ELECTRO RENT CORP | 2013 | FY | 3


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
 

Goodwill

   $ 3,109       $ —         $ —        $ 3,109   

Trade name

     411         —           —          411   

Customer relationships

     790         —           (164     626   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 4,310       $ —         $ (164   $ 4,146   
  

 

 

    

 

 

    

 

 

   

 

 

 
     Balance as of
June 1,  2011
(net of
amortization)
     Additions      Amortization     Balance as of
May 31,  2012
 

Goodwill

   $ 3,109       $ —         $ —        $ 3,109   

Trade name

     411         —           —          411   

Customer relationships

     803         140         (153     790   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 4,323       $ 140       $ (153   $ 4,310   
  

 

 

    

 

 

    

 

 

   

 

 

 

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
 

Trade name

     —         $ 411       $ —        $ 411   

Customer relationships

     3-8 years         2,094         (1,468     626   
  

 

 

    

 

 

    

 

 

   

 

 

 
      $ 2,505       $ (1,468   $ 1,037   
  

 

 

    

 

 

    

 

 

   

 

 

 
     May 31, 2012  
     Estimated
Useful Life
     Gross Carrying
Amount
     Accumulated
Amortization
    Net Carrying
Amount
 

Trade name

     —         $ 411       $ —        $ 411   

Customer relationships

     3-8 years         2,094         (1,304     790   
  

 

 

    

 

 

    

 

 

   

 

 

 
      $ 2,505       $ (1,304   $ 1,201   
  

 

 

    

 

 

    

 

 

   

 

 

 

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:

 

Year ending May 31,

   Future
Amortization
 

2014

   $ 164   

2015

     129   

2016

     118   

2017

     118   

2018

     97   
  

 

 

 
   $ 626   
  

 

 

 


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