Quarterly report pursuant to Section 13 or 15(d)

GOODWILL AND PURCHASED INTANGIBLE ASSETS

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GOODWILL AND PURCHASED INTANGIBLE ASSETS
 3 Months Ended
Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND PURCHASED INTANGIBLE ASSETS 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 business combinations. We have three reportable segments and five operating segments. The operating segments are determined to be the same as reporting units. For additional details, refer to Note 18 “Segment Reporting and Geographic Information” to our Condensed Consolidated Financial Statements. The following table presents changes in goodwill carrying value during the three months ended September 30, 2022:
(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, 2022 $ 725,737  $ 25,908  $ 681,858  $ 872,971  $ 13,575  $ 2,320,049 
Acquired goodwill 6,776  —  —  —  —  6,776 
Goodwill disposal from sale of business (1)
—  —  —  (42,622) —  (42,622)
Goodwill adjustments (5,337) —  —  —  —  (5,337)
Foreign currency adjustments (39) —  —  —  —  (39)
Balance as of September 30, 2022 $ 727,137  $ 25,908  $ 681,858  $ 830,349  $ 13,575  $ 2,278,827 
(1)    Refer to the “Business Dispositions” section of Note 6 “Business Combinations and Dispositions” for more information on the sale of Orbograph.
Goodwill is not subject to amortization but is tested for impairment annually during the third fiscal quarter, as well as whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
As of September 30, 2022, there have been no significant events or circumstances affecting the valuation of goodwill subsequent to the annual assessment performed in the third quarter of the fiscal year ended June 30, 2022. There was no goodwill impairment as a result of that assessment. For additional details, refer to Note 7, “Goodwill and Purchased Intangible Assets” to our Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022.
Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
(In thousands)   As of September 30, 2022 As of June 30, 2022
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
 $ 1,536,826  $ 705,476  $ 831,350  $ 1,523,691  $ 668,175  $ 855,516 
Customer relationships
4-9
 358,567  175,260  183,307  366,567  167,819  198,748 
Trade name / Trademark
4-7
 116,583  67,487  49,096  121,083  68,194  52,889 
Order backlog and other
<1-9
 85,836  64,248  21,588  87,836  58,970  28,866 
Intangible assets subject to amortization(1)
2,097,812  1,012,471  1,085,341  2,099,177  963,158  1,136,019 
In-process research and development 61,322  15,218  46,104  64,457  6,062  58,395 
Total $ 2,159,134  $ 1,027,689  $ 1,131,445  $ 2,163,634  $ 969,220  $ 1,194,414 
(1)    The disposition of Orbograph during the three months ended September 30, 2022, resulted in a decrease in the gross amount of intangible assets subject to amortization of $34.5 million, a decrease in accumulated amortization of $15.9 million, and a decrease in the net amount of $18.6 million. Refer to the “Business Dispositions” section of Note 6 “Business Combinations and Dispositions” for more information on the sale of Orbograph.
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 fully recoverable. Impairment indicators primarily include the declines in our operating cash flows from the use of these assets. If impairment indicators are present, we are required to perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to these long-lived assets to their carrying value.
During the three months ended September 30, 2022, there was an abandonment of an in-process research and development project that resulted in a write off of $9.2 million. As of September 30, 2022, there were no impairment indicators for purchased intangible assets.
Amortization expense for purchased intangible assets for the periods indicated below was as follows:
Three Months Ended September 30,
(In thousands) 2022 2021
Amortization expense - Costs of revenues $ 45,066  $ 41,124 
Amortization expense - SG&A 20,128  12,389 
Amortization expense - Research and development 31  31 
Total $ 65,225  $ 53,544 
Based on the purchased intangible assets gross carrying amount recorded as of September 30, 2022, the remaining estimated annual amortization expense is expected to be as follows:
Fiscal year ending June 30: Amortization (In thousands)
2023 (remaining nine months) $ 195,393 
2024 238,575 
2025 222,123 
2026 206,211 
2027 129,630 
2028 and thereafter 93,409 
Total $ 1,085,341