Annual report pursuant to Section 13 and 15(d)

Goodwill and Purchased Intangible Assets

v3.10.0.1
Goodwill and Purchased Intangible Assets
12 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND PURCHASED INTANGIBLE ASSETS
NOTE 6 — GOODWILL AND PURCHASED INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in the current and prior business combinations. The Company has four reporting units: Wafer Inspection, Patterning, GSS, and Others. The following table presents goodwill balances and the movements by reporting unit during the fiscal years ended June 30, 2018 and 2017:
(In thousands)
 
Wafer Inspection
 
Patterning
 
GSS
 
Others
 
Total
Balance as of June 30, 2016
 
$
281,026

 
$
53,255

 
$

 
$
896

 
$
335,177

Acquired goodwill
 

 

 
2,856

 
11,424

 
14,280

Foreign currency adjustment
 
69

 

 

 

 
69

Balance as of June 30, 2017
 
281,095

 
53,255

 
2,856

 
12,320

 
349,526

Acquired goodwill
 

 

 
5,163

 

 
5,163

Foreign currency and other adjustments
 
(90
)
 

 
20

 
79

 
9

Balance as of June 30, 2018
 
$
281,005

 
$
53,255

 
$
8,039

 
$
12,399

 
$
354,698


Goodwill is net of accumulated impairment losses of $277.6 million, which were recorded prior to the fiscal year ended June 30, 2014. The acquired goodwill during the fiscal year ended June 30, 2018 and 2017 resulted primarily from the acquisition of certain assets and liabilities of privately-held companies. See Note 5 “Business Combinations” for additional details.
The Company performed a qualitative assessment of the goodwill by reporting unit as of February 28, 2018, during the three months ended March 31, 2018 and concluded that it was more likely than not that the fair value of each of the reporting units exceeded its carrying amount. In assessing the qualitative factors, the Company considered the impact of key factors including change in industry and competitive environment, market capitalization, stock price, earnings multiples, budgeted-to-actual revenue performance from prior year, gross margin and cash flow from operating activities. As such, it was not necessary to perform the two-step quantitative goodwill impairment test at that time. In addition, there have been no significant events or circumstances affecting the valuation of goodwill subsequent to the qualitative assessment performed in the third quarter of the fiscal year ended June 30, 2018. The next annual assessment of goodwill by reporting unit is scheduled to be performed in the third quarter of the fiscal year ending June 30, 2019.
Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
(In thousands)
 
 
As of June 30, 2018
 
As of June 30, 2017
Category
Range of
Useful Lives
 
Gross
Carrying
Amount
 
Accumulated
Amortization and Impairment
 
Net
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization and Impairment
 
Net
Amount
Existing technology
4-7 years
 
$
160,859

 
$
144,202

 
$
16,657

 
$
157,259

 
$
140,346

 
$
16,913

Trade name/Trademark
7 years
 
20,993

 
20,060

 
933

 
20,993

 
19,902

 
1,091

Customer relationships
7-8 years
 
56,680

 
55,136

 
1,544

 
55,680

 
54,959

 
721

Backlog
<1 year
 
660

 
461

 
199

 
260

 
22

 
238

Total
 
 
$
239,192

 
$
219,859

 
$
19,333

 
$
234,192

 
$
215,229

 
$
18,963


Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
For the fiscal years ended June 30, 2018, 2017 and 2016, amortization expense for purchased intangible assets was $4.6 million, $3.0 million and $7.6 million, respectively. The increase in the gross carrying value resulted primarily from the acquisition of certain assets and liabilities of privately-held companies. See Note 5 “Business Combinations” for additional details. Based on the intangible assets recorded as of June 30, 2018, and assuming no subsequent additions to, or impairment of, the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:
Fiscal year ending June 30:
Amortization
(In thousands)
2019
$
3,400

2020
3,201

2021
3,201

2022
3,201

2023
3,151

Thereafter
3,179

Total
$
19,333