NOTE 9 — 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 eight reporting units that contain goodwill. One reporting unit is within the Lighting Segment and seven 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 2026;

As of March 1, 2026, the Company performed its annual goodwill impairment test on the five reporting units that contain goodwill, acknowledging that the Company acquired three reporting units as part of the Royston acquisition after the designated measurement date. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $34.7 million or 15% 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 $26.5 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 $114.9 million or 41% 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 $63.4 million or 42% above the carrying value of the reporting unit including goodwill.  The goodwill impairment test of the fourth reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $26.6 million or 132% above the carrying value of the reporting unit including goodwill.

The Company has three indefinite-lived intangible assets as of our March 1, 2025 measurement date, acknowledging the Company acquired three additional indefinite-lived intangible assets as part of the Royston acquisition after the designated measurement date. The Company engaged a third-party valuation specialist to perform a quantitative annual impairment assessment review of indefinite-lived intangible assets as of March 1, 2026, and determined there was no impairment. The impairment test of the first indefinite-lived intangible asset passed with a fair market value of $5.1 million or 5% above its carrying value. The impairment test of the second indefinite-lived intangible asset passed with a fair market value of and $10.9 million or 25% above its carrying value. The impairment test of the third indefinite-lived intangible asset passed with a fair market value of and $15.4 million which is substantially above the carrying value.

Fiscal 2025;

As of March 1, 2025, the Company performed its annual goodwill impairment test on the four 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 no 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.

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

In fiscal 2026, the Company acquired Royston, which impacted the amount of goodwill reported, and 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:

The Company expects to record annual amortization expense as follows: