A-Mark Precious Metals, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

6 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

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 Spectrum Group International, Inc. 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.

•

In March 2021, the Company acquired 100% ownership of JMB, in which we previously held a 20.5% equity interest. At the acquisition date we measured the value of identifiable intangible assets and goodwill at $98.0 million and $92.1 million, respectively.

Carrying Value

The carrying value of goodwill and other purchased intangibles as of December 31, 2021 and June 30, 2021 is as described below:


dollar amounts in thousands
				December 31, 2021										June 30, 2021
	Estimated Useful Lives (Years)	Remaining Weighted Average Amortization Period (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		3.5	$	53,498	$	(30,231	)	$	—		$	23,267	$	53,498	$	(15,832	)	$	—		$	37,666
Developed technology	4		3.3		10,500		(2,053	)		—			8,447		10,500		(741	)		—			9,759
Non-compete and other	3 - 5		0.2		2,300		(2,289	)		—			11		2,300		(2,256	)		—			44
Employment agreement	1 - 3		0.0		295		(295	)		—			—		295		(295	)		—			—
Intangibles subject to amortization					66,593		(34,868	)		—			31,725		66,593		(19,124	)		—			47,469
Trade names and trademarks	Indefinite	Indefinite			47,454		—			(1,290	)		46,164		47,454		—			(1,290	)		46,164
Identifiable intangible assets				$	114,047	$	(34,868	)	$	(1,290	)		77,889	$	114,047	$	(19,124	)	$	(1,290	)	$	93,633

Goodwill	Indefinite	Indefinite		$	102,307	$	—		$	(1,364	)	$	100,943	$	102,307	$	—		$	(1,364	)	$	100,943

The Company's intangible assets are subject to amortization except for trade names and trademarks, which have an indefinite life. Existing customer relationships intangible assets are amortized in a manner reflecting the pattern in which the economic benefits of the assets are consumed. All other intangible assets subject to amortization are amortized using the straight-line method over their useful lives, which are estimated to be one to fifteen years. Amortization expense related to the Company's intangible assets for the three months ended December 31, 2021 and 2020 was $7.9 million and $0.2 million, respectively. Amortization expense related to the Company's intangible assets for the six months ended December 31, 2021 and 2020 was $15.7 million and $0.3 million, respectively. For the presented periods, amortization expense allocable to cost of sales was not significant.

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 Goldline. 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
2022 (6 months remaining)		9,925
2023		9,893
2024		7,382
2025		4,240
2026		47
Thereafter		238
	$	31,725