Goodwill and Intangible Assets

9 Months Ended

Oct. 01, 2021

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 2021 and noted no impairment.

The following table summarizes changes in goodwill during the nine months ended October 1, 2021 (in thousands):

Balance at beginning of the period	$	285,980
Goodwill acquired from acquisitions		213,915
Effect of foreign exchange rate changes		(6,955	)
Balance at end of the period	$	492,940

Goodwill by reportable segment as of October 1, 2021 was as follows (in thousands):

	Reportable Segment
	Photonics			Vision			Precision Motion			Total
Goodwill	$	215,453		$	161,885		$	266,831		$	644,169
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	112,992		$	130,163		$	249,785		$	492,940

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 October 1, 2021 and December 31, 2020, respectively, are summarized as follows (in thousands):

	October 1, 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	$	190,485	$	(118,535	)	$	71,950	$	164,430	$	(110,572	)	$	53,858
Customer relationships		229,369		(101,546	)		127,823		167,429		(92,892	)		74,537
Customer backlog		6,753		(563	)		6,190		—		—			—
Trademarks and trade names		24,052		(12,015	)		12,037		18,367		(11,268	)		7,099
Amortizable intangible assets		450,659		(232,659	)		218,000		350,226		(214,732	)		135,494
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	463,686	$	(232,659	)	$	231,027	$	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				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2021		2020		2021		2020
Amortization expense – cost of revenue	$	3,316	$	2,820	$	9,275	$	8,270
Amortization expense – operating expenses		4,139		3,533		11,300		10,388
Total amortization expense	$	7,455	$	6,353	$	20,575	$	18,658

Estimated amortization expense for each of the five succeeding years and thereafter as of October 1, 2021 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2021 (remainder of year)	$	4,029	$	5,294	$	9,323
2022		13,854		27,032		40,886
2023		12,544		20,998		33,542
2024		10,170		17,631		27,801
2025		8,579		14,917		23,496
Thereafter		22,774		60,178		82,952
Total	$	71,950	$	146,050	$	218,000