Goodwill and Intangible Assets

3 Months Ended

Apr. 01, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

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 2015 and noted no impairment of goodwill. With the exception of our NDS reporting unit, implied fair value of reporting units exceeded their carrying values by at least 20%.

The following table summarizes changes in goodwill during the three months ended April 1, 2016 (in thousands):

Balance at beginning of the period	$	103,456
Net working capital adjustment of Lincoln Laser acquisition		(43	)
Balance at end of the period	$	103,413

Goodwill by reportable segment as of April 1, 2016 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	136,278		$	84,401		$	33,963		$	254,642
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	33,817		$	52,679		$	16,917		$	103,413

Goodwill by reportable segment as of December 31, 2015 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	136,321		$	84,401		$	33,963		$	254,685
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	33,860		$	52,679		$	16,917		$	103,456

Intangible Assets

Intangible assets as of April 1, 2016 and December 31, 2015, respectively, are summarized as follows (in thousands):

	April 1, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and acquired technologies	$	80,977	$	(65,636	)	$	15,341	$	82,821	$	(66,297	)	$	16,524
Customer relationships		67,102		(38,411	)		28,691		67,168		(36,914	)		30,254
Customer backlog		2,644		(2,602	)		42		2,644		(2,589	)		55
Non-compete covenant		2,514		(1,016	)		1,498		2,514		(882	)		1,632
Trademarks and trade names		10,667		(6,298	)		4,369		10,711		(5,934	)		4,777
Amortizable intangible assets		163,904		(113,963	)		49,941		165,858		(112,616	)		53,242
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	176,931	$	(113,963	)	$	62,968	$	178,885	$	(112,616	)	$	66,269

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 and 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 revenue in the accompanying consolidated statements of operations. Amortization expense is as follows (in thousands):

	Three Months Ended
	April 1, 2016		April 3, 2015
Amortization expense – cost of revenue	$	1,184	$	1,119
Amortization expense – operating expenses		2,108		1,889
Total amortization expense	$	3,292	$	3,008

Estimated amortization expense for each of the five succeeding years and thereafter as of April 1, 2016 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2016 (remainder of year)	$	2,909	$	5,608	$	8,517
2017		3,542		6,877		10,419
2018		2,044		6,285		8,329
2019		1,751		4,306		6,057
2020		1,494		2,401		3,895
Thereafter		3,601		9,123		12,724
Total	$	15,341	$	34,600	$	49,941

- 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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