Note I - Goodwill and Other Intangibles

9 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Text Block]

I. Goodwill and Other Intangibles

The Company reviews goodwill for impairment on a reporting unit basis annually as of the end of the fiscal year, and whenever events or circumstances (“triggering events”) indicate that the carrying value of goodwill

may

not be recoverable. The Company monitors for interim triggering events on an ongoing basis. Such triggering events include unfavorable operating results and macroeconomic trends, as well as a market capitalization of the Company below its book value.

Goodwill was reviewed for the following reporting units:

European Industrial

US Industrial

The fair value of reporting units is primarily driven by projected growth rates and operating results under the income approach using a discounted cash flow model, which applies an appropriate market-participant discount rate, and consideration of other market approach data from guideline public companies. If declining actual operating results or future operating results become indicative that the fair value of the Company’s reporting units has declined below their carrying values, an interim goodwill impairment test

may

need to be performed and

may

result in a non-cash goodwill impairment charge. If the Company’s market capitalization falls below the Company’s carrying value for a sustained period of time or if such a decline becomes indicative that the fair value of the Company’s reporting units has declined to below their carrying values, an interim goodwill impairment test

may

need to be performed and

may

result in a non-cash goodwill impairment charge.

For the quarter ended

March

31,

2017,

the Company performed a review of potential triggering events, and concluded there were no triggering events that indicated that the fair value of its European Industrial reporting unit had declined to below its carrying value at

March

31,

2017.

However, as the review pertained to its US Industrial reporting unit, the Company concluded that events have occurred during the quarter that were indicative that the fair value of the US Industrial reporting unit had more likely than not declined to below its carrying value at

March

31,

2017.

Such events included the decline in the industry outlook, as well as the underperformance of this reporting unit relative to its forecasted sales and prior period performance.

In accordance with ASC

350

(as updated by ASU

2017

05,

which the Company early-adopted), the Company performed an impairment test using current assumptions, including updated forecasted cash flows and a company specific discount rate of

13.1%,

for the US Industrial reporting unit and concluded that it required an impairment charge of

$2,550

to fully write off its remaining goodwill balance.

As of

March

31,

2017,

goodwill of

$2,442

pertains solely to the European Industrial reporting unit. The Company will perform its annual impairment test for this reporting unit on

June

30,

2017.

The changes in the carrying amount of goodwill, all of which is allocated to the manufacturing segment, for the

three

quarters ended

March

31,

2017

were as follows:

	Gross Carrying Amount			Accumulate d Impairment			Net Book Value
Balance at June 30, 2016	$	16,392		$	(11,272	)	$	5,120
Impairment		-			(2,550	)		(2,550	)
Translation adjustment		(128	)		-			(128	)
Balance at March 31, 2017	$	16,264		$	(13,822	)	$	2,442

The gross carrying amount and accumulated amortization of the Company’s intangible assets that have definite useful lives and are subject to amortization as of

March

31,

2017

and

June

30,

2016

were as follows:

	March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment			Net Book Value
Licensing agreements	$	3,015	$	(2,610	)	$	-		$	405
Non-compete agreements		2,128		(2,045	)		(83	)		-
Trade name		1,601		(336	)		-			1,265
Other		6,610		(5,322	)		(1,194	)		94
	$	13,354	$	(10,313	)	$	(1,277	)	$	1,764

	June 30, 2016
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment			Net Book Value
Licensing agreements	$	3,015	$	(2,565	)	$	-		$	450
Non-compete agreements		2,128		(2,045	)		(83	)		-
Trade name		1,668		(275	)		-			1,393
Other		6,615		(5,301	)		(1,194	)		120
	$	13,426	$	(10,186	)	$	(1,277	)	$	1,963

The weighted average remaining useful life of the intangible assets included in the table above is approximately

years.

Intangible amortization expense was

$41

and

$40

for the quarters ended

March

31,

2017,

and

March

25,

2016,

respectively. Intangible amortization expense was

$126

and

$114

for the

three

quarters ended

March

31,

2017,

and

March

25,

2016,

respectively. Estimated intangible amortization expense for the remainder of fiscal

2017

and each of the next

five

fiscal years is as follows:

Fiscal Year
2017	$	51
2018		173
2019		162
2020		149
2021		145
2022		138

The gross carrying amount of the Company’s intangible assets that have indefinite lives and are not subject to amortization as of

March

31,

2017

and

June

30,

2016

was

$199

and

$201,

respectively. These assets are comprised of acquired trade names.

- 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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