Goodwill and Intangible Assets

3 Months Ended

Mar. 29, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

7. 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 an 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 three months ended March 29, 2019 (in thousands):

Balance at beginning of the period	$	217,662
Effect of foreign exchange rate changes		(37	)
Balance at end of the period	$	217,625

Goodwill by reportable segment as of March 29, 2019 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	169,724		$	153,953		$	45,177		$	368,854
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	67,263		$	122,231		$	28,131		$	217,625

Goodwill by reportable segment as of December 31, 2018 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	168,955		$	155,017		$	44,919		$	368,891
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	66,494		$	123,295		$	27,873		$	217,662

Intangible Assets

Intangible assets as of March 29, 2019 and December 31, 2018, respectively, are summarized as follows (in thousands):

	March 29, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	134,179	$	(89,045	)	$	45,134	$	134,034	$	(86,623	)	$	47,411
Customer relationships		139,157		(67,591	)		71,566		139,097		(64,174	)		74,923
Customer backlog		1,766		(1,606	)		160		1,738		(1,191	)		547
Non-compete covenant		2,514		(2,514	)		—		2,514		(2,493	)		21
Trademarks and trade names		15,965		(9,223	)		6,742		15,915		(8,924	)		6,991
Amortizable intangible assets		293,581		(169,979	)		123,602		293,298		(163,405	)		129,893
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	306,608	$	(169,979	)	$	136,629	$	306,325	$	(163,405	)	$	142,920

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

	Three Months Ended
	March 29,		March 30,
	2019		2018
Amortization expense – cost of revenue	$	2,311	$	2,480
Amortization expense – operating expenses		3,998		3,698
Total amortization expense	$	6,309	$	6,178

Estimated amortization expense for each of the five succeeding years and thereafter as of March 29, 2019 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2019 (remainder of year)	$	6,912	$	10,748	$	17,660
2020		8,313		12,395		20,708
2021		7,397		11,475		18,872
2022		6,304		9,653		15,957
2023		5,408		8,118		13,526
Thereafter		10,800		26,079		36,879
Total	$	45,134	$	78,468	$	123,602