Goodwill and Intangible Assets

6 Months Ended

Jun. 27, 2014

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 impairment may exist. The Company performed its annual goodwill impairment test at the beginning of the second quarter of 2014 and noted no impairment of goodwill.

The following table summarizes changes in goodwill for the six months ended June 27, 2014 (in thousands):


Balance at beginning of the period	$	71,156
Goodwill acquired from JADAK acquisition		44,428

Balance at end of period	$	115,584

Goodwill acquired from the JADAK acquisition is reflected in the Medical Technologies segment. Goodwill by reportable segment as of June 27, 2014 is as follows (in thousands):


	Reportable Segment									Total
	Laser Products			Medical Technologies			Precision Motion			Total
Goodwill	$	132,954		$	87,993		$	26,291		$	247,238
Accumulated impairment of goodwill		(102,461	)		(12,147	)		(17,046	)		(131,654	)

Total	$	30,493		$	75,846		$	9,245		$	115,584

Goodwill by reportable segment as of December 31, 2013 is as follows (in thousands):


	Reportable Segment									Total
	Laser Products			Medical Technologies			Precision Motion			Total
Goodwill	$	132,954		$	43,565		$	26,291		$	202,810
Accumulated impairment of goodwill		(102,461	)		(12,147	)		(17,046	)		(131,654	)

Total	$	30,493		$	31,418		$	9,245		$	71,156

Intangible Assets

Intangible assets as of June 27, 2014 and December 31, 2013, respectively, are summarized as follows (in thousands):


	June 27, 2014							December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and acquired technologies	$	79,635	$	(59,468	)	$	20,167	$	68,500	$	(56,327	)	$	12,173
Customer relationships		79,232		(27,869	)		51,363		55,585		(24,340	)		31,245
Customer backlog		3,078		(1,872	)		1,206		1,269		(1,269	)		—
Non-compete covenant		1,830		(135	)		1,695		—		—			—
Trademarks and trade names		15,559		(4,993	)		10,566		13,378		(4,530	)		8,848

Amortizable intangible assets		179,334		(94,337	)		84,997		138,732		(86,466	)		52,266

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

Totals	$	192,361	$	(94,337	)	$	98,024	$	151,759	$	(86,466	)	$	65,293

All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining useful life. Amortization expense for customer relationships, customer backlog, non-compete covenant, definite-lived trademarks, trade names and other intangibles is included in operating expenses in the accompanying consolidated statements of operations. Amortization expense for patents and acquired technologies is included in cost of goods sold in the accompanying consolidated statements of operations. Amortization expense is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 27, 2014		June 28, 2013		June 27, 2014		June 28, 2013
Amortization expense – cost of sales	$	1,614	$	1,343	$	2,915	$	2,594
Amortization expense – operating expenses		2,876		1,617		4,620		3,853

Total amortization expense	$	4,490	$	2,960	$	7,535	$	6,447

Estimated amortization expense for each of the five succeeding years and thereafter as of June 27, 2014 is as follows (in thousands):


Year Ending December 31,	Cost of Sales		Operating Expenses		Total
2014 (remainder of year)	$	3,228	$	5,645	$	8,873
2015		4,787		9,460		14,247
2016		3,376		9,227		12,603
2017		2,883		8,265		11,148
2018		1,350		7,383		8,733
Thereafter		4,543		24,850		29,393

Total	$	20,167	$	64,830	$	84,997

- 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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