Note 6 - Goodwill And Other Intangible Assets

12 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 6 -  GOODWILL AND OTHER INTANGIBLE ASSETS

In accordance with ASC Topic 350, “Intangibles – Goodwill and Other,” the Company is required to perform an annual impairment test of its goodwill and indefinite-lived intangible assets. The Company previously performed this test as of July 1st of each fiscal year, with the last test performed using this date as of July 1, 2010. The Company decided to change the annual testing from July 1st to March 1st in order to reduce administrative burden. The change from a testing date of July 1st to March 1st resulted in two impairment tests in fiscal 2011 that were eight months apart. The Company also performs the test on an interim basis when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company uses a combination of the market approach and the income (discounted cash flow) approach in determining the fair value of its reporting units. Under ASC Topic 350, the goodwill impairment test is a two-step process. Under the first step, the fair value of the Company’s reporting unit is compared to its respective carrying value. An indication that goodwill is impaired occurs when the fair value of a reporting unit is less than the carrying value. When there is an indication that goodwill is impaired, the Company is required to perform a second step. In step two, the actual impairment of goodwill is calculated by comparing the implied fair value of the goodwill with the carrying value of the goodwill.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing.  The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing.  These include operating results, forecasts, anticipated future cash flows and marketplace data, to name a few.  There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

Based upon the Company’s analysis as of July 1, 2010, it was determined that the goodwill associated with the four reporting units that contained goodwill was not impaired.  The goodwill impairment test in the Electronic Components Segment passed with an estimated business enterprise value that was $2.2 million or 10% above the carrying value of this reporting unit.  The goodwill impairment test in the All Other Category passed with an estimated business enterprise value that was $0.9 million or 84% above the carrying value of the reporting unit.  The goodwill impairment tests in the Lighting and Graphics Segments passed with margins in excess of 600% and 150%, respectively.

The Company performed a second annual goodwill impairment test, as of March 1, 2011, as a result of the change in the timing of the performance of the annual test as noted above.  Based upon the Company’s analysis as of March 1, 2011, it was determined that the goodwill associated with the four reporting units that contained goodwill was not impaired.  The goodwill impairment test in the Electronic Components Segment passed with an estimated business enterprise value that was $16.5 million or 69% above the carrying value of this reporting unit.  The goodwill impairment test of the Lighting Segment passed with an estimated business enterprise value that was $134.7 million or 42% above the carrying value of the reporting unit.  The goodwill impairment test of the Graphics Segment passed with an estimated business enterprise value that was $22.0 million or 91% above the carrying value of this reporting unit.  The goodwill impairment test in the All Other Category passed with a margin in excess of 265%.

The continuing effects of the recession on some of the Company’s markets, the decline in discounted cash flows associated with these markets, and the decline in the Company’s stock price led management to believe that an additional goodwill impairment test was required for three of the four reporting units that contain goodwill as of September 30, 2011. As a result of the test, it was determined that the goodwill associated with the Graphics Segment was fully impaired. It was also determined that the goodwill associated with the other reporting units tested was not impaired. Because the test was not complete, an estimate of the goodwill impairment was recorded in the first quarter of fiscal year 2012 totaling $258,000. This goodwill impairment test was completed in the second quarter of fiscal 2012 with no change to the impairment that was recorded.

As of March 1, 2012, the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill. The goodwill impairment test in the Electronic Components Segment passed with an estimated business enterprise value that was $7.7 million or 33% above the carrying value of this reporting unit.  The goodwill impairment test in the All Other Category passed with an estimated business enterprise value that was $1.8 million or 155% above the carrying value of the reporting unit.  The goodwill impairment test in the Lighting Segment passed with a margin in excess of $28.8 million or 32% above the carrying value of this reporting unit.

The Company acquired LSI Virticus in March 2012 and recorded goodwill in the amount of $2,413,000 (see Note 15).

The following table presents information about the Company's goodwill on the dates or for the periods indicated.

Goodwill

(In thousands)	Lighting Segment			Graphics Segment			Electronic Components Segment		All Other Category			Total
Balance as of June 30, 2011
Goodwill	$	34,913		$	24,959		$	9,208	$	6,850		$	75,930
Accumulated impairment losses		(34,778	)		(24,701	)		--		(5,685	)		(65,164	)
Goodwill, net as of June 30, 2011		135			258			9,208		1,165			10,766
Goodwill acquired during year		--			--			2,413		--			2,413
Impairment losses		--			(258	)		--		--			(258	)
Balance as of June 30, 2012
Goodwill		34,913			24,959			11,621		6,850			78,343
Accumulated impairment losses		(34,778	)		(24,959	)		--		(5,685	)		(65,422	)
Goodwill, net as of June 30, 2012	$	135		$	--		$	11,621	$	1,165		$	12,921

Based upon the Company’s annual analysis as of July 1, 2010, it was determined that its indefinite-lived intangible assets were not impaired. The Company performed a second annual indefinite-lived intangible asset impairment test, as of March 1, 2011, as a result of the change in the timing of the performance of the annual test. Based upon the Company’s analysis as of March 1, 2011, it was determined that its indefinite-lived intangible assets were not impaired.  A similar impairment test was performed as of March 1, 2012 as part of its annual review of indefinite-lived intangible assets. Based upon the Company’s analysis as of March 1, 2012, it was determined that its indefinite-lived intangible assets were not impaired.

The Company acquired LSI Virticus in March 2012 and recorded definite lived intangible assets in the amount of $1,191,000 (see Note 15).

The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:

	June 30, 2012
Other Intangible Assets (In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Amount
Amortized Intangible Assets
Customer relationships	$	10,352	$	6,538	$	3,814
Patents		70		51		19
LED technology firmware, software		12,361		9,225		3,136
Trade name		460		270		190
Non-compete agreements		948		455		493
Total Amortized Intangible Assets		24,191		16,539		7,652
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	27,613	$	16,539	$	11,074

	June 30, 2011
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Amount
Amortized Intangible Assets
Customer relationships	$	10,352	$	5,745	$	4,607
Patents		70		46		24
LED technology firmware, software		11,228		7,614		3,614
Trade name		460		178		282
Non-compete agreements		890		325		565
Total Amortized Intangible Assets		23,000		13,908		9,092
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	26,422	$	13,908	$	12,514

	Amortization Expense of Other Intangible Assets
(In thousands)	2012		2011		2010
Amortization Expense	$	2,631	$	2,589	$	2,555

The Company expects to record amortization expense as follows:

(In thousands)

2013	$	2,495
2014	$	791
2015	$	705
2016	$	699
2017	$	604
After 2017	$	2,358