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Goodwill<br />
Goodwill was $81.9 million at June 30, 2009 compared with $436.4 million at June 30, 2008. The decrease<br />
is primarily related to non-cash goodwill impairment charges of $330.6 million, unfavorable foreign currency<br />
translation of $35.3 million and contingent purchase price consideration associated with the acquisition of<br />
Innovative Systems GmbH of $11.3 million. In fiscal year 2008, goodwill increased by $32.7 million primarily<br />
due to foreign currency translation and contingent purchase price consideration. Refer to Note 5 – Goodwill in<br />
the Notes to the Consolidated Financial Statements for more information.<br />
The changes in the carrying amount of goodwill for the year ended June 30, 2009 were as follows:<br />
Automotive Consumer Professional Other Total<br />
Balance at June 30, 2008 ...................... $367,492 $ 23,369 $45,586 $ — $ 436,447<br />
Realignment of business segments (Note 15) ......<br />
Contingent purchase price consideration associated<br />
with the acquisition of Innovative Systems<br />
(52,497) — — 52,497 —<br />
GmbH .................................. 11,290 — — — 11,290<br />
Impairment charge .......................... (295,080) (22,663) — (12,820) (330,563)<br />
Other adjustments (1) .......................... (31,205) (706) (3,386) — (35,297)<br />
Balance at June 30, 2009 ...................... $ — $ — $42,200 $ 39,677 $ 81,877<br />
(1) The other adjustments to goodwill primarily consist of foreign currency translation adjustments.<br />
The contingent purchase price consideration associated with the acquisition of Innovative Systems GmbH<br />
continues through August 2025, unless the buyout option is exercised by either the buyer or the seller in<br />
September 20<strong>10</strong>. There is also approximately $<strong>10</strong> million of contingent purchase price consideration associated<br />
with the acquisition of QNX which is payable in November 2009 when the contingency lapses.<br />
Operating (Loss) Income<br />
Fiscal year 2009 operating loss was $(509.3) million or (17.6) percent of net sales. This represents a<br />
decrease of 21.0 percentage points compared to the prior year. The decrease in operating income was primarily<br />
due to a goodwill impairment charge, restructuring costs and a lower gross profit margin.<br />
Fiscal year 2008 operating income was $138.5 million or 3.4 percent of net sales. This represents a decrease<br />
of 7.5 percentage points compared to the prior year. The decrease in operating income was primarily due to a<br />
lower gross profit margin, restructuring costs, and expenses related to the merger termination.<br />
Presented below is a summary of our operating (loss) income by business segment:<br />
Year Ended June 30,<br />
Percentage<br />
Percentage<br />
Percentage<br />
of Net<br />
of Net<br />
of Net<br />
($ in thousands) 2009 Sales 2008 Sales 2007 Sales<br />
Automotive ....................... $(439,957) (21.9)% $114,786 3.9% $341,428 13.9%<br />
Consumer ......................... (49,939) (14.0)% (3,811) (0.7)% 18,670 3.9%<br />
Professional ....................... 44,363 9.0% 87,912 14.0% 75,885 13.1%<br />
Other ............................ (63,741) * (60,386) * (49,596) *<br />
Total ............................. $(509,274) (17.6)% $138,501 3.4% $386,387 <strong>10</strong>.9%<br />
Interest Expense, net<br />
Interest expense, net, was $6.9 million, $8.6 million and $1.5 million in fiscal year 2009, 2008 and 2007,<br />
respectively. Interest income included within Interest expense, net was $8.4 million, $9.2 million and $8.1<br />
million and interest expense included within Interest expense, net was $15.3 million, $17.8 million and $9.6<br />
million in fiscal years 2009, 2008 and 2007, respectively. Interest income primarily relates to interest earned on<br />
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