Goodwill and Intangible Assets

9 Months Ended

Sep. 27, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

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 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 2019 and noted no impairment.

The following table summarizes changes in goodwill during the nine months ended September 27, 2019 (in thousands):

Balance at beginning of the period	$	217,662
Goodwill acquired from acquisitions		55,894
Effect of foreign exchange rate changes		(4,815	)
Balance at end of the period	$	268,741

Goodwill by reportable segment as of September 27, 2019 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	209,506		$	158,781		$	51,683		$	419,970
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	107,045		$	127,059		$	34,637		$	268,741

Goodwill by reportable segment as of December 31, 2018 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	168,955		$	155,017		$	44,919		$	368,891
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	66,494		$	123,295		$	27,873		$	217,662

Intangible Assets

Intangible assets as of September 27, 2019 and December 31, 2018, respectively, are summarized as follows (in thousands):

	September 27, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	155,528	$	(93,459	)	$	62,069	$	134,034	$	(86,623	)	$	47,411
Customer relationships		158,550		(73,754	)		84,796		139,097		(64,174	)		74,923
Customer backlog		2,208		(1,925	)		283		1,738		(1,191	)		547
Non-compete covenant		—		—			—		2,514		(2,493	)		21
Trademarks and trade names		17,514		(9,611	)		7,903		15,915		(8,924	)		6,991
Amortizable intangible assets		333,800		(178,749	)		155,051		293,298		(163,405	)		129,893
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	346,827	$	(178,749	)	$	168,078	$	306,325	$	(163,405	)	$	142,920

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 27,		September 28,		September 27,		September 28,
	2019		2018		2019		2018
Amortization expense – cost of revenue	$	2,797	$	2,492	$	7,554	$	7,461
Amortization expense – operating expenses		3,970		3,947		11,740		11,538
Total amortization expense	$	6,767	$	6,439	$	19,294	$	18,999

Estimated amortization expense for each of the five succeeding years and thereafter as of September 27, 2019 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2019 (remainder of year)	$	2,856	$	4,060	$	6,916
2020		10,697		13,602		24,299
2021		10,896		13,307		24,203
2022		9,320		12,510		21,830
2023		8,176		10,880		19,056
Thereafter		20,124		38,623		58,747
Total	$	62,069	$	92,982	$	155,051