Goodwill and Other Identifiable Intangible Assets

12 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Identifiable Intangible Assets

Goodwill and Other Identifiable Intangible Assets

In accordance with ASC 350, Intangibles - Goodwill and Other Intangible Assets, the Company performs its annual goodwill impairment test during the fourth quarter of each fiscal year, or whenever indicators of impairment are present. The reporting units utilized for goodwill impairment tests align directly with our operating segments, Worldwide Barcode, Networking & Security and Worldwide Communications & Services. The testing includes the determination of each reporting unit's fair value using a discounted cash flows model compared to each reporting unit's carrying value. Key assumptions used in determining fair value include projected growth and operating margin, working capital requirements and discount rates. The Company's projected growth and operating margins have been impacted by the worldwide economic hardships created by COVID-19 and as such recognized a goodwill impairment charge of $119.0 million for our Worldwide, Barcode, Networking and Security reporting unit for the fiscal year ended June 30, 2020 which is recorded to the impairment charges line item in the Consolidated Income Statements. The fair value of our Worldwide Communications & Services reporting unit exceeds its carrying value of assets by approximately 12%. During fiscal years ended June 30, 2019 and 2018, no impairment charges related to goodwill were recorded.

Changes in the carrying amount of goodwill for the years ended June 30, 2020 and 2019, by reportable segment, are set forth in the table below. Additions to goodwill for fiscal years 2020 and 2019 are due to the recent acquisitions.

	Worldwide Barcode, Networking & Security Segment		Worldwide Communications & Services Segment		Total
	(in thousands)
Balance at June 30, 2018	$	135,954	$	152,769	$	288,723
Additions	—		21,854		21,854
Unrealized loss on foreign currency translation	11		127		138
Balance at June 30, 2019	$	135,965	$	174,750	$	310,715
Additions	—		30,445		30,445
Goodwill impairment charges	(119,037)		—		(119,037)
Unrealized loss on foreign currency translation	(558)		(7,277)		(7,835)
Balance at June 30, 2020	$	16,370	$	197,918	$	214,288

The following table shows the Company’s identifiable intangible assets as of June 30, 2020 and 2019, respectively.

	June 30, 2020						June 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Amortized intangible assets:
Customer relationships	$	137,146	$	56,107	$	81,039	$	131,263	$	45,707	$	85,556
Trade names	19,509		7,617		11,892		21,546		9,451		12,095
Non-compete agreements	2,410		1,711		699		2,586		1,209		1,377
Supplier partner program	4,085		1,191		2,894		3,583		815		2,768
Encryption key library	19,900		7,255		12,645		19,900		4,768		15,132
Developed technology	14,004		1,626		12,378		4,512		226		4,286
Total intangibles	$	197,054	$	75,507	$	121,547	$	183,390	$	62,176	$	121,214

During fiscal year 2020, the Company acquired customer relationships, trade names and developed technology related to the acquisition of intY. During fiscal year 2019, the Company acquired customer relationships, trade names and developed technology related to the acquisition of RPM. In addition, during fiscal year 2019, the Company acquired customer relationships, trade names and non-compete agreements related to the acquisition of Canpango, which were subsequently

impaired in fiscal year 2020, totaling $1.4 million in impairment charges. This charge is included in the impairment charges line item in the Consolidated Income Statements. The Company also disposed of fully amortized trade names and non-compete agreements from prior acquisitions. No impairment charges were recognized in fiscal years ended June 30, 2019 and 2018.

The weighted-average amortization period for all intangible assets was approximately 10 years for the year ended June 30, 2020, compared to 9 years for the year ended June 30, 2019 and 10 years for the year ended June 30, 2018. Amortization expense for continuing operations for the years ended June 30, 2020, 2019 and 2018 was $20.0 million, $17.9 million and $18.7 million, respectively, all of which relates to selling, general and administrative costs, not the cost of selling goods, and has been presented as such in the accompanying Consolidated Income Statements.

Estimated future amortization expense is as follows:

	Amortization Expense
	(in thousands)
Year Ended June 30,
2021	$	19,313
2022	17,677
2023	16,737
2024	16,633
2025	16,633
Thereafter	34,554
Total	$	121,547