Note 8 – Goodwill

We test for impairment at the reporting unit level on an annual basis as of April 30^th of every year and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The impairment test for goodwill is a two-step process. The first step compares the fair value of each reporting unit to its carrying value, with fair value of each reporting unit determined using established valuation techniques, specifically the market and income approaches. Should the results of the first step indicate that the fair value of a reporting unit is less than its carrying value, the second step of this test is conducted wherein the amount of any impairment is determined by comparing the implied fair value of goodwill in a reporting unit to the recorded amount of goodwill for that reporting unit. The implied fair value of goodwill is calculated as the excess of fair value of the reporting unit over the amounts assigned to its assets and liabilities. Should the fair value of the goodwill so calculated be less than the carrying value, an impairment is recognized. The annual goodwill impairment test conducted as of April 30, 2011 indicated that the fair value of each reporting unit was substantially in excess of its carrying value and, as such, no impairment was deemed to exist.

During the first half of fiscal year 2010, we determined that goodwill related to our Automotive segment was impaired and we recognized an impairment charge of $12.3 million in our Consolidated Statement of Operations for the fiscal year ended June 30, 2010. During the second half of fiscal year 2010, as a result of the sustained improvements in the operating results of our Automotive reporting unit due to improvements in economic conditions and realized savings resulting from our cost cutting initiatives, we performed a preliminary goodwill impairment test which demonstrated that the calculated fair value of our reporting units exceeded the respective carrying values and therefore no impairment existed in our Automotive reporting unit and our other reporting units. As a result, we ceased recognizing goodwill impairment charges associated with incremental goodwill that is recognized related to contingent purchase price arrangements.

Goodwill was $119.4 million at June 30, 2011 compared with $105.9 million at June 30, 2010. The increase in goodwill in the fiscal year ended June 30, 2011 versus the prior fiscal year is primarily related to foreign currency translation, contingent purchase price consideration associated with the acquisition of innovative Systems GmbH ("innovative") of $5.7 million and goodwill related to the acquisition of 3dB of $0.6 million, offset by approximately $4.5 million of purchase price adjustments for prior year acquisitions, primarily related to the acquisition of Selenium. Refer to Note 2 – Acquisitions for further information. The contingent purchase price consideration associated with the acquisition of innovative is calculated pursuant to the terms of an agreement between the parties. On March 31, 2011, the innovative sellers sent us a letter to exercise their option to have the value of the future contingent purchase consideration determined by a major international accounting firm. The parties are currently disputing certain terms under such agreement and until such time as the dispute is resolved we will not be able to calculate the final purchase price.

The goodwill impairment charge for the fiscal year ended June 30, 2009 consisted of $295.1 million in our Automotive segment and $22.7 million in our consumer segment.

The changes in the carrying amount of goodwill by business segment for the fiscal year ended June 30, 2011 were as follows:


	Automotive		Consumer			Professional			Other		Total
Balance, June 30, 2010	$	6,127	$	30,686		$	69,109		$	0	$	105,922
Acquisition adjustments		0		(1,476	)		(2,426	)		0		(3,902	)
Contingent purchase price consideration associated with the acquisition of innovative		5,737		0			0			0		5,737
Other adjustments⁽ ¹ ⁾		1,495		4,667			5,438			0		11,600

Balance, June 30, 2011	$	13,359	$	33,877		$	72,121		$	0	$	119,357

⁽¹⁾	The other adjustments to goodwill primarily consist of foreign currency translation adjustments.