. GOODWILL AND OTHER INTANGIBLES

Goodwill

The Company reviews goodwill for impairment on a reporting unit basis annually as of the

first

day of the Company's

fourth

fiscal quarter, and whenever events or changes in circumstances (“triggering events”) indicate that the carrying value of goodwill

may

not

be recoverable.

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.

July 2, 2018,

as described in Note B, Acquisition of Veth Propulsion Holding B.V., the Company acquired goodwill in the amount of

$23,999

and intangible assets in the amount of

$26,500

consisting of customer relationships, technology and know-how, and trade names as part of the acquisition of Veth Propulsion. As of

June 30, 2019,

these amounts were final. Veth Propulsion is reported as part of the Company's manufacturing segment and European Propulsion reporting unit.

A significant amount of judgment is involved in determining if a triggering event has occurred. Such indicators

may

include, among others: a significant decline in expected future cash flows; a sustained, significant decline in the Company's stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on the Company's consolidated financial statements.

The Company believes that the economic disruptions and unprecedented market volatilities and uncertainties resulting from the COVID-

outbreak was a triggering event in the

third

quarter of fiscal

2020.

Consequently, it performed an interim goodwill impairment test as of the quarter ended

March 27, 2020.

Subsequent to the adoption of ASU

2017

04,

goodwill impairment charges are recorded using a simplified

one

-step approach. The fair value of a reporting unit, as defined, is compared to the carrying value of the reporting unit, including goodwill. The fair value is primarily determined using discounted cash flow analyses which is driven by projected growth rates, and which applies an appropriate market-participant discount rate; the fair value determined is also compared to the value obtained using a market approach from guideline public company multiples. If the carrying amount exceeds the fair value, that difference is recognized as an impairment loss.

The European Propulsion reporting unit, which carried goodwill in the amount of

$22,822,

had heretofore been experiencing positive operating results. The Company continues to have a positive outlook of its operations and remains committed to supporting it. However, the onset of the COVID-

outbreak and its uncertainties, as described in Note A, Basis of Presentation and Significant Accounting Policies, required the Company to approach the goodwill impairment analysis differently this year; that past performance is

longer necessarily a good predictor of the future in a COVID-

environment. To incorporate uncertainties in its analysis, the Company applied a scenario modeling analysis for its goodwill impairment test this year. It is deemed to be the most prudent and a more robust approach in the face of uncertainty. Each scenario was then weighted with management's expectations of potential outcomes, to arrive at a reasonable conclusion of the fair value of the reporting unit. This was the approach deployed by the Company in this year's goodwill and long-lived asset impairment analyses.

In assessing the current environment, management is informed that there is consensus among industry experts that the impacts from the outbreak will be severe and adverse, and that a general contraction in the macroeconomic environment is expected. The magnitude and duration is unknown. Management expects that a contraction of the global economy would reduce or shift the demand for its products in the near term. For example, the reporting unit expects that the demand for certain of its end-market products, such as passenger leisure cruise vessels, passenger ferries, and other commercial vessels that operate based on general economic activities, will likely be adversely impacted as social restrictions by governments remain in place or tighten to curb the outbreak. Based on additional market insights and expectations of industry and subject matter experts, which also includes the negative impacts of the historic and unprecedented free fall drop in the global price of oil, the Company believes that future cash flow projections of this reporting unit will fall short of its previous projections, which included synergies that are now less likely to be realized in the face of a COVID-

environment.

The European Industrial reporting unit which carried goodwill in the amount of

$2,558

is also challenged with the same macroeconomic conditions and market contraction.

The Company completed its interim assessment for goodwill impairment as of

March 27, 2020

with the assistance of the aforementioned

third

party expert, using updated inputs, including an appropriate risk-based, company specific weighted average discount rate of

13.0%.

The assessment resulted in the full impairment of the European Propulsion and European Industrial reporting units, in the amount of

$25,380.

As a result of the full impairment of goodwill, the balance of goodwill at

June 30, 2020

zero

. There will

longer be a need for future goodwill impairment tests.

As a consequence of these macroeconomic developments, market insights and expectations, and the occurrence of a triggering event in the quarter, the Company also performed an assessment of its intangibles and other long-lived assets. The Company performed an undiscounted operating cash flow analysis as of

March 27, 2020,

as well as the review of other assets in service and their remaining useful lives. It was determined that an impairment charge pertaining to certain tradenames, licenses and other assets was required, in the amount of

$2,223.

The total non-cash impairment charge of

$27,603,

as described above, is a non-cash charge and is reported on the goodwill and other impairment charge line in the consolidated statement of operations within the manufacturing segment. The tax impact of this charge is to increase the income tax (benefit) by

$1,199.

The changes in the carrying amount of goodwill are summarized as follows:

	Net Book Value Rollforward									Net Book Value By Reporting Unit
	Gross Carrying Amount			Accumulated Impairment			Net Book Value			European Propulsion			European Industrial
Balance at June 30, 2018	$	16,514		$	(13,822	)	$	2,692		$	-		$	2,692
Acquisition		23,999			-			23,999			23,999			-
Translation adjustment		(737	)		-			(737	)		(628	)		(109	)
Balance at June 30, 2019		39,776			(13,822	)		25,954			23,371			2,583
Impairment		-			(25,380	)		(25,380	)		(22,822	)		(2,558	)
Translation adjustment		(574	)		-			(574	)		(549	)		(25	)
Balance at June 30, 2020	$	39,202		$	(39,202	)	$	-		$	-		$	-

Other Intangibles

June 30,

the following acquired intangible assets have definite useful lives and are subject to amortization:

	Net Book Value Rollforward									Net Book Value By Asset Type
	Gross Carrying Amount			Accumulated Amortization / Impairment			Net Book Value			Customer Relationships			Technology Know-how			Trade Name			Other
Balance at June 30, 2018	$	13,485		$	(11,781	)	$	1,704		$	-		$	-		$	1,288		$	416
Addition		236			-			236			-			-			-			236
Acquistion		26,500			-			26,500			16,300			8,400			1,800			-
Amortization		-			(2,653	)		(2,653	)		(1,123	)		(1,172	)		(261	)		(97	)
Translation adjustment		(634	)		-			(634	)		(334	)		(203	)		(94	)		(3	)
Balance at June 30, 2019		39,587			(14,434	)		25,153			14,843			7,025			2,733			552
Addition		92			-			92			-			-			-			92
Amortization		-			(4,532	)		(4,532	)		(3,003	)		(1,139	)		(232	)		(158	)
Impairment		-			(1,306	)		(1,306	)		-			-			(1,080	)		(226	)
Translation adjustment		(434	)		-			(434	)		(286	)		(102	)		(33	)		(13	)
Balance at June 30, 2020	$	39,245		$	(20,272	)	$	18,973		$	11,554		$	5,784		$	1,388		$	247

Other intangibles consist mainly of computer software. Amortization is recorded on the basis of straight-line or accelerated, as appropriate, over the estimated useful lives of the assets.

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

years.

Intangible amortization expense for the years ended

June 30, 2020

and

2019

was

$4,532

and

$2,653,

respectively. Estimated intangible amortization expense for each of the next

five

fiscal years is as follows:

Fiscal Year
2021	$	3,173
2022		2,989
2023		2,827
2024		2,679
2025		2,495
Thereafter		4,810