GOODWILL AND PURCHASED INTANGIBLE ASSETS

3 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND PURCHASED INTANGIBLE ASSETS

GOODWILL AND PURCHASED INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in business combinations. We have three reportable segments and five operating segments. The operating

segments are determined to be the same as reporting units. For additional details, refer to Note 18 “Segment Reporting and Geographic Information” to our Condensed Consolidated Financial Statements. The following table presents changes in goodwill carrying value during the three months ended September 30, 2023:

(In thousands)	Wafer Inspection and Patterning		Global Service and Support (“GSS”)		Specialty Semiconductor Process		Printed Circuit Board (“PCB”) and Display		Component Inspection		Total
Balance as of June 30, 2023	$	727,130	$	25,908	$	681,858	$	830,349	$	13,575	$	2,278,820
Foreign currency adjustments	(15)		—		—		—		—		(15)
Balance as of September 30, 2023	$	727,115	$	25,908	$	681,858	$	830,349	$	13,575	$	2,278,805

Goodwill is not subject to amortization but is tested for impairment annually during the third fiscal quarter, as well as whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

As of September 30, 2023, there have been no significant events or circumstances affecting the valuation of goodwill subsequent to the annual assessment performed in the third quarter of the fiscal year ended June 30, 2023. There was no goodwill impairment as a result of that assessment. For additional details, refer to Note 7, "Goodwill and Purchased Intangible Assets" to our Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

Purchased Intangible Assets

The components of purchased intangible assets as of the dates indicated below were as follows:

(In thousands)		As of September 30, 2023						As of June 30, 2023
Category	Range of Useful  Lives (in years)	Gross Carrying Amount		Accumulated Amortization and Impairment		Net Amount		Gross Carrying Amount		Accumulated Amortization and Impairment		Net Amount
Existing technology	4-8	$	1,552,074	$	887,902	$	664,172	$	1,536,826	$	841,815	$	695,011
Customer relationships	4-9	358,567		214,609		143,958		358,567		205,037		153,530
Trade name / Trademark	4-7	119,083		86,068		33,015		116,583		78,749		37,834
Order backlog and other	<1-7	83,336		82,590		746		85,836		82,264		3,572
Intangible assets subject to amortization		2,113,060		1,271,169		841,891		2,097,812		1,207,865		889,947
In-process research and development		46,074		15,966		30,108		61,322		15,966		45,356
Total		$	2,159,134	$	1,287,135	$	871,999	$	2,159,134	$	1,223,831	$	935,303

Purchased intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be fully recoverable. Impairment indicators primarily include declines in our operating cash flows from the use of these assets. If impairment indicators are present, we are required to perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to these long-lived assets to their carrying value.

As of September 30, 2023, there were no impairment indicators for purchased intangible assets.

Amortization expense for purchased intangible assets for the periods indicated below was as follows:

	Three Months Ended September 30,
(In thousands)	2023		2022
Amortization expense - Costs of revenues	$	46,088	$	45,066
Amortization expense - SG&A	17,216		20,128
Amortization expense - Research and development	—		31
Total	$	63,304	$	65,225

Based on the purchased intangible assets gross carrying amount recorded as of September 30, 2023, the remaining estimated annual amortization expense is expected to be as follows:

Fiscal year ending June 30:	Amortization (In thousands)
2024 (remaining nine months)	$	177,836
2025	224,688
2026	208,775
2027	132,194
2028	49,727
2029 and thereafter	48,671
Total	$	841,891