Note 4: Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets consist of purchased customer relationships and trade names.
Our goodwill and intangibles at May 31, 2013 are the result of our acquisition of EMT on August 24, 2011, Telogy on March 31, 2010, and Rush Computer Rentals, Inc. on January 31, 2006.
The changes in carrying amount of goodwill and other intangible assets for fiscal 2013 and 2012 were as follows:
| Balance as of June 1, 2012 (net of amortization) |
Additions | Amortization | Balance as of May 31, 2013 |
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Goodwill |
$ | 3,109 | $ | — | $ | — | $ | 3,109 | ||||||||
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Trade name |
411 | — | — | 411 | ||||||||||||
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Customer relationships |
790 | — | (164 | ) | 626 | |||||||||||
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| $ | 4,310 | $ | — | $ | (164 | ) | $ | 4,146 | ||||||||
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| Balance as of June 1, 2011 (net of amortization) |
Additions | Amortization | Balance as of May 31, 2012 |
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Goodwill |
$ | 3,109 | $ | — | $ | — | $ | 3,109 | ||||||||
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Trade name |
411 | — | — | 411 | ||||||||||||
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Customer relationships |
803 | 140 | (153 | ) | 790 | |||||||||||
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| $ | 4,323 | $ | 140 | $ | (153 | ) | $ | 4,310 | ||||||||
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Goodwill is not deductible for tax purposes.
We evaluate the recoverability of goodwill and indefinite-lived intangible assets annually as of May 31, and whenever events or changes in circumstances indicate to us that the carrying amount may not be recoverable. There were no conditions that indicated any impairment of goodwill or identifiable intangible assets as of May 31, 2013, 2012 and 2011.
Intangible assets with finite useful lives are amortized over their respective estimated useful lives. The following table provides a summary of our intangible assets:
| May 31, 2013 | ||||||||||||||||
| Estimated Useful Life |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
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Trade name |
— | $ | 411 | $ | — | $ | 411 | |||||||||
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Customer relationships |
3-8 years | 2,094 | (1,468 | ) | 626 | |||||||||||
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| $ | 2,505 | $ | (1,468 | ) | $ | 1,037 | ||||||||||
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| May 31, 2012 | ||||||||||||||||
| Estimated Useful Life |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
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Trade name |
— | $ | 411 | $ | — | $ | 411 | |||||||||
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Customer relationships |
3-8 years | 2,094 | (1,304 | ) | 790 | |||||||||||
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| $ | 2,505 | $ | (1,304 | ) | $ | 1,201 | ||||||||||
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Amortization expense was $164, $153 and $184 for fiscal 2013, 2012 and 2011, respectively.
Amortization expense for customer relationships and non-compete agreements is included in selling, general and administrative expenses. The following table provides estimated future amortization expense related to intangible assets:
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Year ending May 31, |
Future Amortization |
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2014 |
$ | 164 | ||
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2015 |
129 | |||
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2016 |
118 | |||
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2017 |
118 | |||
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2018 |
97 | |||
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| $ | 626 | |||
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