As
provided in the press release furnished as Exhibit 99.1 to the Registrant’s
Current Report on Form 8-K dated April 23, 2009, the Registrant observed
indicators of potential impairment of its goodwill, including the impact of the
Registrant’s declining stock price and deteriorating industry
conditions. These indicators caused the Registrant to conduct a
preliminary interim goodwill impairment analysis and record an estimated
non-cash goodwill impairment charge of $957,000 ($746,000 inclusive of the
income tax effect) in the quarter ended March 31, 2009.
On May
15, 2009, the Registrant completed an expanded analysis of the non-cash goodwill
impairment charges that had been recorded in June 2008 and December
2008. As a result of this goodwill impairment analysis, the
Registrant concluded that it must reduce the June 2008 non-cash goodwill
impairment charge by $974,000 ($674,000 inclusive of the income tax effect) and
restore $974,000 of goodwill to the June 30, 2008 balance
sheet. Additionally, the Registrant concluded that it must increase
the December 2008 non-cash impairment charge by a net amount of $581,000
($315,000 inclusive of the income tax effect) and reduce goodwill on the revised
balance sheet accordingly. The net effect to the Registrant of these
adjustments to the non-cash goodwill impairments was a net reduction of the
impairment charges of $393,000 ($359,000 inclusive of the income tax effect) and
a net restoration of $393,000 of goodwill to the March 31, 2009 balance
sheet.
The
impairment charge will not result in any cash expenditures, will not affect the
Registrant’s cash position, cash flow from operating activities or liquidity
position, does not affect the Registrant’s compliance with its loan covenants,
and does not have any effect on current or future operations of the
Registrant.
On May
19, 2009, the Registrant issued a press release concerning the goodwill
impairment charges discussed above. A copy of the press release is furnished as
Exhibit 99 to this report and is incorporated herein by reference.
The
information contained in this Item 7.01 is being furnished and shall not be
deemed “filed” with the Securities and Exchange Commission or otherwise
incorporated by reference into any registration statement or other document
filed pursuant to the Securities Act of 1933 or Securities Exchange Act of
1934.
Item 8.01. – Other
Events.
The Registrant and its registered
independent public accounting firm, Deloitte & Touche, LLP, have concluded
that at June 30, 2008, the Registrant had a material weakness in its internal
control over financial reporting relating to the goodwill impairment
charges. A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company's annual or
interim financial statements will not be prevented or detected on a timely
basis. As a result, the Registrant intends to amend its Form 10-K for the fiscal
year ended June 30, 2008 and its Form 10-Qs for the periods ended September 30,
2008 and December 31, 2008 to reflect the existence of this material
weakness. Once these amended filings are made, the Registrant expects
to file its Form 10-Q for the quarter and nine months ended March 31,
2009.