LSI INDUSTRIES INC Goodwill & Intangibles Disclosure
NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS
The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.
The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of reporting units that contain goodwill. reporting unit is within the Lighting Segment and reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.
Fiscal 2025;
As of March 1, 2025, the Company performed its annual goodwill impairment test on the reporting units that contain goodwill. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $30.1 million or 6% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of one reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $22.3 million which is substantially above the carrying value of the reporting unit including goodwill. The goodwill impairment test of the second reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $106.6 million or 29% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of the third reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $63.1 million or 39% above the carrying value of the reporting unit including goodwill.
The Company has three indefinite-lived intangible assets. The Company performed its annual review of two of our indefinite-lived intangible assets utilizing qualitative factors associated with the step zero methodology, as of March 1, 2025, and determined there was impairment. The Company engaged a third-party valuation specialist to perform a quantitative annual impairment assessment of one of our indefinite-lived intangible assets as of March 1, 2025, and determined there was no impairment.
Fiscal 2024;
As of March 1, 2024, the Company performed its annual goodwill impairment test on the reporting units that contain goodwill. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $37.3 million or 23% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of one reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $22.7 million which is substantially above the carrying value of the reporting unit including goodwill. The goodwill impairment test of the second reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $95.5 million or 19% above the carrying value of the reporting unit including goodwill.
The Company has two indefinite-lived intangible assets. The Company performed its annual review of indefinite-lived intangible assets utilizing qualitative factors associated with the step zero methodology, as of March 1, 2024, and determined there was impairment.
The following table presents information about the Company's goodwill on the dates or for the periods indicated:
|
(In thousands) |
Lighting Segment |
Display Solutions Segment |
Total |
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|
Balance as of June 30, 2024 |
||||||||||||
|
Goodwill |
$ | 70,971 | $ | 63,347 | $ | 134,318 | ||||||
|
Goodwill acquired |
- | 12,367 | 12,367 | |||||||||
|
Accumulated impairment losses |
(61,763 | ) | (27,525 | ) | (89,288 | ) | ||||||
|
Goodwill, net as of June 30, 2024 |
$ | 9,208 | $ | 48,189 | $ | 57,397 | ||||||
|
Balance as of June 30, 2025 |
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|
Goodwill |
$ | 70,971 | $ | 75,714 | $ | 146,685 | ||||||
|
Goodwill acquired, net of adjustments |
- | 6,769 | 6,769 | |||||||||
|
Foreign currency translation |
- | 382 | 382 | |||||||||
|
Accumulated impairment losses |
(61,763 | ) | (27,525 | ) | (89,288 | ) | ||||||
|
Goodwill, net as of June 30, 2025 |
$ | 9,208 | $ | 55,340 | $ | 64,548 | ||||||
In fiscal 2025, the Company acquired Canada’s Best Holdings (CBH), which impacted the amount of goodwill reported.
The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:
|
(In thousands) |
June 30, 2024 |
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|
Gross Carrying Amount |
Accumulated Amortization |
Net Amount |
||||||||||
|
Amortized Intangible Assets |
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|
Customer relationships |
$ | 69,573 | $ | 21,332 | $ | 48,241 | ||||||
|
Patents |
268 | 268 | - | |||||||||
|
LED technology, software |
24,126 | 17,058 | 7,068 | |||||||||
|
Trade name |
2,658 | 1,265 | 1,393 | |||||||||
|
Non-compete |
400 | 168 | 232 | |||||||||
|
Total Amortized Intangible Assets |
$ | 97,025 | $ | 40,091 | $ | 56,934 | ||||||
|
Indefinite-lived Intangible Assets |
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|
Trademarks and trade names |
16,982 | - | 16,982 | |||||||||
|
Total indefinite-lived Intangible Assets |
16,982 | - | 16,982 | |||||||||
|
Total Other Intangible Assets |
$ | 114,007 | $ | 40,091 | $ | 73,916 | ||||||
|
(In thousands) |
June 30, 2025 |
|||||||||||
|
Gross Carrying Amount |
Accumulated Amortization |
Net Amount |
||||||||||
|
Amortized Intangible Assets |
||||||||||||
|
Customer relationships |
$ | 78,485 | $ | 25,251 | $ | 53,234 | ||||||
|
Patents |
268 | 268 | - | |||||||||
|
LED technology, software |
24,126 | 18,694 | 5,432 | |||||||||
|
Trade name |
3,704 | 1,404 | 2,300 | |||||||||
|
Non-compete |
590 | 280 | 310 | |||||||||
|
Total Amortized Intangible Assets |
$ | 107,173 | $ | 45,897 | $ | 61,276 | ||||||
|
Indefinite-lived Intangible Assets |
||||||||||||
|
Trademarks and trade names |
16,982 | - | 16,982 | |||||||||
|
Total indefinite-lived Intangible Assets |
16,982 | - | 16,982 | |||||||||
|
Total Other Intangible Assets |
$ | 124,155 | $ | 45,897 | $ | 78,258 | ||||||
|
(In thousands) |
2025 |
2024 |
||||||
|
Amortization expense of other intangible assets |
$ | 5,806 | $ | 4,957 | ||||
The Company expects to record annual amortization expense as follows:
|
(In thousands) |
||||
|
2026 |
$ | 6,220 | ||
|
2027 |
$ | 6,037 | ||
|
2028 |
$ | 5,560 | ||
|
2029 |
$ | 4,916 | ||
|
2030 |
$ | 4,911 | ||
|
After 2030 |
$ | 33,632 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Sep 11, 2025 | Showing above |
| 2024 | Sep 11, 2024 | |
| 2023 | Sep 8, 2023 | |
| 2022 | Sep 9, 2022 | |
| 2021 | Sep 10, 2021 | |
| 2020 | Sep 11, 2020 | |
| 2019 | Sep 6, 2019 | |
| 2018 | Sep 11, 2018 | |
| 2017 | Sep 8, 2017 | |
| 2016 | Sep 7, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.