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Note 7 - Goodwill and Other Intangible Assets | 12 Months Ended
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Jun. 30, 2021
Notes to Financial Statements |
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 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. Prior to the acquisition of JSI, the Company had two reporting units that contain goodwill. One reporting unit is within the Lighting Segment and one reporting unit is within the Display Solutions Segment. The tradename intangible asset has an indefinite life and is also tested separately on an annual basis. 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. Fiscal 2021: As of March 1, 2021, the Company performed its annual goodwill impairment test on the two reporting units that contain goodwill. The 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 this reporting unit including goodwill. The goodwill impairment test of the reporting unit in the Display Solutions Segment passed with a business enterprise value of $11.4 million or 2,065% above the carrying value of the reporting unit including goodwill. The Company also performed its annual review of its indefinite-lived intangible asset as of March 1, 2021 and determined there was no impairment. The indefinite-lived intangible impairment test passed with a fair market value that was $15.7 million or 358% above its carrying value. The Company has performed an assessment of its goodwill and intangible assets from the date of the interim test as of March 1, 2021 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. The Company acquired JSI on May 21, 2021 (see Note 2). The total purchase price exceeded the estimated fair value of net assets by approximately $33.4 million, which was allocated to goodwill. Goodwill and intangible assets related to JSI are included in the assets of the Display Solutions Segment. Refer to Note 2 for additional information on the intangible assets of JSI. Beginning in fiscal 2022, JSI goodwill will be subject to annual impairment testing as a separate reporting unit. Fiscal 2020: As of March 1, 2020, the Company performed its annual goodwill impairment test on the two reporting units that contain goodwill. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $31.6 million or 33% above the carrying value of this reporting unit including goodwill. The goodwill impairment test of the reporting unit in the Display Solutions Segment passed with a business enterprise value of $4.7 million or 619% above the carrying value of the reporting unit including goodwill. The Company also performed its annual review of its indefinite-lived intangible asset as of March 1, 2020 and determined there was no impairment. The indefinite-lived intangible impairment test passed with a fair market value that was $16.8 million or 392% above its carrying value. A significant decline in the Company’s stock price during March 2020 related to the COVID-19 pandemic led management to conclude that a triggering event occurred. As a result, an interim goodwill impairment test subsequent to the March 1 testing date was required for both reporting units as of March 31, 2020. The result of the impairment test on both reporting units indicated that goodwill was not impaired. The following table presents information about the Company's goodwill on the dates or for the periods indicated:
|  |  |  |  |  | Display |  |  |  |  |
(In thousands) |  | Lighting |  |  | Solutions |  |  |  |  |
|  | Segment |  |  | Segment |  |  | Total |
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 |
Balance as of June 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 70,971 |  |  | $ | 28,690 |  |  | $ | 99,661 |
Goodwill acquired |  |  | - |  |  |  | 33,415 |  |  |  | 33,415 |
Accumulated impairment losses |  |  | (61,763 | ) |  |  | (27,525 | ) |  |  | (89,288 | )
Goodwill, net as of June 30, 2021 |  | $ | 9,208 |  |  | $ | 34,580 |  |  | $ | 43,788 |
In 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 gross carrying amount and accumulated amortization by major other intangible asset class is as follows:
|  | June 30, 2021 |
(In thousands) |  | Gross |  |  |  |  |  |  |  |  |
|  | Carrying |  |  | Accumulated |  |  | Net |
|  | Amount |  |  | Amortization |  |  | Amount |
Amortized Intangible Assets |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | $ | 62,083 |  |  | $ | 10,967 |  |  | $ | 51,116 |
Patents |  |  | 268 |  |  |  | 237 |  |  |  | 31 |
LED technology firmware, software |  |  | 20,966 |  |  |  | 13,415 |  |  |  | 7,551 |
Trade name |  |  | 2,658 |  |  |  | 939 |  |  |  | 1,719 |
Non-compete |  |  | 260 |  |  |  | 6 |  |  |  | 254 |
Total Amortized Intangible Assets |  |  | 86,235 |  |  |  | 25,564 |  |  |  | 60,671 |
Indefinite-lived Intangible Assets |  |  |  |  |  |  |  |  |  |  |  |
Trademarks and trade names |  |  | 12,102 |  |  |  | - |  |  |  | 12,102 |
Total indefinite-lived Intangible Assets |  |  | 12,102 |  |  |  | - |  |  |  | 12,102 |
Total Other Intangible Assets |  | $ | 98,337 |  |  | $ | 25,564 |  |  | $ | 72,773 |
|  | 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 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.
(In thousands) |  | 2021 |  |  | 2020 |
Amortization expense of other intangible assets |  | $ | 2,948 |  |  | $ | 2,687 |
The Company expects to record annual amortization expense as follows:
(In thousands) |  |  |  |
2022 |  | $ | 4,808 |
2023 |  | $ | 4,760 |
2024 |  | $ | 4,760 |
2025 |  | $ | 4,760 |
2026 |  | $ | 4,754 |
After 2026 |  | $ | 36,829 |

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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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