Goodwill & Other Intangible Assets

12 Months Ended

Feb. 22, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL & OTHER INTANGIBLE ASSETS

A summary of the changes in goodwill during the years ended February 22, 2013 and February 24, 2012, by reportable segment, is as follows:



Goodwill	Americas			EMEA			Other			Total
Goodwill	$	80.5		$	267.0		$	119.8		$	467.3
Accumulated impairment losses	(1.7		)	(229.9		)	(60.9		)	(292.5		)
Balance as of February 25, 2011	$	78.8		$	37.1		$	58.9		$	174.8
Transfers (1)	10.0			(6.0		)	(4.0		)	—
Acquisitions (2)	2.0			0.3			1.1			3.4
Dispositions (3)	—			—			(0.2		)	(0.2		)
Currency translation adjustments	(0.1		)	(1.4		)	0.1			(1.4		)
Goodwill	92.4			259.9			116.8			469.1
Accumulated impairment losses	(1.7		)	(229.9		)	(60.9		)	(292.5		)
Balance as of February 24, 2012	$	90.7		$	30.0		$	55.9		$	176.6
Acquisitions (4)	—			4.4			—			4.4
Impairments (5)	—			(35.1		)	(24.8		)	(59.9		)
Currency translation adjustments	(0.3		)	0.7			(0.1		)	0.3
Goodwill	92.1			265.0			116.7			473.8
Accumulated impairment losses	(1.7		)	(265.0		)	(85.7		)	(352.4		)
Balance as of February 22, 2013	$	90.4		$	—		$	31.0		$	121.4

________________________


(1)	In 2012, the transfer of a portion of Designtex’s business to the Americas segment resulted in a goodwill reclassification between the Other category and the Americas segment. As a result of the 2012 change in reportable segments, goodwill was reclassified from EMEA to the Americas segment based on a relative fair value analysis. See Note 18 for additional information.


(2)	In 2012, we acquired substantially all the assets of bkm Total Office resulting in an addition to goodwill in the Americas segment. See Note 19 for additional information. In addition, we made various immaterial acquisitions resulting in additions to the EMEA segment and Other category.


(3)	In 2012, we sold a portion of PolyVision’s business. See Note 19 for additional information.


(4)	In 2013, we made various immaterial acquisitions resulting in additions to goodwill in the EMEA segment.


(5)	In 2013, we recorded goodwill impairment charges in both our EMEA and Designtex reporting units. See further details below.

Our goodwill impairment evaluation is a two step process. In step one, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, we perform step two to measure the amount of impairment loss, if any. In step two, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.

We estimated the fair value of our reporting units using the income approach, which calculates the fair value of each reporting unit based on the present value of its estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to execute on the projected cash flows. The estimation of the fair value of our reporting units represents a Level 3 measurement.

We initiated our annual goodwill impairment analysis in Q4 2013 and concluded that fair value of our EMEA reporting unit (in the EMEA segment) and the Designtex reporting unit (in the Other category) were below their respective carrying values. The decline in the estimated fair value of the EMEA reporting unit was driven in part by the operating loss we recorded in 2013. In addition, the near-term outlook for Western Europe remains heavily challenged by macroeconomic headwinds. Therefore, in Q4 2013, we determined that these factors were likely to negatively impact the level of near-term profitability we would expect to achieve with our current business model. The projections used in our impairment model reflected our assumptions regarding revenue growth rates, economic and market trends, cost structure and other expectations about the anticipated short-term and long-term operating results of the EMEA reporting unit. Based on the step one and step two analyses, we recorded a $35.1 goodwill impairment charge in 2013, and there is no remaining net goodwill in the EMEA reporting unit as of February 22, 2013. Additionally, we tested the recoverability of the EMEA long-lived assets (other than goodwill) and concluded that these assets were not impaired.

The decline in the estimated fair value of the Designtex reporting unit was largely driven by lower than expected operating performance in 2013 and the significant future investment required to strengthen our product offering, marketing and overall brand image. The projections used in our impairment model reflected our assumptions regarding revenue growth rates, market trends, business mix, cost structure and other expectations about the anticipated short-term and long-term operating results of the Designtex reporting unit. The decline in the fair value of the Designtex reporting unit, as well as the allocation of fair value to unrecognized intangible assets in step two of the goodwill impairment test, resulted in an implied fair value of goodwill below the carrying value of the goodwill for the Designtex reporting unit. As a result, we recorded a goodwill impairment charge of $24.8, which resulted in remaining net goodwill of $10.7 as of February 22, 2013.

Based on the results of the annual impairment test for all other reporting units, we concluded that no other goodwill impairment existed apart from the impairment charges discussed above. The excess of fair value over carrying value for each of our reporting units as of the annual testing date ranged from approximately 41% to approximately 148% of carrying value. We will continue to evaluate goodwill, on an annual basis in Q4, and whenever events or changes in circumstances, such as significant adverse changes in business climate or operating results, changes in management's business strategy or significant declines in our stock price, indicate that there may be a potential indicator of impairment.

As of February 22, 2013 and February 24, 2012, our other intangible assets and related accumulated amortization consisted of the following:



Other Intangible Assets	February 22, 2013							February 24, 2012
Other Intangible Assets	Weighted Average Useful Life (Years)	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Intangible assets subject to amortization:
Proprietary technology	9.7	$	22.8	$	19.7	$	3.1	$	23.5	$	19.3	$	4.2
Trademarks	8.9	13.3		13.3		—		29.7		29.3		0.4
Non-compete agreements	4.5	2.6		2.4		0.2		2.3		2.3		—
Other	5.7	14.5		11.2		3.3		10.9		9.3		1.6
		53.2		46.6		6.6		66.4		60.2		6.2
Intangible assets not subject to amortization:
Trademarks	n/a	12.6		—		12.6		12.6		—		12.6
		$	65.8	$	46.6	$	19.2	$	79.0	$	60.2	$	18.8

In 2013, 2012 and 2011, no intangible asset impairment charges were recorded.

We recorded amortization expense on intangible assets subject to amortization of $3.0 in 2013, $3.0 in 2012 and $3.2 for 2011. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five years is as follows:



Year Ending in February	Amount
2014	$	2.4
2015	2.2
2016	1.3
2017	0.6
2018	0.1
	$	6.6

Future events, such as acquisitions, dispositions or impairments, may cause these amounts to vary.

- 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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