Goodwill and Other Intangible Assets

12 Months Ended

Aug. 31, 2015

Goodwill and Other Intangible Assets [Abstract]

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 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 2015 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.

	The following tables present the changes in goodwill allocated to the Company’s reportable segments, Electronics
Manufacturing Services (“EMS”) and Diversified Manufacturing Services ("DMS"), during the fiscal years
ended August 31, 2015 and 2014 (in thousands):

		August 31, 2014								August 31, 2015
				Accumulated		Acquisitions		Foreign				Accumulated
		Gross		Impairment		&		Currency		Gross		Impairment
Reportable Segment		Balance		Balance		Adjustments		Impact		Balance		Balance		Net Balance
EMS		$	474,305	$	(464,053)	$	18,586	$	(965)	$	491,926	$	(464,053)	$	27,873
DMS			929,161		(555,769)		64,262		(3,145)		990,278		(555,769)		434,509
Total		$	1,403,466	$	(1,019,822)	$	82,848	$	(4,110)	$	1,482,204	$	(1,019,822)	$	462,382

	August 31, 2013								August 31, 2014
			Accumulated		Acquisitions		Foreign				Accumulated
	Gross		Impairment		&		Currency		Gross		Impairment
Reportable Segment	Balance		Balance		Adjustments		Impact		Balance		Balance		Net Balance
EMS	$	474,400	$	(464,053)	$	―	$	(95)	$	474,305	$	(464,053)	$	10,252
DMS		894,433		(555,769)		34,696		32		929,161		(555,769)		373,392
Total	$	1,368,833	$	(1,019,822)	$	34,696	$	(63)	$	1,403,466	$	(1,019,822)	$	383,644

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 8 years and finite-lived trade names which are being amortized over periods up to 10 years. Indefinite-lived intangible assets consist of trade names. The Company completed its annual impairment test for its indefinite-lived intangible assets during the fourth quarter of fiscal year 2015 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 values are 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, 2015 and 2014 (in thousands):

		Gross				Net
		Carrying		Accumulated		Carrying
August 31, 2015		Amount		Amortization		Amount
Contractual agreements and customer relationships		$	201,423	$	(96,013)	$	105,410
Intellectual property			150,453		(99,295)		51,158
Finite-lived trade name			4,434		(556)		3,878
Indefinite-lived trade name			123,090		―		123,090
	Total	$	479,400	$	(195,864)	$	283,536

		Gross				Net
		Carrying		Accumulated		Carrying
August 31, 2014		Amount		Amortization		Amount
Contractual agreements and customer relationships		$	165,651	$	(83,695)	$	81,956
Intellectual property			126,805		(87,795)		39,010
Indefinite-lived trade name			123,090		―		123,090
	Total	$	415,546	$	(171,490)	$	244,056

The weighted-average amortization period for aggregate net intangible assets at August 31, 2015 is 9.7 years, which includes a weighted-average amortization period of 12.3 years for net contractual agreements and customer relationships, a weighted-average amortization period of 5.1 years for net intellectual property and a weighted-average amortization period of 4.5 years for finite-lived trade names.

	Intangible asset amortization for fiscal years 2015, 2014 and 2013 was approximately $24.4 million, $23.9 million and
$11.0 million, respectively. The estimated future amortization expense is as follows (in thousands):

		Fiscal Year Ending August 31,		Amount
		2016		$	28,350
		2017			25,964
		2018			23,995
		2019			14,772
		2020			12,587
		Thereafter			54,778
			Total	$	160,446

- 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.

+ References + Details