Goodwill and Intangible Assets

6 Months Ended

Jul. 02, 2021

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 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 2021 and noted no impairment.

The following table summarizes changes in goodwill during the six months ended July 2, 2021 (in thousands):

Balance at beginning of the period	$	285,980
Effect of foreign exchange rate changes		(3,321	)
Balance at end of the period	$	282,659

Goodwill by reportable segment as of July 2, 2021 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	217,304		$	163,231		$	53,353		$	433,888
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	114,843		$	131,509		$	36,307		$	282,659

Goodwill by reportable segment as of December 31, 2020 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	218,517		$	165,195		$	53,497		$	437,209
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	116,056		$	133,473		$	36,451		$	285,980

Intangible Assets

Intangible assets as of July 2, 2021 and December 31, 2020, respectively, are summarized as follows (in thousands):

	July 2, 2021							December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	163,174	$	(116,078	)	$	47,096	$	164,430	$	(110,572	)	$	53,858
Customer relationships		165,963		(99,114	)		66,849		167,429		(92,892	)		74,537
Trademarks and trade names		18,271		(11,793	)		6,478		18,367		(11,268	)		7,099
Amortizable intangible assets		347,408		(226,985	)		120,423		350,226		(214,732	)		135,494
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	360,435	$	(226,985	)	$	133,450	$	363,253	$	(214,732	)	$	148,521

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				Six Months Ended
	July 2,		July 3,		July 2,		July 3,
	2021		2020		2021		2020
Amortization expense – cost of revenue	$	2,982	$	2,716	$	5,959	$	5,450
Amortization expense – operating expenses		3,586		3,410		7,161		6,855
Total amortization expense	$	6,568	$	6,126	$	13,120	$	12,305

Estimated amortization expense for each of the five succeeding years and thereafter as of July 2, 2021 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2021 (remainder of year)	$	5,903	$	7,096	$	12,999
2022		10,115		13,340		23,455
2023		8,892		11,600		20,492
2024		6,646		9,585		16,231
2025		5,198		7,972		13,170
Thereafter		10,342		23,734		34,076
Total	$	47,096	$	73,327	$	120,423