Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2022

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 2022 and noted no impairment.

The following table summarizes changes in goodwill during the nine months ended September 30, 2022 (in thousands):

Balance at beginning of the period	$	479,500
Goodwill acquired from acquisitions		9,863
Effect of foreign exchange rate changes		(24,311	)
Balance at end of the period	$	465,052

Goodwill by reportable segment as of September 30, 2022 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	201,864		$	162,128		$	252,289		$	616,281
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	99,403		$	130,406		$	235,243		$	465,052

Goodwill by reportable segment as of December 31, 2021 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	214,564		$	160,675		$	255,490		$	630,729
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	112,103		$	128,953		$	238,444		$	479,500

Intangible Assets

Intangible assets as of September 30, 2022 and December 31, 2021, respectively, are summarized as follows (in thousands):

	September 30, 2022							December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	178,968	$	(125,375	)	$	53,593	$	189,609	$	(122,130	)	$	67,479
Customer relationships		215,274		(112,689	)		102,585		228,656		(104,386	)		124,270
Customer backlog		6,795		(6,795	)		—		6,862		(2,254	)		4,608
Trademarks and trade names		22,644		(12,736	)		9,908		23,976		(12,371	)		11,605
Amortizable intangible assets		423,681		(257,595	)		166,086		449,103		(241,141	)		207,962
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	436,708	$	(257,595	)	$	179,113	$	462,130	$	(241,141	)	$	220,989

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				Nine Months Ended
	September 30,		October 1,		September 30,		October 1,
	2022		2021		2022		2021
Amortization expense – cost of revenue	$	3,247	$	3,316	$	10,004	$	9,275
Amortization expense – operating expenses		6,472		4,139		20,987		11,300
Total amortization expense	$	9,719	$	7,455	$	30,991	$	20,575

Estimated amortization expense for each of the five succeeding years and thereafter as of September 30, 2022 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2022 (remainder of year)	$	3,186	$	5,242	$	8,428
2023		11,583		19,633		31,216
2024		9,434		16,467		25,901
2025		8,041		13,931		21,972
2026		6,750		11,835		18,585
Thereafter		14,599		45,385		59,984
Total	$	53,593	$	112,493	$	166,086