XML 64 R12.htm IDEA: XBRL DOCUMENT v3.20.2
GOODWILL AND INTANGIBLE ASSETS
12 Months Ended
Jul. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS

The Company's goodwill of $257.1 million as of July 31, 2020 relates to the Company's Direct Marketing reporting unit, which is the only reporting unit in the Direct Marketing reportable segment. The Company has not previously recognized any impairment losses for this reporting unit.

Other intangible assets, net, as of July 31, 2020, include trademarks and tradenames, and customer relationships. The trademarks and tradenames intangible assets are being amortized on a straight-line basis and the customer relationship intangible assets are being amortized on a double-declining basis over their estimated useful lives. At least annually, the remaining useful lives are evaluated.

The table below presents information for the Company's identifiable intangible assets that are subject to amortization:
 
 
 
July 31, 2020
 
July 31, 2019
 
Weighted Average Amortization Period
 
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
 
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
 
(in years)
 
(In thousands)
Customer Relationships
15
 
$
192,730

$
60,032

$
132,698

 
$
192,730

$
39,617

$
153,113

Trademarks and Trade Names
3
 
20,520

17,955

2,565

 
20,520

11,115

9,405

Total
 
 
$
213,250

$
77,987

$
135,263

 
$
213,250

$
50,732

$
162,518



As of April 30, 2020, the Company reviewed its goodwill and other intangible assets for indicators of impairment as a result of the impact of the COVID-19 pandemic, and as a result, the Company believes that indicators of impairment were present for all these asset classes due to a general deterioration in macroeconomic conditions, reduced cash flow projections and a significant decline in the Company's market capitalization. The Company performed a quantitative impairment test of goodwill. The Company calculated the fair value of the Direct Marketing reporting unit using a discounted cash flow ("DCF") valuation approach, which indicated the fair value of the reporting unit exceeded its carrying value by greater than $30.0 million, and therefore, as of April 30, 2020, there was no goodwill impairment. The DCF calculation was dependent on estimates for future sales, operating income, depreciation and amortization, income tax payments, working capital changes and capital expenditures, as well as expected long-term growth rates for cash flows. All of these factors are affected by economic conditions related to the industries in which the Company and its customers operate, as well as in conditions in the global capital markets. The discount rates utilized in the DCF valuation are based upon our weighted average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital adjusted as appropriate to consider the risk inherent in future cash flows of the reporting unit.

The Company performed a qualitative assessment of whether it was more likely than not that its other intangibles assets were impaired as of April 30, 2020. The Company reviewed its previous forecasts and assumptions based on the Company's current projections, that are subject to various risks and uncertainties, including forecasted revenues, expenses and cash flows, including the duration and extent of impact to our businesses from the COVID-19 pandemic. Based upon that assessment, the Company concluded it was not more likely than not that the other intangible assets were impaired as of April 30, 2020.

In the Company's latest annual goodwill impairment test that occurred as of June 30, 2020, the Company elected to perform a qualitative assessment of whether it was more likely than not that goodwill was impaired, and the test determined that goodwill was not impaired. However, as a result of the COVID-19 pandemic, it is possible in future periods that further declines in market conditions, customer demand or other potential changes in operations may increase the risk that goodwill and other intangible assets may become impaired.

The table below presents amortization expense recorded by the Company for its identifiable intangible assets.
 
Fiscal Year Ended July 31,
 
2020
 
2019
 
(In thousands)
Customer relationships
$
20,415

 
$
23,606

Trademarks and trade names
6,840

 
6,840

Total
$
27,255

 
$
30,446



The estimated future amortization expense of intangible assets as of July 31, 2020 is as follows (in thousands):
For the Fiscal Years Ended July 31,
 
2021
$
20,258

2022
15,334

2023
11,427

2024
9,371

2025
9,371

Thereafter
69,502

 
$
135,263