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Goodwill and Intangible Assets | 12 Months Ended
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Apr. 30, 2011
Goodwill and Intangible Assets |
Goodwill and Intangible Assets |
NOTE 9: | GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill by segment for the years ended April 30, 2011 and 2010 are as follows:
(in 000s) |  |  |  |
|  | Tax Services |  |  | Business Services |  |  | Total |  |  |  |
Balance at May 1, 2009: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 449,779 |  |  | $ | 402,639 |  |  | $ | 852,418 |  |  |  |  |
Accumulated impairment losses |  |  | (2,188 | ) |  |  | – |  |  |  | (2,188 | ) |  |  |  |
|  |  | 447,591 |  |  |  | 402,639 |  |  |  | 850,230 |  |  |  |  |
Changes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisitions |  |  | 5,136 |  |  |  | 1,112 |  |  |  | 6,248 |  |  |  |  |
Disposals and foreign currency changes |  |  | (1,031 | ) |  |  | – |  |  |  | (1,031 | ) |  |  |  |
Impairments |  |  | – |  |  |  | (15,000 | ) |  |  | (15,000 | ) |  |  |  |
Balance at April 30, 2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 453,884 |  |  |  | 403,751 |  |  |  | 857,635 |  |  |  |  |
Accumulated impairment losses |  |  | (2,188 | ) |  |  | (15,000 | ) |  |  | (17,188 | ) |  |  |  |
|  |  | 451,696 |  |  |  | 388,751 |  |  |  | 840,447 |  |  |  |  |
Changes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisitions |  |  | 15,441 |  |  |  | 28,552 |  |  |  | 43,993 |  |  |  |  |
Disposals and foreign currency changes |  |  | (10,286 | ) |  |  | (5,209 | ) |  |  | (15,495 | ) |  |  |  |
Impairments |  |  | (22,700 | ) |  |  | – |  |  |  | (22,700 | ) |  |  |  |
Balance at April 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 459,039 |  |  |  | 427,094 |  |  |  | 886,133 |  |  |  |  |
Accumulated impairment losses |  |  | (24,888 | ) |  |  | (15,000 | ) |  |  | (39,888 | ) |  |  |  |
|  | $ | 434,151 |  |  | $ | 412,094 |  |  | $ | 846,245 |  |  |  |  |
Goodwill and other indefinite-life intangible assets were tested for impairment in the fourth quarter of fiscal year 2011. Except as discussed below, no impairment was identified. The RedGear reporting unit within our Tax Services segment experienced lower than expected revenues, and as a result, we evaluated this reporting unit's goodwill for impairment at January 31, 2011. The measurement of impairment of goodwill consists of two steps. In the first step, we compared the fair value of this reporting unit, determined using discounted cash flows, to its carrying value. As the results of the first test indicated that the fair value was less than its carrying value, we then performed the second step, which was to determine the implied fair value of its goodwill and to compare that to its carrying value. The second step included hypothetically valuing all of the tangible and intangible assets of this reporting unit. As a result, we recorded an impairment of the reporting unit's goodwill of $22.7 million, leaving a remaining goodwill balance of approximately $14 million. The impairment is included in selling, general and administrative expenses on the consolidated statements of income. We recorded a $15.0 million impairment in our Business Services segment in fiscal year 2010, related to RSM EquiCo, due to declining revenues and profitability. We recorded a $2.2 million goodwill impairment in our Tax Services segment in fiscal year 2009, which was a result of the closure of a previously acquired business. The components of intangible assets are as follows:
(in 000s) |  |  |  |
As of April 30, |  | 2011 |  |  | 2010 |  |  |  |
|  | Gross |  |  |  |  |  |  |  |  | Gross |  |  |  |  |  |  |  |  |  |
|  | Carrying |  |  | Accumulated |  |  |  |  |  | Carrying |  |  | Accumulated |  |  |  |  |  |  |
|  | Amount |  |  | Amortization |  |  | Net |  |  | Amount |  |  | Amortization |  |  | Net |  |  |  |
Tax Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | $ | 87,624 |  |  | $ | (41,076 | ) |  | $ | 46,548 |  |  | $ | 67,705 |  |  | $ | (33,096 | ) |  | $ | 34,609 |  |  |  |  |
Noncompete agreements |  |  | 23,456 |  |  |  | (22,059 | ) |  |  | 1,397 |  |  |  | 23,062 |  |  |  | (21,278 | ) |  |  | 1,784 |  |  |  |  |
Reacquired franchise rights |  |  | 214,330 |  |  |  | (9,961 | ) |  |  | 204,369 |  |  |  | 223,773 |  |  |  | (6,096 | ) |  |  | 217,677 |  |  |  |  |
Franchise agreements |  |  | 19,201 |  |  |  | (3,093 | ) |  |  | 16,108 |  |  |  | 19,201 |  |  |  | (1,813 | ) |  |  | 17,388 |  |  |  |  |
Purchased technology |  |  | 14,700 |  |  |  | (8,505 | ) |  |  | 6,195 |  |  |  | 14,500 |  |  |  | (6,266 | ) |  |  | 8,234 |  |  |  |  |
Trade name |  |  | 1,325 |  |  |  | (600 | ) |  |  | 725 |  |  |  | 1,325 |  |  |  | (400 | ) |  |  | 925 |  |  |  |  |
Business Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  |  | 152,079 |  |  |  | (128,738 | ) |  |  | 23,341 |  |  |  | 145,149 |  |  |  | (120,037 | ) |  |  | 25,112 |  |  |  |  |
Noncompete agreements |  |  | 35,818 |  |  |  | (24,662 | ) |  |  | 11,156 |  |  |  | 33,052 |  |  |  | (22,118 | ) |  |  | 10,934 |  |  |  |  |
Attest firm affiliation |  |  | 7,629 |  |  |  | (318 | ) |  |  | 7,311 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  |  |
Trade name – amortizing |  |  | 2,600 |  |  |  | (2,600 | ) |  |  | – |  |  |  | 2,600 |  |  |  | (2,600 | ) |  |  | – |  |  |  |  |
Trade name – non-amortizing |  |  | 55,637 |  |  |  | (4,868 | ) |  |  | 50,769 |  |  |  | 55,637 |  |  |  | (4,868 | ) |  |  | 50,769 |  |  |  |  |
Total intangible assets |  | $ | 614,399 |  |  | $ | (246,480 | ) |  | $ | 367,919 |  |  | $ | 586,004 |  |  | $ | (218,572 | ) |  | $ | 367,432 |  |  |  |  |
Amortization of intangible assets of continuing operations for the years ended April 30, 2011, 2010 and 2009 was $29.5 million, $30.0 million and $24.9 million, respectively. Estimated amortization of intangible assets for fiscal years 2012, 2013, 2014, 2015 and 2016 is $27.3 million, $22.8 million, $19.3 million, $14.5 million and $13.1 million, respectively. In connection with the acquisition of Caturano, as discussed in note 2, we recorded a liability related to unfavorable operating lease terms in the amount of $5.9 million, which will be amortized over the remaining contractual life of the operating lease. The net balance was $5.5 million at April 30, 2011.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13816-109267 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 142 -Paragraph 42, 43, 44, 45, 46, 47 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16373-109275 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16323-109275 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13854-109267 + Details
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