Goodwill and Other Intangible Assets

9 Months Ended

Mar. 31, 2013

Note 7.

Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill are as follows ($000):


	Nine Months Ended March 31, 2013
	Infrared Optics		Near-Infrared Optics		Military & Materials		Advanced Products Group		Total

Balance – beginning of period	$	9,612	$	48,496	$	12,326	$	10,314	$	80,748
Goodwill acquired		—		10,980		18,486		11,774		41,240
Foreign currency translation		53		289		—		—		342


Balance – end of period	$	9,665	$	59,765	$	30,812	$	22,088	$	122,330

The Company reviews the recoverability of goodwill at least annually and any time business conditions indicate a potential change in recoverability. The measurement of a potential impairment begins with comparing the current fair value of the Company’s reporting units to the recorded value (including goodwill). The Company uses a discounted cash flow model (“DCF model”) and a market analysis to determine the current fair value of its reporting units. A number of significant assumptions and estimates are involved in estimating the forecasted cash flows used in the DCF model, including markets and market shares, sales volume and pricing, costs to produce, working capital changes and income tax rates. Management considers historical experience and all available information at the time the fair values of the reporting units are estimated. However, actual fair values that could be realized could differ from those used to evaluate the impairment of goodwill.

The gross carrying amount and accumulated amortization of the Company’s intangible assets other than goodwill as of March 31, 2013 and June 30, 2012 were as follows ($000):


	March 31, 2013							June 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value

Patents	$	39,532	$	(9,563	)	$	29,969	$	21,856	$	(7,640	)	$	14,216
Trademarks		17,805		(944	)		16,861		13,166		(888	)		12,278
Customer Lists		52,457		(10,920	)		41,537		25,816		(8,296	)		17,520
Other		1,578		(1,389	)		189		1,375		(1,375	)		—

Total	$	111,372	$	(22,816	)	$	88,556	$	62,213	$	(18,199	)	$	44,014

As a result of the preliminary valuations, the Company recorded approximately $49.0 million of identifiable intangible assets in connection with the acquisitions of M Cubed, the Oclaro business and product line, and LightWorks. These identifiable intangible assets included customer lists, patents, trademarks and other of $26.6 million, $17.6 million, $4.6 million and $0.2 million, respectively. The Company intends to finalize its identifiable intangible asset valuations for these acquisitions during fiscal year 2013.

Amortization expense recorded on all intangible assets was $2.2 million and $4.6 million, respectively, for the three and nine months ended March 31, 2013 and was $1.3 million and $3.3 million for the three and nine months ended March 31, 2012, respectively. Patents are being amortized over a range of 60 to 240 months with a weighted average remaining life of approximately 132 months. Customer lists are being amortized over approximately 120 to 192 months with a weighted average remaining life of approximately 133 months. The gross carrying amount of trademarks includes $16.1 million of all acquired trade names. These trade names have indefinite lives and are not amortized but tested annually for impairment or more frequently if a triggering event occurs. Included in the gross carrying amount and accumulated amortization of the Company’s intangible assets is the effect of foreign currency translation on that portion of the intangible assets relating to the Company’s German subsidiaries, Photop and Photop AOFR Pty. Ltd. (“Photop AOFR”).

At March 31, 2013, the estimated amortization expense for existing intangible assets for each of the five succeeding fiscal years is as follows ($000):


Year Ending June 30,

Remaining 2013	$	2,119
2014		7,856
2015		7,266
2016		7,199
2017		7,189

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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