Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

v3.5.0.2
Goodwill and Intangible Assets
 3 Months Ended
Sep. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
On July 1, 2005, all of the outstanding common stock of A-Mark was acquired by Spectrum PMI, Inc. Spectrum PMI was a holding company whose outstanding common stock was owned 80% by SGI, and 20% by Auctentia, S.L. In September 2012, SGI purchased from Auctentia its 20% interest in Spectrum PMI. On September 30, 2013, Spectrum PMI was merged with and into SGI, as a result of which all of the outstanding shares of A-Mark were then owned directly by SGI.
In connection with the acquisition of A-Mark by Spectrum PMI on July 1, 2005, the accounts of the Company were adjusted using the push down basis of accounting to recognize the allocation of the consideration paid to the respective net assets acquired. In accordance with the push down basis of accounting, the Company's net assets were adjusted to their fair values as of the date of the acquisition based upon an independent appraisal. As a result, the balance of goodwill totaled $8.9 million and identifiable purchased intangible assets of $8.4 million as of June 30, 2016. Goodwill represents the excess of the purchase price and related costs over the value assigned to intangible assets of businesses acquired and accounted for under the purchase method.
Due to the Company's business combination with AMST that closed on August 31, 2016 (see Note 1) the Company recorded an additional $2.5 million and $4.3 million of identifiable intangible assets and goodwill, respectively. The Company’s investment in AMST is expected to create synergies between the acquired minting operation and the Company’s established distribution network by providing a more steady and reliable fabricated source of silver during times of market volatility. The Company considers that much of the acquired goodwill relates to the “ ready state” of AMST's established minting operation with existing quality processes, procedures and ability to scale production to meet market needs. 
The carrying value of goodwill and other purchased intangibles as of September 30, 2016 and June 30, 2016 is as described below:
dollar amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2016
 
June 30, 2016

Estimated Useful Lives (Years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Book Value
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Book Value
Identifiable intangible Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Existing customer relationships
5 - 15
 
6,447

 
(4,310
)
 
2,137

 
5,747

 
(4,214
)
 
1,533

Non-compete and other
4
 
2,000

 
(2,000
)
 
—

 
2,000

 
(2,000
)
 
—

Employment agreement
3
 
195

 
(195
)
 
—

 
195

 
(195
)
 
—

Intangibles subject to amortization
 
 
8,642

 
(6,505
)
 
2,137

 
7,942

 
(6,409
)
 
1,533

Trade Name
Indefinite
 
$
2,254

 
$
—

 
$
2,254

 
$
454

 
$
—

 
$
454

 
 
 
$
10,896

 
$
(6,505
)
 
$
4,391

 
$
8,396

 
$
(6,409
)
 
$
1,987

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
Indefinite
 
$
8,881

 
$
—

 
$
8,881

 
$
4,620

 
$
—

 
$
4,620

 
 
 
 
 
 
 
 
 
 
 
 
 
 

The Company's intangible assets are subject to amortization except for trade-names, which have an indefinite life. Intangible assets subject to amortization are amortized using the straight-line method over their useful lives, which are estimated to be three to fifteen years. Amortization expense related to the Company's intangible assets for the three months ended September 30, 2016 and 2015 was $96,000 and $95,000, respectively.
Estimated amortization expense on an annual basis for the succeeding five years is as follows (in thousands):
Fiscal year ending June 30,
 
Amount
2017 (9 months remaining)
 
$
324

2018
 
432

2019
 
432

2020
 
425

2021
 
47

Thereafter
 
477

Total
 
$
2,137