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 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 the most recent annual goodwill and indefinite-lived intangible asset impairment test as of the beginning of the second quarter of 2018 and noted no impairment of goodwill.

The following table summarizes changes in goodwill during the six months ended June 29, 2018 (in thousands):

Balance at beginning of the period	$	210,988
Goodwill acquired from Zettlex acquisition		10,844
Effect of foreign exchange rate changes		(3,508	)
Balance at end of the period	$	218,324

Goodwill by reportable segment as of June 29, 2018 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	169,768		$	155,494		$	44,291		$	369,553
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	67,307		$	123,772		$	27,245		$	218,324

Goodwill by reportable segment as of December 31, 2017 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	170,818		$	157,436		$	33,963		$	362,217
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	68,357		$	125,714		$	16,917		$	210,988

Intangible Assets

Intangible assets as of June 29, 2018 and December 31, 2017, respectively, are summarized as follows (in thousands):

	June 29, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	133,484	$	(81,818	)	$	51,666	$	130,890	$	(77,295	)	$	53,595
Customer relationships		138,868		(58,112	)		80,756		131,809		(52,015	)		79,794
Customer backlog		3,907		(2,584	)		1,323		2,524		(2,284	)		240
Non-compete covenant		2,514		(2,224	)		290		2,514		(1,956	)		558
Trademarks and trade names		16,042		(8,390	)		7,652		15,708		(7,874	)		7,834
Amortizable intangible assets		294,815		(153,128	)		141,687		283,445		(141,424	)		142,021
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	307,842	$	(153,128	)	$	154,714	$	296,472	$	(141,424	)	$	155,048

All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining useful lives. 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, definite-lived trademarks and trade names, and other intangible assets is included in operating expenses in the accompanying consolidated statements of operations. Amortization expense was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2018		2017		2018		2017
Amortization expense – cost of revenue	$	2,489	$	1,696	$	4,969	$	3,337
Amortization expense – operating expenses		3,893		3,347		7,591		6,196
Total amortization expense	$	6,382	$	5,043	$	12,560	$	9,533

Estimated amortization expense for each of the five succeeding years and thereafter as of June 29, 2018 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2018 (remainder of year)	$	5,181	$	7,900	$	13,081
2019		9,527		14,735		24,262
2020		8,617		12,446		21,063
2021		7,695		11,483		19,178
2022		5,937		9,611		15,548
Thereafter		14,709		33,846		48,555
Total	$	51,666	$	90,021	$	141,687