Note 8 – Goodwill
In September 2011, we adopted ASU 2011-08, under which an entity may first assess qualitative factors in determining whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Adoption of this guidance had no impact on our financial condition or results of operations as no events came to our attention indicating that the fair values of our reporting units might be less than their carrying values. In fiscal years 2013 and 2012, we did not elect to first assess the qualitative factors in evaluating our goodwill for impairment; therefore, we proceeded with our quantitative goodwill impairment test.
We test for impairment at the reporting unit level on an annual basis as of April 30th of every year and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Refer to Note 1 – Summary of Significant Accounting Policies for more information on how we test goodwill for impairment. The annual goodwill impairment tests conducted as of April 30, 2013 and 2012 indicated that the fair value of each reporting unit was substantially in excess of its carrying value and, as such, no impairments were deemed to exist. Our accumulated amount of goodwill impairment recorded in prior fiscal years is $330.0 million.
Goodwill was $234.3 million at June 30, 2013 compared with $180.8 million at June 30, 2012. The increase in goodwill in the fiscal year ended June 30, 2013 versus the prior fiscal year was primarily related to goodwill associated with the following: $56.7 million in connection with the acquisition of Martin, $2.0 million in connection with the acquisition of iOnRoad and $0.6 million in connection with the acquisition of Interchain offset to a certain extent by foreign currency translation. Refer to Note 2 – Acquisitions for more information.
The changes in the carrying amount of goodwill by business segment for the fiscal years ended June 30, 2013 and 2012 were as follows:
| Infotainment | Lifestyle | Professional | Other | Total | ||||||||||||||||
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Balance, June 30, 2011 |
$ | 8,069 | $ | 39,167 | $ | 72,121 | $ | 0 | $ | 119,357 | ||||||||||
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Acquisitions and adjustments |
0 | 79,757 | 0 | 0 | 79,757 | |||||||||||||||
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Contingent purchase price consideration associated with the acquisition of innovative Systems GmbH(1) |
(1,258 | ) | (825 | ) | 0 | 0 | (2,083 | ) | ||||||||||||
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Other adjustments(2) |
(955 | ) | (8,154 | ) | (7,111 | ) | 0 | (16,220 | ) | |||||||||||
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Balance, June 30, 2012 |
$ | 5,856 | $ | 109,945 | $ | 65,010 | $ | 0 | $ | 180,811 | ||||||||||
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Acquisitions and adjustments |
2,618 | 12 | 56,650 | 0 | 59,280 | |||||||||||||||
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Other adjustments(2) |
102 | (2,519 | ) | (3,332 | ) | 0 | (5,749 | ) | ||||||||||||
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Balance, June 30, 2013 |
$ | 8,576 | $ | 107,438 | $ | 118,328 | $ | 0 | $ | 234,342 | ||||||||||
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| (1) | The contingent purchase price consideration associated with the acquisition of innovative Systems GmbH (“IS”) is calculated pursuant to the terms of an agreement between the parties. Certain terms of the agreement are currently subject to a dispute between the parties and the matter has been submitted to arbitration. Until such time as the dispute is resolved, we will not be able to calculate the final purchase price. |
| (2) | The other adjustments to goodwill primarily consist of foreign currency translation adjustments. |