Goodwill And Other Intangible Assets

12 Months Ended

Jun. 30, 2012

Note 5.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses. Identifiable intangible assets acquired in business combinations are recorded based upon fair market value at the date of acquisition.

Changes in the carrying amount of goodwill are as follows:


	Year Ended June 30, 2012
	Infrared Optics			Near- Infrared Optics		Military & Materials		Advanced Products Group		Total
Balance – July 1, 2011	$	10,038		$	33,511	$	10,399	$	10,314	$	64,262
Goodwill acquired		—			16,193		—		—		16,193
Foreign currency translation		(426	)		719		—		—		293
Balance – June 30, 2012	$	9,612		$	50,423	$	10,399	$	10,314	$	80,748

In connection with the acquisition of Aegis in July of 2011, the Company recorded the excess purchase price over the net assets of the business acquired as goodwill in the accompanying Condensed Consolidated Balance Sheets based on the purchase price allocation.


	Year Ended June 30, 2011
	Infrared Optics		Near- Infrared Optics		Military & Materials		Advanced Products Group		Total
Balance – July 1, 2010	$	9,525	$	32,335	$	3,914	$	10,314	$	56,088
Goodwill acquired		—		—		6,485		—		6,485
Foreign currency translation		513		1,176		—		—		1,689
Balance – June 30, 2011	$	10,038	$	33,511	$	10,399	$	10,314	$	64,262

In connection with the acquisition of Max Levy Autograph (“MLA”) in December of 2010, the Company recorded the excess purchase price over the net assets of the business acquired as goodwill in the accompanying Condensed Consolidated Balance Sheets based on the purchase price allocation.

In accordance with U.S. GAAP, the Company tests for potential impairment of goodwill at least annually and any time business conditions indicate a potential change in recoverability. The evaluation of impairment involves comparing the current fair value of the Company’s reporting units to the recorded value (including goodwill). The Company uses a DCF model and a market analysis to determine the current fair value of its reporting units. A number of significant assumptions and estimates are involved in estimating the forecasted cash flows used in the DCF model, including markets and market shares, sales volume and pricing, costs to produce, working capital changes and income tax rates. Management considers historical experience and all available information at the time the fair values of the reporting units are estimated. As of April 1 of fiscal years 2012 and 2011, the Company completed its annual impairment tests of its reporting units. Based on the results of these analyses, the Company’s goodwill of $80.7 million as of June 30, 2012 and $64.3 million as of June 30, 2011 was not impaired.

The gross carrying amount and accumulated amortization of the Company’s intangible assets other than goodwill as of June 30, 2012 and 2011 were as follows:


	June 30, 2012							June 30, 2011
($000)	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Patents	$	21,856	$	(7,640	)	$	14,216	$	16,009	$	(5,843	)	$	10,166
Tradenames		13,166		(888	)		12,278		11,074		(811	)		10,263
Customer Lists		25,816		(8,296	)		17,520		14,327		(6,024	)		8,303
Other		1,375		(1,375	)		—		1,387		(1,387	)		—

Total	$	62,213	$	(18,199	)	$	44,014	$	42,797	$	(14,065	)	$	28,732

Amortization expense recorded on the intangible assets for the years ended June 30, 2012, 2011 and 2010 was $4.5 million, $2.8 million, and $1.9 million, respectively. The patents are being amortized over a range of 120 to 240 months with a weighted average remaining life of approximately 129 months. The customer lists are being amortized over 120 months with a weighted average remaining life of approximately 105 months. In connection with the acquisition of Aegis, the Company completed its valuation of certain identifiable intangible assets during the recently completed year ended June 30, 2012. The components of the identifiable intangible assets related to Aegis were $11.7 million for customer lists, $5.4 million for patents and $2.0 million for tradenames. The tradenames were determined to have an indefinite life and are not amortized but tested annually for impairment.

In connection with past acquisitions, the Company acquired tradenames with indefinite lives. The carrying amount of these tradenames of $11.6 million is not amortized but tested annually for impairment. The Company completed its impairment test of these tradenames with indefinite lives in the fourth quarter of fiscal years 2012 and 2011. Based on the results of these tests, the tradenames were not impaired at June 30, 2012 or 2011.

Included in the gross carrying amount and accumulated amortization of the Company’s patents, customer list and other component of intangible assets and goodwill is the effect of the foreign currency translation of the portion relating to the Company’s German subsidiaries, Photop and AOFR. The estimated amortization expense for existing intangible assets for each of the five succeeding years is as follows:


Year Ending June 30,
($000)
2013	$	4,186
2014		3,744
2015		3,479
2016		3,411
2017		3,402

- 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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