Goodwill and Purchased Intangible Assets
|6 Months Ended
Dec. 31, 2011
|Finite-Lived Intangible Assets [Abstract]
|Goodwill and Purchased Intangible Assets
GOODWILL AND PURCHASED INTANGIBLE ASSETS
The following table presents goodwill balances as of the dates indicated below:
The changes in the gross goodwill balance since June 30, 2011 resulted primarily from foreign currency translation adjustments.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In September 2011, the FASB amended its guidance to simplify testing goodwill for impairment. The amended guidance allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If an entity determines that as a result of the qualitative assessment that it is more likely than not (> 50% likelihood) that the fair value of a reporting unit is less than its carrying amount, then the quantitative test is required. Otherwise, no further testing is required. The Company elected to early adopt this accounting guidance at the beginning of the three months ended December 31, 2011.
The Company has four reporting units: Defect Inspection, Metrology, Service and Other. As of December 31, 2011, the entire goodwill balance resided in the Defect Inspection reporting unit.
The fair value of each of the Company's reporting units was substantially in excess of its estimated carrying amount as of the most recent quantitative analysis of goodwill impairment performed in the three months ended December 31, 2010. There have been no triggering events or changes in circumstances since that quantitative analysis to indicate that the fair value of any of the Company's reporting units would be less than its carrying amount.
The Company performed a qualitative assessment of the goodwill by reporting unit as of November 30, 2011 during the three months ended December 31, 2011 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 these key factors: 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 goodwill impairment test at this time.
Based on the Company's assessment, goodwill in the reporting units was not impaired as of December 31, 2011 or 2010.
Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
For the three months ended December 31, 2011 and 2010, amortization expense for other intangible assets was $7.7 million and $8.5 million, respectively. For the six months ended December 31, 2011 and 2010, amortization expense for other intangible assets was $15.7 million and $16.9 million, respectively. Based on the intangible assets recorded as of December 31, 2011, and assuming no subsequent additions to, or impairment of, the underlying assets, the remaining estimated amortization expense is expected to be as follows: