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Note 6 - Goodwill and Other Intangible Assets | 12 Months Ended
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Jun. 30, 2018
Notes to Financial Statements |
Goodwill and Intangible Assets Disclosure [Text Block] | NOTE 6 — 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 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 three reporting units that contain goodwill. There are two reporting units within the Lighting Segment and one reporting unit within the Graphics Segment. One reporting unit previously reported in the Technology Segment has been transferred to the Lighting Segment as a result of the merge of the Technology Segment with the Lighting Segment (See Note 2 ). 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. A sustained and significant decline in the Company’s stock price in the first quarter of fiscal 2018 led management to believe that a triggering event occurred and that an interim goodwill impairment test was required for one of the reporting units in the Lighting Segment that contains goodwill, as of September 30, 2017. This particular reporting unit was tested because its fair market value was marginally higher than its carrying value. The other reporting units had considerable clearance between its fair market value and carrying value. Because the Company elected to early adopt ASU 2017 - 04, “Simplifying the Test for Goodwill Impairment”, the requirement to perform step 2 in the impairment test was not required. The result of the impairment test on the reporting unit in the Lighting Segment indicated that goodwill was impaired by $28,000,000. As of March 1, 2018, the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill. The goodwill impairment test on one reporting unit in the Lighting Segment passed with a business enterprise value that was $21.4 million or 15% above the carrying value of this reporting unit. The goodwill impairment test of a second reporting unit in the Lighting Segment that contains goodwill passed with an estimated business enterprise value that was $16.1 million or 69% above the carrying value of this reporting unit. The goodwill impairment test of the reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value that was $3.3 million or 319% above the carrying value of the reporting unit. The Company has performed an assessment of goodwill from the date of the annual test through the balance sheet date for possible triggering events and has concluded that other than the impairment analysis that was performed in the fourth quarter on the reporting unit in the Lighting Segment (see below), there were no triggering events that would indicate the assets are impaired. Another sustained and significant decline in the Company’s stock price in the fourth quarter of fiscal 2018 led management to believe that a triggering event occurred and that an interim goodwill impairment test was required for one of the reporting units in the Lighting Segment that contains goodwill, as of May 31, 2018. This particular reporting unit was tested because its fair market value was marginally higher than its carrying value. The other reporting units had considerable clearance between its fair market value and carrying value. Because the Company elected to early adopt ASU 2017 - 04, “Simplifying the Test for Goodwill Impairment”, the requirement to perform step 2 in the impairment test was not required. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value that was $13.7 million or 11% above the carrying value of this reporting unit including goodwill. As of March 1, 2017, the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill (excluding Atlas Lighting Products). The goodwill impairment test on two reporting units in the Lighting Segment passed with a business enterprise value that was $60.0 million or 80% above the carrying value for one of the reporting units and a business enterprise value that was $23.2 million or 95% above the carrying value for the second reporting unit. The goodwill impairment test of the one reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value that was $4.2 million or 424% above the carrying value of the reporting unit. 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 June 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 94,564 |  |  | $ | 28,690 |  |  | $ | 123,254 |
Accumulated impairment losses |  |  | (37,191 | ) |  |  | (27,525 | ) |  |  | (64,716 | )
Goodwill, net as of June 30, 2017 |  | $ | 57,373 |  |  | $ | 1,165 |  |  | $ | 58,538 |
Goodwill impairment |  | $ | (28,000 | ) |  | $ | -- |  |  | $ | (28,000 | )
Balance as of June 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 94,564 |  |  | $ | 28,690 |  |  | $ | 123,254 |
Accumulated impairment losses |  |  | (65,191 | ) |  |  | (27,525 | ) |  |  | (92,716 | )
Goodwill, net as of June 30, 2018 |  | $ | 29,373 |  |  | $ | 1,165 |  |  | $ | 30,538 |
The Company performed its annual review of indefinite-lived intangible assets as of March 1, 2018 and determined there was no impairment. The indefinite-lived intangible impairment test passed with a fair market value that was $20.6 million or 604% above its carrying value. The Company has performed an assessment of its intangible assets from the date of the annual test through the balance sheet date for possible triggering events and has concluded that there were no triggering events that would indicate the assets are impaired. As of March 1, 2017, the Company performed its annual review of indefinite-lived intangible assets and determined there was no impairment. The indefinite-lived intangible asset impairment test passed with a fair market value that was $15.2 million or 445% above its carrying value. In March 2017, a customer relationship intangible asset with a net book value of $479,000 related to the LED video screen product line in the Graphics Segment was determined to be fully impaired. The Company deemed that distribution channels and corresponding projected future cash flows that support the customer list intangible asset are not adequate to support the asset. The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:
|  | June 30, 2018 |
Other Intangible Assets |  | Gross |  |  |  |  |  |  |  |  |
(In thousands) |  | Carrying |  |  | Accumulated |  |  | Net |
|  | Amount |  |  | Amortization |  |  | Amount |
Amortized Intangible Assets |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | $ | 35,563 |  |  | $ | 10,011 |  |  | $ | 25,552 |
Patents |  |  | 338 |  |  |  | 217 |  |  |  | 121 |
LED technology firmware, software |  |  | 16,066 |  |  |  | 11,801 |  |  |  | 4,265 |
Trade name |  |  | 2,658 |  |  |  | 609 |  |  |  | 2,049 |
Non-compete agreements |  |  | 710 |  |  |  | 710 |  |  |  | - |
Total Amortized Intangible Assets |  |  | 55,335 |  |  |  | 23,348 |  |  |  | 31,987 |
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 |  | $ | 58,757 |  |  | $ | 23,348 |  |  | $ | 35,409 |
|  | June 30, 2017 |
Other Intangible Assets |  | Gross |  |  |  |  |  |  |  |  |
(In thousands) |  | Carrying |  |  | Accumulated |  |  | Net |
|  | Amount |  |  | Amortization |  |  | Amount |
Amortized Intangible Assets |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | $ | 35,563 |  |  | $ | 7,956 |  |  | $ | 27,607 |
Patents |  |  | 338 |  |  |  | 186 |  |  |  | 152 |
LED technology firmware, software |  |  | 16,066 |  |  |  | 11,237 |  |  |  | 4,829 |
Trade name |  |  | 2,658 |  |  |  | 499 |  |  |  | 2,159 |
Non-compete agreements |  |  | 710 |  |  |  | 710 |  |  |  |  |
Total Amortized Intangible Assets |  |  | 55,335 |  |  |  | 20,588 |  |  |  | 34,747 |
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 |  | $ | 58,757 |  |  | $ | 20,588 |  |  | $ | 38,169 |
|  | Amortization Expense of Other Intangible Assets |
(In thousands) |  | 2018 |  |  | 2017 |  |  | 2016 |
Amortization Expense |  | $ | 2,760 |  |  | $ | 1,257 |  |  | $ | 506 |
The Company expects to record annual amortization expense as follows:
(In thousands) |  |  |  |
2019 |  | $ | 2,760 |
2020 |  | $ | 2,687 |
2021 |  | $ | 2,682 |
2022 |  | $ | 2,460 |
2023 |  | $ | 2,411 |
After 2023 |  | $ | 18,987 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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