XML 27 R15.htm IDEA: XBRL DOCUMENT

Note 7 - Goodwill and Other Intangible Assets

9 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The fair value measurements of the reporting units are based on significant inputs not observable in the market and thus represent Level 3 measurements as defined by ASC 820 “Fair Value Measurements.” The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of two reporting units that contain goodwill. There is one reporting unit within the Lighting Segment and one reporting unit within the Graphics Segment. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

As of March 1, 2021, the Company performed its annual preliminary goodwill impairment test on the two reporting units that contain goodwill. The preliminary goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $28.2 million or 26% above the carrying value of the reporting unit including goodwill. The preliminary goodwill impairment test of the reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value of $11.4 million or 2,065% above the carrying value of the reporting unit including goodwill. The definitive impairment test is expected to be completed in the fourth quarter of fiscal 2021. It is anticipated that the results of the definitive test will not change when the test is complete.

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

Goodwill
(In thousands)	Lighting			Graphics
	Segment			Segment			Total
Balance as of March 31, 2021
Goodwill	$	70,971		$	28,690		$	99,661
Accumulated impairment losses		(61,763	)		(27,525	)		(89,288	)
Goodwill, net as of March 31, 2021	$	9,208		$	1,165		$	10,373

Balance as of June 30, 2020
Goodwill	$	86,711		$	28,690		$	115,401
Accumulated impairment losses		(77,503	)		(27,525	)		(105,028	)
Goodwill, net as of June 30, 2020	$	9,208		$	1,165		$	10,373

In the second quarter of fiscal 2021, the Company wrote-off the goodwill and impairment loss for a dissolved entity. The net impact to the consolidated financial statements, including the goodwill, net balance, was zero.

The Company performed its annual review of indefinite-lived intangible assets as of March 1, 2021 and determined there was no impairment. The preliminary indefinite-lived intangible impairment test passed with a fair market value of $15.7 million or 358% above its carrying value. The definitive indefinite-lived impairment test is expected to be completed in the fourth quarter of fiscal 2021. It is anticipated that the results of the definitive test will not change when the test is complete.

The following table presents the gross carrying amount and accumulated amortization by each major asset class:

Other Intangible Assets	March 31, 2021
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	30,163	$	10,273	$	19,890
Patents		268		230		38
LED technology firmware, software		16,066		13,215		2,851
Trade name		2,658		911		1,747
Total Amortized Intangible Assets		49,155		24,629		24,526

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	$	52,577	$	24,629	$	27,948

Other Intangible Assets	June 30, 2020
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	14,129	$	21,434
Patents		338		277		61
LED technology firmware, software		16,066		12,852		3,214
Trade name		2,658		829		1,829
Total Amortized Intangible Assets		54,625		28,087		26,538

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	$	58,047	$	28,087	$	29,960

In the second quarter of fiscal 2021, the Company wrote-off intangible assets’ gross carrying amount and accumulated amortization for a dissolved entity. The net impact to the consolidated financial statements, including the total other intangible assets, was zero.

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2021		2020		2021		2020

Amortization Expense of Other Intangible Assets	$	671	$	670	$	2,012	$	2,016

The Company expects to record annual amortization expense as follows:

(In thousands)

2021	$	2,682
2022	$	2,461
2023	$	2,412
2024	$	2,412
2025	$	2,412
After 2025	$	14,159