Goodwill and Purchased Intangible Assets
|6 Months Ended
Dec. 31, 2014
|Goodwill and Intangible Assets Disclosure [Abstract]
|Goodwill and Purchased Intangible Assets
GOODWILL AND PURCHASED INTANGIBLE ASSETS
The following table presents goodwill balances and the movements during the six months ended December 31, 2014:
The changes in the gross goodwill balance since June 30, 2014 resulted 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 prior business combinations. The Company has four reporting units: Defect Inspection, Metrology, Service and Other. As of December 31, 2014, substantially all of the goodwill balance resided within the Defect Inspection reporting unit.
The Company performed a qualitative assessment of the goodwill by reporting unit as of November 30, 2014 during the three months ended December 31, 2014 and concluded that it was more likely than not that the fair value of each of the reporting units exceeded its carrying amount. As a result of the Company’s determination following its qualitative assessment, it was not necessary to perform the two-step quantitative goodwill impairment test at this time. In assessing the qualitative factors, the Company considered the impact of key factors, including changes in the industry and competitive environment, market capitalization, stock price, earnings multiples, budgeted-to-actual revenue performance from prior year, gross margin and cash flows from operating activities.
Based on the Company’s assessment, goodwill in the reporting units was not impaired as of December 31, 2014 or 2013.
Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
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 three months ended December 31, 2014 and 2013, amortization expense for intangible assets was $4.0 million and $3.9 million, respectively. For the six months ended December 31, 2014 and 2013, amortization expense for intangible assets was $8.1 million and $8.4 million, respectively. Based on the intangible assets recorded as of December 31, 2014, and assuming no subsequent additions to, or impairment of, the underlying assets, the remaining estimated amortization expense is expected to be as follows: