Goodwill, Intangible Assets and Impairment Charges

12 Months Ended

Dec. 31, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill, Intangible Assets and Impairment Charges

6. Goodwill, Intangible Assets and Impairment Charges

Goodwill

The following table summarizes changes in goodwill during the year ended December 31, 2015 (in thousands):

	December 31, 2015
Balance at beginning of year	$	90,746
Goodwill acquired from the Applimotion acquisition		7,672
Goodwill acquired from the Lincoln Laser acquisition		3,367
Goodwill acquired from the Skyetek acquisition		1,671
Balance at end of year	$	103,456

Goodwill acquired from the Applimotion, Lincoln Laser and Skyetek acquisitions is reflected in the Precision Motion, Laser Products and Vision Technologies segments, respectively. Goodwill by reportable segment as of December 31, 2015 is as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	136,321		$	84,401		$	33,963		$	254,685
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	33,860		$	52,679		$	16,917		$	103,456

Goodwill by reportable segment as of December 31, 2014 is as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	132,954		$	82,730		$	26,291		$	241,975
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	30,493		$	51,008		$	9,245		$	90,746

Intangible Assets

Intangible assets as of December 31, 2015 and 2014, respectively, are summarized as follows (in thousands):

	December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Amortizable intangible assets:
Patents and acquired technologies	$	82,821	$	(66,297	)	$	16,524		7.7
Customer relationships		67,168		(36,914	)		30,254		13.6
Customer backlog		2,644		(2,589	)		55		1.0
Non-compete covenant		2,514		(882	)		1,632		3.2
Trademarks and trade names		10,711		(5,934	)		4,777		9.1
Amortizable intangible assets		165,858		(112,616	)		53,242		11.0
Non-amortizable intangible assets:
Trade names		13,027		—			13,027
Total	$	178,885	$	(112,616	)	$	66,269

	December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Amortizable intangible assets:
Patents and acquired technologies	$	78,253	$	(62,010	)	$	16,243		7.5
Customer relationships		63,029		(31,531	)		31,498		14.7
Customer backlog		1,810		(1,641	)		169		0.2
Non-compete covenant		1,830		(366	)		1,464		4.2
Trademarks and trade names		10,205		(5,364	)		4,841		9.8
Amortizable intangible assets		155,127		(100,912	)		54,215		11.8
Non-amortizable intangible assets:
Trade names		13,027		—			13,027
Total	$	168,154	$	(100,912	)	$	67,242

All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining useful life. Amortization expense for customer relationships and definite-lived trademarks, trade names and other intangibles is included in operating expenses in the accompanying consolidated statements of operations. Amortization expense for patents and acquired technologies is included in cost of revenue in the accompanying consolidated statements of operations. Amortization expense is as follows (in thousands):

	Year Ended December 31,
	2015		2014		2013
Amortization expense – cost of revenue	$	4,712	$	6,143	$	5,280
Amortization expense – operating expenses		7,611		10,262		7,270
Total amortization expense	$	12,323	$	16,405	$	12,550

Estimated future amortization expense for each of the five succeeding years and thereafter is as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2016	$	3,963	$	7,498	$	11,461
2017		3,600		6,898		10,498
2018		2,080		6,306		8,386
2019		1,768		4,324		6,092
2020		1,501		2,418		3,919
Thereafter		3,612		9,274		12,886
Total	$	16,524	$	36,718	$	53,242

Impairment Charges

The most recent annual goodwill and indefinite-lived intangible asset impairment test was performed as of the beginning of the second quarter of 2015, noting no impairment. With the exception of our NDS reporting unit, implied fair values of all reporting units exceeded their carrying values by at least 20%.

During the fourth quarter of 2014, the Company completed its annual operating plan for the NDS business following the MEDICA and RSNA tradeshows, two main tradeshows for the NDS business. Expectations for sales and operating profit were lowered significantly versus prior forecasts. The lower expectations for sales and operating profit were driven by a strategic decision to discontinue certain NDS products, lack of seasonal uptick during the fourth quarter of 2014 attributable to slower than expected hospital capital expenditures, and lower than expected customer orders from the fourth quarter tradeshows.

In considering the above mentioned factors, the Company determined that a triggering event occurred in the fourth quarter of 2014 and that an interim impairment review of the goodwill and intangible assets related to the NDS reporting unit was necessary. First, the Company performed a long-lived asset recoverability test in accordance with ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets,” on the lowest level of identifiable cash flows, which was determined to be the NDS business. The recoverability test compared the carrying value of the NDS business to the undiscounted cash flows. As a result of this recoverability test, the Company determined that the assets were not recoverable. The Company then determined the fair value of the NDS business using a discounted cash flow methodology, which resulted in a $21.8 million intangible assets impairment charge in the fourth quarter of 2014. The impairment charge is reflected in the operating results of the Vision Technologies segment.

Subsequent to impairing the NDS business’s long-lived assets, step one of the goodwill impairment analysis was performed. As the carrying value of the NDS reporting unit exceeded its implied fair value, the Company performed the second step of the goodwill impairment test, comparing the implied fair value of the reporting unit’s goodwill with its carrying amount to measure the impairment loss. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, whereby the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that reporting unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal to that excess. After completing the second step of the goodwill impairment test, the Company recorded a $19.6 million goodwill impairment charge in the fourth quarter of 2014. The impairment charge is reflected in the operating results of the Vision Technologies segment.

The results of the impairment review as of December 31, 2014 are summarized in the following table (in thousands):

	Pre-Impairment Net Carrying Value		Impairment Charge			Post-Impairment Net Carrying Value
Goodwill	$	110,321	$	(19,575	)	$	90,746
Intangible assets		89,109		(21,867	)		67,242
Total	$	199,430	$	(41,442	)	$	157,988

The Company did not have any goodwill or indefinite-lived intangible asset impairment charges during the year ended December 31, 2013.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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