Goodwill and Intangible Assets

9 Months Ended

Oct. 02, 2020

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 for impairment annually 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 2020 and noted no impairment.

The following table summarizes changes in goodwill during the nine months ended October 2, 2020 (in thousands):

Balance at beginning of the period	$	274,710
Net working capital adjustments from a prior-year acquisition		1,118
Effect of foreign exchange rate changes		3,695
Balance at end of the period	$	279,523

Goodwill by reportable segment as of October 2, 2020 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	215,697		$	162,580		$	52,475		$	430,752
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	113,236		$	130,858		$	35,429		$	279,523

Goodwill by reportable segment as of December 31, 2019 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	213,413		$	160,086		$	52,440		$	425,939
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	110,952		$	128,364		$	35,394		$	274,710

Intangible Assets

Intangible assets as of October 2, 2020 and December 31, 2019, respectively, are summarized as follows (in thousands):

	October 2, 2020							December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	160,496	$	(106,118	)	$	54,378	$	159,217	$	(97,523	)	$	61,694
Customer relationships		163,155		(88,072	)		75,083		161,807		(78,206	)		83,601
Customer backlog		—		—			—		2,316		(2,316	)		—
Trademarks and trade names		17,939		(10,814	)		7,125		17,871		(10,018	)		7,853
Amortizable intangible assets		341,590		(205,004	)		136,586		341,211		(188,063	)		153,148
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	354,617	$	(205,004	)	$	149,613	$	354,238	$	(188,063	)	$	166,175

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
	October 2,		September 27,		October 2,		September 27,
	2020		2019		2020		2019
Amortization expense – cost of revenue	$	2,820	$	2,797	$	8,270	$	7,554
Amortization expense – operating expenses		3,533		3,970		10,388		11,740
Total amortization expense	$	6,353	$	6,767	$	18,658	$	19,294

Estimated amortization expense for each of the five succeeding years and thereafter as of October 2, 2020 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2020 (remainder of year)	$	2,820	$	3,533	$	6,353
2021		11,521		13,866		25,387
2022		9,863		13,055		22,918
2023		8,667		11,360		20,027
2024		6,452		9,383		15,835
Thereafter		15,055		31,011		46,066
Total	$	54,378	$	82,208	$	136,586