Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

v3.19.3
Goodwill and Intangible Assets
3 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
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 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. 
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, lower distribution and storage costs for Goldline.
Carrying Value
The carrying value of goodwill and other purchased intangibles as of September 30, 2019 and June 30, 2019 is as described below:
dollar amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2019
 
June 30, 2019

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
 
$
8,848

 
$
(6,605
)
 
$

 
$
2,243

 
$
8,848

 
$
(6,376
)
 
$

 
$
2,472

Non-compete and other
3 - 5
 
2,300

 
(2,138
)
 

 
162

 
2,300

 
(2,122
)
 

 
178

Employment agreement
3
 
295

 
(264
)
 

 
31

 
295

 
(256
)
 

 
39

Intangibles subject to amortization
 
11,443

 
(9,007
)
 

 
2,436

 
11,443

 
(8,754
)
 

 
2,689

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade name
Indefinite
 
$
4,454

 
$

 
$
(1,291
)
 
$
3,163

 
$
4,454

 
$

 
$
(1,291
)
 
$
3,163

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Identifiable intangible assets
 
$
15,897

 
$
(9,007
)
 
$
(1,291
)
 
$
5,599

 
$
15,897

 
$
(8,754
)
 
$
(1,291
)
 
$
5,852

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, 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, 2019 and 2018 was $253,000 and $252,000, respectively.
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 for the three months ended September 30, 2019.
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
2020 (9 months remaining)
 
$
758

2021
 
599

2022
 
571

2023
 
128

2024
 
47

Thereafter
 
333

Total
 
$
2,436