Note 6 - Goodwill and Other Intangible Assets

12 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 6 — GOODWILL AND OTHER INTANGIBLE ASSETS

Carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment in accordance with ASC Topic 350, “Intangibles – Goodwill and Other.”  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 goodwill and indefinite-lived intangible assets using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level, that 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 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 relies upon a number of factors, judgments and estimates when conducting its impairment testing.  These include operating results, forecasts, anticipated future cash flows and marketplace data, to name a few.  There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

As of March 1, 2014, the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill. The goodwill impairment test of a reporting unit in the Lighting Segment passed with a business enterprise value that was $2.5 million or 3% above its carrying value. The goodwill impairment test of a reporting unit in the Graphics Segment passed with an estimated business enterprise value that was $2.5 million or 453% above the carrying value of the reporting unit. The goodwill impairment test of one of the reporting units in the Technology Segment that contains goodwill passed with an estimated business enterprise value that was $18.2 million or 71% above the carrying value of this reporting unit.

As of March 1, 2015, the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill. The goodwill impairment test in the Lighting Segment passed with a business enterprise value that was $36.2 million or 45% above the carrying value of this reporting unit. The goodwill impairment test of a reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value that was $4.0 million or 344% above the carrying value of the reporting unit. As part of the Company realigning its business segments discussed in Note 2, the goodwill that was previously reported in the All Other Category is now reported in the Graphics Segment. The goodwill impairment test of the reporting unit in the Technology Segment that contains goodwill passed with an estimated business enterprise value that was $14.9 million or 58% above the carrying value of this 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			Technology			All Other
	Segment			Segment			Segment			Category			Total
Balance as of June 30, 2014
Goodwill	$	34,913		$	28,690		$	11,621		$	3,119		$	78,343
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		(3,119	)		(67,835	)
Goodwill, net as of June 30, 2014	$	135		$	1,165		$	9,208		$	0		$	10,508
Sale of LSI Saco
Goodwill		--			--			--			(3,119	)		(3,119	)
Accumulated impairment losses		--			--			--			3,119			3,119
		--			--			--			--			--
Balance as of June 30, 2015
Goodwill	$	34,913		$	28,690		$	11,621		$	--		$	75,224
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		--			(64,716	)
Goodwill, net as of June 30, 2015	$	135		$	1,165		$	9,208		$	--		$	10,508

The Company performed its annual review of indefinite-lived intangible assets as of March 1, 2014 and determined there was no impairment. As of June 30, 2014, the Company performed an impairment test on two definite-lived intangible assets at the LSI Controls reporting unit (formerly LSI Virticus) in the Technology Segment. The triggering event for this impairment analysis was the shortfall in lighting control sales relative to forecast. The income (discounted cash flow) approach was used to determine the fair market value of the intangible assets. As a result of the analysis, it was determined that two definite-lived intangible assets were fully impaired, totaling $805,000 of impairment expense.

As of March 1, 2015, 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 $6.6 million or 192% above its carrying value.

In the first quarter of fiscal 2015, the Company sold LSI Saco Technologies Inc. A customer relationship intangible asset with a gross carrying amount of $1,306,000 and accumulated amortization of $428,000 was sold as a result of the sale of LSI Saco Technologies (See Note 15).

The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:

	June 30, 2015
Other Intangible Assets	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	9,316	$	7,290	$	2,026
Patents		338		120		218
LED technology firmware, software		11,228		10,910		318
Trade name		460		460		--
Non-compete agreements		710		602		108
Total Amortized Intangible Assets		22,052		19,382		2,670
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	$	25,474	$	19,382	$	6,092

	June 30, 2014
Other Intangible Assets	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	10,352	$	7,412	$	2,940
Patents		338		84		254
LED technology firmware, software		11,228		10,832		396
Trade name		460		454		6
Non-compete agreements		710		501		209
Total Amortized Intangible Assets		23,088		19,283		3,805
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	$	26,510	$	19,283	$	7,227

	Amortization Expense of Other Intangible Assets
(In thousands)	2015		2014		2013
Amortization Expense	$	527	$	815	$	2,495

The Company expects to record amortization expense as follows:

(In thousands)
2016	$	505
2017	$	409
2018	$	400
2019	$	400
2020	$	327
After 2020	$	629