Goodwill and Intangibles

3 Months Ended

Aug. 31, 2011

Note 6: Goodwill and Intangibles

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 purchase 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 August 31, 2011 are the result of our acquisition of Telogy on March 31, 2010 and of Rush Computer Rentals, Inc. on January 31, 2006. Our evaluation of intangible assets, if any, associated with the acquisition of EMT on August 24, 2011 has not yet been completed.

The changes in carrying amount of goodwill and other intangible assets for the three months ended August 31, 2011 were as follows:


	Balance as of
	June 1, 2011 (net					Balance as of
	of amortization)		Amortization			August 31, 2011
Goodwill	$	3,109	$	—		$	3,109
Trade name		411		—			411
Customer relationships		803		(29	)		774

	$	4,323	$	(29	)	$	4,294

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 carrying amount may not be recoverable. There were no conditions that indicated any impairment of goodwill or identifiable intangible assets as of May 31, 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:


	August 31, 2011
	Estimated	Gross Carrying		Accumulated			Net Carrying
	Useful Life	Amount		Amortization			Amount

Trade name	indefinite	$	411	$	—		$	411
Customer relationships	3-4 years		1,954		(1,180	)		774

		$	2,365	$	(1,180	)	$	1,185


	May 31, 2011
	Estimated	Gross Carrying		Accumulated			Net Carrying
	Useful Life	Amount		Amortization			Amount

Trade name	indefinite	$	411	$	—		$	411
Customer relationships	3-4 years		1,954		(1,151	)		803

		$	2,365	$	(1,151	)	$	1,214

Amortization expense related to intangible assets was $29 and $54 for the three months ended August 31, 2011 and 2010, 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 as of August 31, 2011:


	Future
Year ending May 31,	Amortization
2012 (remaining)	$	88
2013		118
2014		118
2015		118
2016		118
Thereafter		214

	$	774

- 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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