Goodwill and Other Intangible Assets

12 Months Ended

Aug. 31, 2012

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 2012 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.

The following tables present the changes in goodwill allocated to the Company’s reportable segments during the fiscal years ended August 31, 2012 and 2011 (in thousands):


	August 31, 2011								August 31, 2012
Reportable Segment	Gross Balance		Accumulated Impairment Balance			Acquisitions		Foreign Currency Impact	Gross Balance		Accumulated Impairment Balance			Net Balance
DMS	$	584,018	$	(558,768	)	$	60,942	$(1,212)	$	643,748	$	(558,768	)	$	84,980
E&I		342,733		(331,784	)		—	(911)		341,822		(331,784	)		10,038
HVS		132,269		(132,269	)		—	—		132,269		(132,269	)		—

Total	$	1,059,020	$	(1,022,821	)	$	60,942	$(2,123)	$	1,117,839	$	(1,022,821	)	$	95,018


	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

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. Indefinite lived intangible assets consist of a trade name. The Company completed its annual impairment test for its indefinite-lived intangible asset during the fourth quarter of fiscal year 2012 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, 2012 and August 31, 2011 (in thousands):


August 31, 2012	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Contractual agreements and customer relationships	$	122,679	$	(63,772	)	$	58,907
Intellectual property		84,688		(76,799	)		7,889
Finite lived trade name		2,668		(1,001	)		1,667
Indefinite-lived trade name		50,590		—			50,590

Total	$	260,625	$	(141,572	)	$	119,053


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
Indefinite-lived trade name		52,892		—			52,892

Total	$	217,573	$	(128,467	)	$	89,106

The weighted-average amortization period for aggregate net intangible assets at August 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 14 – “Business Acquisitions” for further details.

Intangible asset amortization for fiscal years 2012, 2011 and 2010 was approximately $16.8 million, $22.1 million, and $25.9 million, respectively. The estimated future amortization expense is as follows (in thousands):


Fiscal Year Ending August 31,	Amount
2013	$	13,645
2014		11,414
2015		8,231
2016		4,983
2017		3,486
Thereafter		26,704

Total	$	68,463

- 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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