(60,900	)	$	61,440
Intellectual property		84,688		(76,560	)		8,128
Finite lived trade names		2,645		(661	)		1,984
Indefinite lived trade names		50,590		—			50,590

Total	$	260,263	$	(138,121	)	$	122,142


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

The weighted-average amortization period for aggregate net intangible assets at May 31, 2012 is 10.8 years, which includes a weighted-average amortization period of 11.2 years for net contractual agreements and customer relationships, a weighted-average amortization period of 8.7 years for net intellectual property and a weighted-average amortization period of 2.0 years for a net finite lived trade name.

In connection with the acquisition of Telmar Network Technology, Inc. (“Telmar”) in the second quarter of fiscal year 2012, the Company acquired $49.9 million of intangible assets, including $38.6 million assigned to customer relationships with an assigned useful life of 15 years, $2.7 million assigned to a finite lived trade name with an assigned useful life of two years and $8.6 million assigned to other intellectual property with an assigned useful life of nine years, and $60.9 million of goodwill. See Note 12 – “Business Acquisitions” for further details.

The Company’s estimated future intangible asset amortization expense is as follows (in thousands):


Fiscal year ending August 31,	Amount
2012 (remaining three months)	$	3,430
2013		13,663
2014		11,362
2015		8,231
2016		4,961
Thereafter		29,905

Total	$	71,552

- 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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