Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

v3.20.4
Goodwill and Intangible Assets
6 Months Ended
Dec. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets

8.

GOODWILL AND INTANGIBLE ASSETS

Goodwill is an intangible asset that arises when a company acquires an existing business or assets (net of assumed liabilities) which comprise a business.  In general, the amount of goodwill recorded in an acquisition is calculated as the purchase price of the business minus the fair market value of the tangible assets and the identifiable intangible assets, net of the assumed liabilities. Goodwill and intangibles can also be established by push-down accounting.  Below is a summary of the significant transactions that generated goodwill and intangible assets of the Company:

 

In connection with the acquisition of A-Mark by SGI in July 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.

 

In connection with the Company's business combination with AMST in August 2016, the Company recorded an additional $2.5 million and $4.3 million of identifiable intangible assets and goodwill, respectively; these values were based upon an independent appraisal and represent their fair values at the acquisition date. The Company’s investment in AMST has resulted in synergies between the acquired minting operation and the Company’s established distribution network by providing a steadier and more 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.

 

In connection with the Company's acquisition of Goldline in August 2017, the Company recorded $5.0 million and $1.4 million of additional identifiable intangible assets and goodwill, respectively; these values were based upon an independent appraisal and represent their fair values at the acquisition date. The Company’s investment in Goldline created synergies between Goldline's direct marketing operation and the Company’s established distribution network, secured storage and lending operations that has led to increased product margin spreads, and lower distribution and storage costs for Goldline.

Carrying Value

The carrying value of goodwill and other purchased intangibles as of December 31, 2020 and June 30, 2020 is as described below:

 

dollar amounts in thousands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

June 30, 2020

 

 

 

Estimated

Useful

Lives

(Years)

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Accumulated

Impairment

 

 

Net

Book

Value

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Accumulated

Impairment

 

 

Net

Book

Value

 

Identifiable intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Existing customer

   relationships

 

5 - 15

 

$

8,998

 

 

$

(7,582

)

 

$

 

 

$

1,416

 

 

$

8,998

 

 

$

(7,307

)

 

$

 

 

$

1,691

 

Non-compete and other

 

3 - 5

 

 

2,300

 

 

 

(2,222

)

 

 

 

 

 

78

 

 

 

2,300

 

 

 

(2,187

)

 

 

 

 

 

113

 

Employment agreement

 

3

 

 

295

 

 

 

(295

)

 

 

 

 

 

 

 

 

295

 

 

 

(288

)

 

 

 

 

 

7

 

Intangibles subject to amortization

 

 

 

 

11,593

 

 

 

(10,099

)

 

 

 

 

 

1,494

 

 

 

11,593

 

 

 

(9,782

)

 

 

 

 

 

1,811

 

Trade names and trademarks

 

Indefinite

 

 

4,454

 

 

 

 

 

 

(1,291

)

 

 

3,163

 

 

 

4,454

 

 

 

 

 

 

(1,291

)

 

 

3,163

 

Identifiable intangible assets

 

 

 

$

16,047

 

 

$

(10,099

)

 

$

(1,291

)

 

 

4,657

 

 

$

16,047

 

 

$

(9,782

)

 

$

(1,291

)

 

$

4,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

Indefinite

 

$

10,245

 

 

$

 

 

$

(1,364

)

 

$

8,881

 

 

$

10,245

 

 

$

 

 

$

(1,364

)

 

$

8,881

 

 

The Company's intangible assets are subject to amortization except for trade-names and trademarks, 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 December 31, 2020 and 2019 was $163,000 and $255,000, respectively. Amortization expense related to the Company's intangible assets for the six months ended December 31, 2020 and 2019 was $317,000 and $508,000, respectively.  For the presented periods, no amortization expense was allocated to cost of sales.

Impairment

The accumulated impairment charge of $2.7 million (goodwill and indefinite-lived intangible assets) was a non-recurring charge for fiscal 2018 related to the Direct Sales segment.  No further impairment of goodwill or indefinite-lived intangible assets has occurred since fiscal 2018.

Estimated Amortization

Estimated annual amortization expense related to definite-lived intangible assets for the succeeding five years is as follows (in thousands):

 

Fiscal Year Ending June 30,

 

Amount

 

2021 (6 months remaining)

 

 

312

 

2022

 

 

601

 

2023

 

 

158

 

2024

 

 

77

 

2025

 

 

60

 

Thereafter

 

 

286

 

Total

 

$

1,494