Annual report pursuant to Section 13 and 15(d)

Goodwill and Purchased Intangible Assets

v3.7.0.1
Goodwill and Purchased Intangible Assets
12 Months Ended
Jun. 30, 2017
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, 2017 and 2016 :
(In thousands)
Wafer Inspection
Patterning
GSS
Others
Total
Balance as of June 30, 2015
$
332,783

(1)
$
2,480

(2)
$

$

$
335,263

Goodwill reallocation
(51,671
)
(3)
50,775

(3)

896

(3)

Foreign currency adjustment
(86
)



(86
)
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

__________________
(1)
The balance as of June 30, 2015 , reflects goodwill for the Defect Inspection reporting unit under the old reporting structure which was renamed as Wafer Inspection under a new reporting structure after certain components were allocated out.
(2)
The balance as of June 30, 2015 , reflects goodwill for the Metrology reporting unit under the old reporting structure which was renamed as Patterning under a new reporting structure after certain components were allocated in.
(3)
The Company made certain organizational changes and consolidated its product division effective in the first quarter of fiscal 2016. The reorganization resulted in the reallocation of certain goodwill balances as noted above.
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, 2017 resulted from the acquisition of certain assets and liabilities of a privately-held company. See Note 5 “Business Combination” for additional details.
The Company performed a qualitative assessment of the goodwill by reporting unit as of November 30, 2016 during the three months ended December 31, 2016 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 second quarter of the fiscal year ended June 30, 2017 . The next annual assessment of goodwill by reporting unit is scheduled to be performed in the second quarter of the fiscal year ending June 30, 2018 .
Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
(In thousands)
As of June 30, 2017
As of June 30, 2016
Category
Range of
有用的生活
Gross
Carrying
Amount
Accumulated
Amortization and Impairment
Net
Amount
Gross
Carrying
Amount
Accumulated
Amortization and Impairment
Net
Amount
Existing technology
4-7 years
$
157,259

$
140,346

$
16,913

$
141,659

$
138,160

$
3,499

Trade name/Trademark
7 years
20,993

19,902

1,091

19,893

19,743

150

Customer relationships
7-8 years
55,680

54,959

721

54,980

54,298

682

Backlog
<1 year
260

22

238




Total
$
234,192

$
215,229

$
18,963

$
216,532

$
212,201

$
4,331


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, 2017 , 2016 and 2015 , amortization expense for purchased intangible assets was $3.0 million , $7.6 million and $15.8 million , respectively. The increase in the gross carrying value resulted from the acquisition of a privately-held company. See Note 5 “Business Combination” for additional details. Based on the intangible assets recorded as of June 30, 2017 , 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)
2018
$
4,172

2019
2,409

2020
2,409

2021
2,409

2022
2,409

Thereafter
5,155

Total
$
18,963

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