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Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets
 12 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL AND OTHER INTANGIBLE ASSETS
2020 December Quarter Widia Impairment Charges
In the December quarter of fiscal 2020, the Company experienced deteriorating market conditions, primarily in general engineering and transportation applications in India and China, in addition to overall global weakness in the manufacturing sector. In view of these declining conditions and the significant detrimental effect on cash flows and actual and projected revenue and earnings compared with our most recent annual impairment test, we determined that an impairment triggering event had occurred and performed an interim quantitative impairment test of our goodwill, indefinite-lived trademark intangible asset and other long-lived assets of our Widia reporting unit. We evaluated the recoverability of goodwill for the reporting unit by comparing the fair value with its carrying value, with the fair values determined using a combination of a discounted cash flow analysis and market multiples based upon historical and projected financial information. As a result of this interim test, we recorded a non-cash pre-tax impairment charge during the three months ended December 31, 2019 of $14.6 million in the Widia segment, of which $13.1 million was for goodwill and $1.5 million was for an indefinite-lived trademark intangible asset. These impairment charges were recorded in goodwill and other intangible assets impairments in our consolidated statements of income. No impairment was recorded for the other Widia long-lived assets.
2020 March Quarter Widia Impairment Charges
In the March quarter of fiscal 2020, the decline in actual and projected financial results for the Widia reporting unit, primarily as a result of the COVID-19 pandemic, represented an interim impairment triggering event because there was essentially zero cushion between the reporting unit's carrying value and fair value as of March 31 2020. This is because the Widia reporting unit was recorded at fair value as of the last impairment date of December 31, 2019. We evaluated the recoverability of goodwill for the reporting unit by comparing the fair value with its carrying value, with the fair values determined using a combination of a discounted cash flow analysis and market multiples based upon historical and projected financial information. As a result of this interim test, we recorded a non-cash pre-tax impairment charge during the three months ended March 31, 2020 of $15.6 million in the Widia segment, of which $13.7 million was for goodwill and $1.9 million was for an indefinite-lived trademark intangible asset. These impairment charges were recorded in goodwill and other intangible assets impairments in our consolidated statements of income. No impairment was recorded for the other Widia long-lived assets. Subsequent to the impairment charges recorded in the March quarter of fiscal 2020, there is no remaining goodwill for the Widia reporting unit and the carrying value of the indefinite-lived trademark is $11.2 million as of June 30, 2020, which approximates fair value.
As of June 30, 2020, $270.6 million of goodwill was allocated to the Industrial reporting unit. We completed an annual quantitative test of goodwill impairment and determined that the fair value of the reporting unit substantially exceeded the carrying value and, therefore, no impairment was recorded during fiscal 2020.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill and indefinite-lived intangible impairment test will prove to be an accurate prediction of the future. Certain events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately affect the estimated fair values of the Industrial reporting unit and of the indefinite-lived trademark may include such items as: (i) a decrease in expected future cash flows, specifically, a further decrease in sales volume driven by a prolonged weakness in customer demand or other pressures, including those related to the COVID-19 pandemic, adversely affecting our long-term sales trends; (ii) inability to achieve the anticipated benefits from simplification/modernization and other cost reduction programs and (iii) inability to achieve the sales from our strategic growth initiatives.
Divestiture Effect on Other Intangible Assets
During the December quarter of fiscal 2020, we completed the sale of certain assets of the non-core specialty alloys and metals business within the Infrastructure segment. As a result of this transaction, other intangibles decreased by $12.5 million in our Infrastructure segment during fiscal 2020. See Note 4 for more information.
A summary of the carrying amount of goodwill attributable to each segment, as well as the changes in such, is as follows:
(in thousands)
Industrial
 
Widia
 
Infrastructure
 
Total
Gross goodwill
$
411,458

 
$
41,186

 
$
633,211

 
$
1,085,855

Accumulated impairment losses
(137,204
)
 
(13,638
)
 
(633,211
)
 
(784,053
)
Balance as of June 30, 2018
$
274,254

 
$
27,548

 
$
—

 
$
301,802

 
 
 
 
 
 
 
 
Activity for 2019:
 
 
 
 
 
 
 
Change in gross goodwill due to translation
(1,546
)
 
(245
)
 
—

 
(1,791
)
 
 
 
 
 
 
 
 
Gross goodwill
409,912

 
40,941

 
633,211

 
1,084,064

Accumulated impairment losses
(137,204
)
 
(13,638
)
 
(633,211
)
 
(784,053
)
Balance as of June 30, 2019
$
272,708

 
$
27,303

 
$
—

 
$
300,011

 
 
 
 
 
 
 
 
Activity for 2020:
 
 
 
 
 
 
 
Change in gross goodwill due to translation
(2,128
)
 
(484
)
 
—

 
(2,612
)
Impairment charges
—

 
(26,819
)
 
—

 
(26,819
)
 
 
 
 
 
 
 
 
Gross goodwill
407,784

 
40,457

 
633,211

 
1,081,452

Accumulated impairment losses
(137,204
)
 
(40,457
)
 
(633,211
)
 
(810,872
)
Balance as of June 30, 2020
$
270,580

 
$
—

 
$
—

 
$
270,580


The components of our other intangible assets were as follows: 
 
Estimated
Useful Life
(in years)
 
June 30, 2020
 
 
June 30, 2019
(in thousands)
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
 
Gross Carrying
Amount
 
Accumulated
Amortization
Contract-based
3 to 15
 
$
—

 
$
—

 
 
$
7,062

 
$
(7,062
)
Technology-based and other
4 to 20
 
32,713

 
(22,612
)
 
 
46,228

 
(31,890
)
Customer-related
10 to 21
 
181,408

 
(88,112
)
 
 
205,213

 
(94,711
)
Unpatented technology
10 to 30
 
31,586

 
(17,890
)
 
 
31,702

 
(15,492
)
Trademarks
5 to 20
 
13,087

 
(8,772
)
 
 
14,755

 
(9,352
)
Trademarks
Indefinite
 
11,160

 
—

 
 
14,545

 
—

Total
 
 
$
269,954

 
$
(137,386
)
 
 
$
319,505

 
$
(158,507
)

Amortization expense for intangible assets was $13.8 million, $14.4 million and $14.7 million for 2020, 2019 and 2018, respectively. Estimated amortization expense for 2021 through 2025 is $12.5 million, $12.1 million, $11.9 million, $10.7 million, and $9.5 million, respectively.