8. Goodwill and Intangible Assets

Goodwill

Goodwill is recorded when the consideration for a business combination exceeds the fair value of net tangible and identifiable intangible assets acquired. The Company tests its goodwill balances annually for impairment as of the beginning of the second quarter or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The Company performed the most recent annual goodwill and indefinite-lived intangible asset impairment test as of the beginning of the second quarter of 2018 and noted no impairment of goodwill.

The following table summarizes changes in goodwill during the nine months ended September 28, 2018 (in thousands):

Balance at beginning of the period	$	210,988
Goodwill acquired from acquisitions		11,862
Effect of foreign exchange rate changes		(3,078	)
Balance at end of the period	$	219,772

Goodwill by reportable segment as of September 28, 2018 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	169,803		$	156,129		$	45,069		$	371,001
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	67,342		$	124,407		$	28,023		$	219,772

Goodwill by reportable segment as of December 31, 2017 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	170,818		$	157,436		$	33,963		$	362,217
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	68,357		$	125,714		$	16,917		$	210,988

Intangible Assets

Intangible assets as of September 28, 2018 and December 31, 2017, respectively, are summarized as follows (in thousands):

	September 28, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	134,144	$	(84,359	)	$	49,785	$	130,890	$	(77,295	)	$	53,595
Customer relationships		140,539		(61,253	)		79,286		131,809		(52,015	)		79,794
Customer backlog		1,779		(761	)		1,018		2,524		(2,284	)		240
Non-compete covenant		2,514		(2,358	)		156		2,514		(1,956	)		558
Trademarks and trade names		16,064		(8,688	)		7,376		15,708		(7,874	)		7,834
Amortizable intangible assets		295,040		(157,419	)		137,621		283,445		(141,424	)		142,021
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	308,067	$	(157,419	)	$	150,648	$	296,472	$	(141,424	)	$	155,048

Amortizable intangible assets as of September 28, 2018 include intangible assets of $1.1 million recognized in conjunction with the acquisition of certain customer relationships in September 2018.

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

	Three Months Ended				Nine Months Ended
	September 28,		September 29,		September 28,		September 29,
	2018		2017		2018		2017
Amortization expense – cost of revenue	$	2,492	$	2,741	$	7,461	$	6,078
Amortization expense – operating expenses		3,947		3,217		11,538		9,413
Total amortization expense	$	6,439	$	5,958	$	18,999	$	15,491

Estimated amortization expense for each of the five succeeding years and thereafter as of September 28, 2018 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2018 (remainder of year)	$	2,532	$	4,068	$	6,600
2019		9,256		14,945		24,201
2020		8,338		12,602		20,940
2021		7,407		11,683		19,090
2022		6,289		9,829		16,118
Thereafter		15,963		34,709		50,672
Total	$	49,785	$	87,836	$	137,621