Goodwill and Other Intangible Assets

12 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The changes in the carrying amount of goodwill by segment are as follows:



	Electrical Infrastructure			Oil Gas & Chemical		Storage Solutions			Industrial			Total
	(In thousands)
Net balance at June 30, 2014	$	43,243		$	10,943	$	10,027		$	5,624		$	69,837
Acquisition related adjustments	175			—		—			44			219
Purchase of HDB (Note 2)	—			3,065		—			—			3,065
Translation adjustment ⁽¹⁾	(1,044		)	—		(363		)	(196		)	(1,603		)
Net balance at June 30, 2015	42,374			14,008		9,664			5,472			71,518
Purchase of BTE (Note 2)	—			—		6,942			—			6,942
Translation adjustment ⁽¹⁾	(204		)	—		75			(38		)	(167		)
Net balance at June 30, 2016	42,170			14,008		16,681			5,434			78,293
Purchase of Houston Interests (Note 2)	—			19,596		—			15,550			35,146
Acquisition related adjustments	—			—		88			—			88
Translation adjustment ⁽¹⁾	(18		)	—		(5		)	(3		)	(26		)
Net balance at June 30, 2017	$	42,152		$	33,604	$	16,764		$	20,981		$	113,501


(1)	The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency.

We performed our annual goodwill impairment test as of May 31, 2017, which resulted in no impairment. However, the aggregate difference between the fair values of our reporting units and their carrying amounts has decreased significantly since last year as a result of current market conditions. The fair value of one reporting unit (carrying value of goodwill of $8.0 million) only exceeded its carrying amount by 9%. The valuation model for this reporting unit incorporates the award of a significant project prior to the end of the second fiscal quarter, with project work to commence shortly thereafter. Management has concluded this award is probable of occurring. If the project is ultimately not awarded to us, the Company currently expects this would represent a triggering event requiring an interim evaluation of goodwill with respect to this reporting unit, which could result in a material impairment. In addition, for our other reporting units, if the market view of revenue opportunities or gross margin changes, the Company may need to perform an interim analysis, which could result in the recognition of a material impairment to goodwill. The Company will continue to monitor the operating results of its reporting units each period and perform additional tests as needed.

Other Intangible Assets

Information on the carrying value of other intangible assets is as follows:



		At June 30, 2017
	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(Years)	(In thousands)
Intellectual property	9 to 15	$	2,579	$	(1,425	)	$	1,154
Customer based	1 to 15	38,207		(13,543		)	24,664
Non-compete Agreements	4 to 5	1,453		(1,298		)	155
Trade names	1 to 3	1,630		(1,307		)	323
Total other intangible assets		$	43,869	$	(17,573	)	$	26,296



		At June 30, 2016
	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(Years)	(In thousands)
Intellectual property	9 to 15	$	2,579	$	(1,246	)	$	1,333
Customer based	1.5 to 15	28,179		(9,655		)	18,524
Non-compete agreements	4 to 5	1,453		(1,102		)	351
Trade name	3 to 5	1,615		(824		)	791
Total other intangible assets		$	33,826	$	(12,827	)	$	20,999

If we are required to perform an interim goodwill analysis, and such analysis indicates impairment, the Company would need to perform an impairment analysis of relevant customer relationships and other intangible assets. With respect to the reporting unit referenced above, customer relationships with a net book value of $7.2 million as of June 30, 2017 could potentially be impaired if the reporting unit is concluded to be impaired. We will continue to monitor all intangible assets for indications of impairment and perform tests as necessary.

The increase in the gross carrying amount of other intangible assets at June 30, 2017 compared to June 30, 2016 is primarily due to the December 12, 2016 acquisition of Houston Interests (See Note 2). The specifically identifiable intangible assets recognized in the Houston Interests acquisition consist of:


•	customer-based intangibles with a fair value of $10.0 million and useful life of between 1 and 9 years; and


•	trade name with a fair value of $0.2 million and useful life of 1 year.

Amortization expense totaled $4.9 million, $3.6 million, and $5.0 million in fiscal 2017, 2016, and 2015, respectively. The Company recognized $1.6 million of amortization expense during the year ended June 30, 2017 for intangible assets recorded as part of the Houston Interests acquisition. We estimate that future amortization of other intangible assets will be as follows (in thousands):



For year ending:
June 30, 2018	$	4,742
June 30, 2019	3,501
June 30, 2020	3,491
June 30, 2021	3,472
June 30, 2022	2,618
Thereafter	8,472
Total estimated amortization expense	$	26,296

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details