Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Purchased Intangible Assets

v3.19.3
Goodwill and Purchased Intangible Assets
3 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND PURCHASED INTANGIBLE ASSETS
NOTE 7 – 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. We have four reportable segments and six reporting units. For additional details, refer to Note 18, “Segment Reporting and Geographic Information” of the Condensed Consolidated Financial
Statements. The following table presents goodwill carrying value and the movements during the three months ended September 30, 2019(1):
(In thousands)
 
Wafer Inspection and Patterning
 
Global Service and Support (GSS)
 
Specialty Semiconductor Process
 
PCB and Display
 
Component Inspection
 
Total
Balance as of June 30, 2019
 
$
360,615

 
$
25,908

 
$
821,842

 
$
989,918

 
$
13,575

 
$
2,211,858

Acquired goodwill
 
54,001

 

 

 

 

 
54,001

Foreign currency and other adjustments
 
(35
)
 

 

 
(2,135
)
 

 
(2,170
)
Balance as of September 30, 2019
 
$
414,581

 
$
25,908

 
$
821,842

 
$
987,783

 
$
13,575

 
$
2,263,689


_________________
(1)
No goodwill was assigned to the Other reporting unit, and accordingly was excluded in the table above.
    
As of September 30, 2019, there have been no significant events or circumstances affecting the valuation of goodwill subsequent to the qualitative assessment performed in the third and fourth quarters of the fiscal year ended June 30, 2019. For additional details, refer to Note 7 “Goodwill and Purchased Intangible Assets,” of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019. 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, 2020.
Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
(In thousands)
 
 
As of
September 30, 2019
 
As of
June 30, 2019
Category
Range of
Useful 
Lives
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization,
and Impairment
 
Net
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
and
Impairment
 
Net
Amount
Existing technology
4-8
 
$
1,251,277

 
$
232,203

 
$
1,019,074

 
$
1,224,629

 
$
196,582

 
$
1,028,047

Trade name / Trademark
4-7
 
117,133

 
28,537

 
88,596

 
114,573

 
25,052

 
89,521

Customer relationships
4-9
 
305,028

 
74,511

 
230,517

 
297,250

 
66,471

 
230,779

Backlog and other
<1-9
 
50,393

 
30,014

 
20,379

 
43,969

 
19,146

 
24,823

Intangible assets subject to amortization
 
 
1,723,831

 
365,265

 
1,358,566

 
1,680,421

 
307,251

 
1,373,170

In-process research and development
 
 
190,635

 

 
190,635

 
187,500

 

 
187,500

Total
 
 
$
1,914,466

 
$
365,265

 
$
1,549,201

 
$
1,867,921

 
$
307,251

 
$
1,560,670


Purchased 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. The change in the gross carrying amounts of intangible assets is due to acquisition of certain assets and liabilities of privately-held companies. For additional details, refer to Note 6 “Business Combinations” of the Condensed Consolidated Financial Statements.
Amortization expense for purchased intangible assets for the periods indicated below was as follows:
 
Three Months Ended
 
September 30,
(In thousands)
2019
 
2018
Amortization expense - Cost of revenues
$
35,621

 
$
890

Amortization expense - Selling, general and administrative
22,256

 
544

Amortization expense - Research and development
31

 

Total
$
57,908

 
$
1,434


Based on the purchased intangible assets gross carrying amount recorded as of September 30, 2019, the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:
Fiscal year ending June 30:
Amortization
(In thousands)
2020 (remaining 9 months)
$
161,422

2021
194,901

2022
192,323

2023
191,271

2024
188,714

2025 and thereafter
429,935

Total
$
1,358,566