Goodwill and Intangible Assets

3 Months Ended

Apr. 03, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

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 for impairment annually 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 2019 and noted no impairment.  

The following table summarizes changes in goodwill during the three months ended April 3, 2020 (in thousands):

Balance at beginning of the period	$	274,710
Net working capital adjustments from a prior-year acquisition		223
Effect of foreign exchange rate changes		(6,214	)
Balance at end of the period	$	268,719

Goodwill by reportable segment as of April 3, 2020 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	210,107		$	158,347		$	51,494		$	419,948
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	107,646		$	126,625		$	34,448		$	268,719

Goodwill by reportable segment as of December 31, 2019 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	213,413		$	160,086		$	52,440		$	425,939
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	110,952		$	128,364		$	35,394		$	274,710

Intangible Assets

Intangible assets as of April 3, 2020 and December 31, 2019, respectively, are summarized as follows (in thousands):

	April 3, 2020							December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	156,336	$	(99,090	)	$	57,246	$	159,217	$	(97,523	)	$	61,694
Customer relationships		158,219		(80,352	)		77,867		161,807		(78,206	)		83,601
Customer backlog		2,206		(2,206	)		—		2,316		(2,316	)		—
Trademarks and trade names		17,490		(10,132	)		7,358		17,871		(10,018	)		7,853
Amortizable intangible assets		334,251		(191,780	)		142,471		341,211		(188,063	)		153,148
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	347,278	$	(191,780	)	$	155,498	$	354,238	$	(188,063	)	$	166,175

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
	April 3,		March 29,
	2020		2019
Amortization expense – cost of revenue	$	2,734	$	2,311
Amortization expense – operating expenses		3,445		3,998
Total amortization expense	$	6,179	$	6,309

Estimated amortization expense for each of the five succeeding years and thereafter as of April 3, 2020 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2020 (remainder of year)	$	8,098	$	10,175	$	18,273
2021		10,990		13,265		24,255
2022		9,422		12,466		21,888
2023		8,282		10,840		19,122
2024		6,158		8,941		15,099
Thereafter		14,296		29,538		43,834
Total	$	57,246	$	85,225	$	142,471