GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table provides changes in the carrying amount of goodwill by reportable segment:


	North America		International		Total
Balance as of June 30, 2023	$	697,053	$	241,587	$	938,640




Translation	(896)		(1,609)		(2,505)
Balance as of March 31, 2024	$	696,157	$	239,978	$	936,135

As a result of the significant decline in the Company’s market capitalization and the same factors triggering the interim impairment tests for the ParmCrisps® and Thinsters® trademarks, certain North America personal care tradenames, and other intangible assets discussed below, the Company completed an interim impairment test of all reporting units. For United Kingdom, Western Europe, Canada, and Ella's Kitchen UK, the Company performed a qualitative evaluation to assess factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The Company concluded that the qualitatively tested reporting units estimated fair values exceeded their carrying amounts. Three of these reporting units (United Kingdom, Western Europe and Canada) were quantitatively tested in fiscal 2023 and as of the last quantitative testing date, their estimated fair values exceeded their respective carrying amounts by more than 17.7%.

During the three months ended March 31, 2024, the Company completed an interim quantitative impairment test of goodwill in the United States (“U.S.”) reporting unit and concluded that the reporting unit’s estimated fair value exceeded its carrying amount. The fair value of the reporting unit was estimated utilizing a blended approach which included an income approach utilizing the Discounted Cash Flows (“DCF”) Method and the Guideline Public Company Methodology (“GPCM”), a market-based approach.

At March 31, 2024, the goodwill related to the U.S. reporting unit is at risk of potential impairment if the fair value of this reporting unit, and its associated assets, decrease in value due to the amount and timing of expected future cash flows, decreased customer demand for products, an inability to execute management’s business strategies, or general market conditions, such as economic downturns, and changes in interest rates, including discount rates. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company’s estimates. If the Company’s ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods. As of March 31, 2024 the U.S. reporting unit had $647,321 of goodwill and the reporting unit’s estimated fair value exceeded its carrying amount by 5.2%.

Other Intangible Assets

The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:


	March 31, 2024		June 30, 2023
Non-amortized intangible assets:
Trademarks and tradenames(1)	$	224,788	$	250,860
Amortized intangible assets:
Other intangibles	144,294		161,874
Less: Accumulated amortization	(118,817)		(114,629)
Net amortized intangible assets	25,477		47,245
Net other intangible assets	$	250,265	$	298,105

(1) The gross carrying amount of trademarks and tradenames is reflected net of $249,291 and $223,981 of accumulated impairment charges as of March 31, 2024 and June 30, 2023, respectively.

During the three months ended March 31, 2024, the Company recorded a non-cash impairment charge of $10,797 related to Thinsters® indefinite and definite lived intangible assets in connection with the probable sale of its Thinsters® cookie business (see Note 20, Subsequent Event). The Company concluded that as of March 31, 2024, there was a high probability that the sale of the Thinsters® business would occur and therefore, a quantitative impairment test was performed. To determine the amount of the impairment, the Company compared the carrying amount of the Thinsters® assets to its estimated fair value (which was the expected selling price less transaction costs). Further, the Company determined that not all criteria were met to be able to classify the Thinsters® business as held for sale as of March 31, 2024, since the Company did not receive approval from its Board of Directors to sell the Thinsters® business

until after March 31, 2024. The assets are part of the North America reportable segment and have a remaining aggregate carrying amount of $2,023 as of March 31, 2024.

During the three months ended March 31, 2024, as a result of further expected decline in the actual and projected performance and cash flows of certain North America personal care brands (namely, Alba Botanica®, Avalon Organics®, and JASON®) and the ParmCrisps® brand, the Company determined that interim impairment tests of the associated indefinite-lived trademarks were required to be performed. During the three months ended March 31, 2024, the Company recorded non-cash impairment charges of $12,815 and $8,000 for the personal care tradenames and the ParmCrisps® trademark, respectively, to reduce the carrying amounts of such intangible assets to their estimated fair values of $13,000 and nil, respectively. The fair value was determined using the relief from royalty method, and impairment charges were recorded within intangibles and long-lived asset impairment on the Consolidated Statements of Operations. The assets are part of the North America reportable segment.

As a result of the same factors triggering the interim impairment tests for the ParmCrisps® trademark discussed above, during the three months ended March 31, 2024, the Company completed its interim impairment tests of the ParmCrisps® asset group, which was primarily comprised of amortizable customer relationships, machinery and equipment and operating lease right-of-use assets. The Company determined that the carrying amount of the ParmCrisps® asset group exceeded the estimated fair value. During the three months ended March 31, 2024, the Company recorded non-cash impairment charges of $10,586 to reduce the carrying amount of the ParmCrisps® customer relationships, to their estimated fair value which was determined using a discounted cash flow analysis. Impairment charges were recorded within intangibles and long-lived asset impairment on the Consolidated Statements of Operations. The customer relationship intangible asset was part of the North America reportable segment and was fully impaired as of March 31, 2024.

During the three months ended March 31, 2023, the Company recorded non-cash impairment charges of $102,000 and $8,500 for the ParmCrisps® and Thinsters® trademarks, respectively, to reduce the carrying amount of such intangible assets to their estimated fair value. The fair values were determined using the relief from royalty method, and impairment charges were recorded within intangibles and long-lived asset impairment on the Consolidated Statements of Operations. The assets are part of the North America reportable segment and fully impaired as of March 31, 2024. As a result of the same factors triggering the interim impairment tests for the ParmCrisps® and Thinsters® trademarks, the Company completed interim impairment tests of the ParmCrisps® and Thinsters® asset groups, which were primarily comprised of amortizable customer relationships. The Company determined that the ParmCrisps® asset group’s carrying amount exceeded the estimated fair value. During the three months ended March 31, 2023, the Company recorded non-cash impairment charges of $45,798 to reduce the carrying amount of the ParmCrisps® customer relationships, the primary asset in the asset group, to their estimated fair value. Impairment charges were recorded within intangibles and long-lived asset impairment on the Consolidated Statements of Operations. The fair value of the Thinsters® asset group exceeded its carrying amount. The assets had a remaining aggregate carrying amount of $19,889 as of June 30, 2023.

Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships, trademarks and tradenames and are amortized over their estimated useful lives of 7 to 25 years.

Amortization expense included in the Consolidated Statements of Operations was as follows:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Amortization of acquired intangibles	$	1,255	$	2,842	$	4,719	$	8,415

The weighted average remaining amortization period of amortized intangible assets is 7.7 years.