Goodwill And Intangible Assets

12 Months Ended

Apr. 30, 2013

Goodwill And Intangible Assets [Abstract]

Note 5. Goodwill and Intangible Assets

The following tables present details of the Company’s goodwill and intangible assets as of April 30, 2013 and April 30, 2012 (in thousands).


		Gross				Net	Weighted-
		carrying		Accumulated		carrying	average
April 30, 2013		amount		amortization		amount	useful life
Indefinite Lives:
Goodwill	$	11,706	$	-	$	11,706	-
Finite Lives:
Customer-related		6,236		(3,723)		2,513	7 years
Technology-based		2,638		(1,722)		916	5 years
Trademarks		4,600		(877)		3,723	10 years
Trade name		100		(100)		-	2 years
Total	$	25,280	$	(6,422)	$	18,858

		Gross				Net	Weighted-
		carrying		Accumulated		carrying	average
April 30, 2012		amount		amortization		amount	useful life
Indefinite Lives:
Goodwill	$	11,706	$	-	$	11,706	-
Finite Lives:
Customer-related		6,236		(3,043)		3,193	7 years
Technology-based		2,638		(1,410)		1,228	5 years
Trademarks		4,600		(331)		4,269	10 years
Trade name		100		(100)		-	2 years
Total	$	25,280	$	(4,884)	$	20,396

Acquired finite-lived intangibles are generally amortized on a straight line basis over their estimated useful life. The useful life of finite-lived intangibles is the period over which the asset is expected to contribute directly or indirectly to future cash flows of the Company. Intangible assets amortization expense for fiscal 2013, 2012, and 2011 was $1.5 million, $2.1 million, and $3.6 million, respectively. The estimated future amortization expense related to intangible assets as of April 30, 2013, is as follows (in thousands):


Fiscal Year Ending April 30		Amount
2014	$	1,538
2015		1,512
2016		1,096
2017		814
2018		774
Thereafter		1,418
Total	$	7,152

The following table summarizes the activity in the Company's goodwill account during fiscal years 2013 and 2012:



		Year ended April 30, 2013						Year ended April 30, 2012
		eDiscovery		Database, archive, and migration		Total		eDiscovery		Database, archive, and migration		Total
Balance, beginning of the period	$	6,064	$	5,642	$	11,706	$	19,519	$	5,642	$	25,161
Impairments of goodwill		-		-		-		(13,455)		-		(13,455)
Balance, end of period	$	6,064	$	5,642	$	11,706	$	6,064	$	5,642	$	11,706

Goodwill at April 30, 2013, represents the excess of purchase prices of acquired companies over the sum of the amounts assigned to assets acquired less liabilities assumed. The Company believes these acquisitions will produce the following results:

·	Increased Market Presence and Opportunities: The addition of the acquired companies should increase the combined company’s market presence and opportunities for growth in sales and earnings.

·	Enhanced Product Mix: The complementary nature of the Company’s products with those of the acquired companies should benefit current customers and provide the combined company with the ability to access new customers.

·	Operating Efficiencies: The combination of the Company and the acquired companies provides the opportunity for potential economies of scale and cost savings.

The Company believes these primary factors support the amount of goodwill recorded as a result of the purchase price for companies it has acquired. Goodwill is tested for impairment on an annual basis as of April 30, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach.

Pursuant to the accounting guidance for goodwill and other intangible assets, the Company performs a qualitative assessment to test a business unit’s goodwill for impairment. Based on our qualitative assessment, if the Company determines it is not more likely than not that the fair value of a business unit is less than its carrying amount, the two step impairment test will be performed. In the first step, the fair value of the Company is compared to its carrying value. The Company determined that the asset group to be tested for recoverability is at the business unit level as it was the lowest level at which cash flows were identifiable. The business units that contain goodwill and intangible assets are Database, eDiscovery, and Archive. In connection with the preparation of financial statements for the year ended April 30, 2013, management completed a valuation of the Company, which incorporated existing market-based considerations as well as a discounted cash flow methodology based on current results and projections, and concluded the all business units were not at risk of failing step one of the impairment test.

In fiscal year ended April 30, 2012 we recorded impairment charges of $13.5 million for the goodwill related to the acquisition of Daegis, representing 69% of its carrying value. The impairment charge is included in impairments of goodwill and intangible assets in the consolidated statement of operations.

The Company tested the other long-lived assets of the eDiscovery business unit for recoverability and concluded that the carrying value of the eDiscovery intangible assets was partially recoverable. As a result, the Company recorded impairment charges of $1.5 million for the intangible assets of eDiscovery during fiscal year 2012. The intangible assets impaired were $0.2 million of trademarks, $1.2 million of technology-based, and $0.1 million of non-compete. All other long-lived assets were deemed fully recoverable. The Company recorded these impairment charges in impairments of goodwill and intangible assets in the consolidated statement of operations.

In the fiscal year ended April 30, 2011, we recorded impairment charges of $1.1 million for the goodwill related to the acquisition of CipherSoft in January, 2009, representing 100% of its carrying value, and $11.2 million for the goodwill related to the acquisition of AXS-One in June, 2009, representing 100% of its carrying value. These impairment charges were included in impairments of goodwill and intangible assets in the consolidated statement of operations.

The Company tested the other long-lived assets of both the Ciphersoft and AXS-One business units for recoverability and concluded that the carrying value of the AXS-One intangible assets was partially recoverable while those of CipherSoft were not. As a result, the Company recorded impairment charges of $0.4 million for the intangible assets of CipherSoft and $3.3 million for the intangible assets of AXS-One during fiscal year 2011. The intangible assets impaired for CipherSoft were $0.3 million of technology-based, and $0.1 million of trade name. The intangible assets impaired for AXS-One were $0.7 million of trademarks and $2.6 million of technology-based. All other long-lived assets for both business units were deemed fully recoverable. The Company recorded these impairment charges in impairments of goodwill and intangible assets in the consolidated statement of operations.

- 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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