Goodwill and Intangible Assets

9 Months Ended

Sep. 27, 2013

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 and liabilities acquired. The Company tests its goodwill balances annually 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 its annual goodwill impairment test at the beginning of the second quarter and noted no impairment of goodwill. As of the date of our most recent annual impairment test, the fair value of our medical components reporting unit exceeded its carrying value by approximately 10%. The gap between the fair value and the carrying value is relatively small for this reporting unit because our recent NDS acquisition constitutes the majority of the reporting unit.

The following table summarizes changes in goodwill for the nine months ended September 27, 2013 (in thousands):


	September 27, 2013
Balance at beginning of the period	$	44,578
Goodwill acquired from NDS acquisition		26,509

Balance at end of period	$	71,087

Goodwill acquired from the NDS acquisition is reflected in the Precision Technologies segment. Goodwill by reportable segment as of September 27, 2013 is as follows (in thousands):


	Reportable Segment						Total
	Laser Products			Precision Technologies			Total
Goodwill	$	84,592		$	118,149		$	202,741
Accumulated impairment of goodwill		(54,099	)		(77,555	)		(131,654	)

Total	$	30,493		$	40,594		$	71,087

Goodwill by reportable segment as of December 31, 2012, as restated to conform to the current period segment presentation, is as follows (in thousands):


	Reportable Segment						Total
	Laser Products			Precision Technologies			Total
Goodwill	$	84,592		$	91,640		$	176,232
Accumulated impairment of goodwill		(54,099	)		(77,555	)		(131,654	)

Total	$	30,493		$	14,085		$	44,578

Intangible Assets

Intangible assets as of September 27, 2013 and December 31, 2012, respectively, are summarized as follows (in thousands):


	September 27, 2013							December 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and acquired technologies	$	68,294	$	(54,778	)	$	13,516	$	61,667	$	(50,904	)	$	10,763
Customer relationships		55,517		(22,911	)		32,606		33,245		(18,981	)		14,264
Customer backlog		3,623		(3,516	)		107		2,355		(2,355	)		—
Trademarks, trade names and other		13,331		(4,322	)		9,009		5,780		(3,814	)		1,966

Amortizable intangible assets		140,765		(85,527	)		55,238		103,047		(76,054	)		26,993

Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027

Totals	$	153,792	$	(85,527	)	$	68,265	$	116,074	$	(76,054	)	$	40,020

Definite-lived intangible assets are amortized on either a straight-line basis or an economic benefits basis over their remaining useful life. Amortization expense, by classification, in the consolidated statements of operations is summarized as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 27, 2013		September 28, 2012		September 27, 2013		September 28, 2012
Amortization expense – cost of sales	$	1,343	$	791	$	3,937	$	2,373
Amortization expense – operating expenses		1,772		663		5,625		1,988

Total amortization expense	$	3,115	$	1,454	$	9,562	$	4,361

Estimated amortization expense for each of the five succeeding years and thereafter as of September 27, 2013, is as follows (in thousands):


Year Ending December 31,	Cost of Sales		Operating Expenses		Total
2013 (remainder of year)	$	1,343	$	1,645	$	2,988
2014		4,953		6,041		10,994
2015		3,310		5,444		8,754
2016		1,965		5,050		7,015
2017		1,573		4,720		6,293
Thereafter		372		18,822		19,194

Total	$	13,516	$	41,722	$	55,238

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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