| Goodwill and Other Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill The roll-forward of activity related to our goodwill was as follows (in thousands): Thirteen Weeks Ended April 3, March 29, Balance, beginning of period $ 145,607 $ 170,773 Goodwill additions 108,002 4,100 Goodwill adjustments 4,631 (7,950 ) Balance, end of period $ 258,240 $ 166,923 Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in connection with our acquisitions. Additions to goodwill represent goodwill from acquisitions made during the period. Adjustments to goodwill include translation adjustments resulting from fluctuations in the value of goodwill held in currencies other than U.S. dollars, as well as adjustments made for the finalization of the purchase price allocations. Acquisition of DCG Systems, Inc. On December 10, 2015 , we acquired 100% of the outstanding shares of DCG Systems, Inc. (“DCG”) for approximately $161.8 million in cash. DCG, with approximately 200 employees and headquarters in Fremont, California, is a leading supplier of electrical fault characterization, localization and editing tools, providing process development, yield ramp and failure analysis applications for a wide range of semiconductor and electronics manufacturers. The total purchase price of the acquisition was $182.2 million . We incurred $3.3 million in transactional costs during the thirteen week period ended December 31, 2015, which were recorded in selling, general and administrative costs in our consolidated statements of operations. The excess of the purchase price over the fair value of the net assets acquired was $108.0 million , which was recorded as goodwill in the Industry Group and is primarily related to expected future cash flows attributable to the synergies expected to be realized after our acquisition and integration of the acquired electrical fault analysis (“EFA”) business. The preliminary fair values of the assets acquired and liabilities assumed in the acquisition were recognized as follows (in thousands): Purchase Price Allocation Current assets $ 64,335 Non-current assets 9,930 Deferred tax assets 207 Current liabilities (23,859 ) Non-current liabilities (7,889 ) Net tangible assets acquired 42,724 Intangible assets acquired: Developed technology 10,500 In-process research and development 13,100 Customer relationships 6,900 Backlog 1,000 Total intangible assets acquired 31,500 Goodwill 108,002 Total $ 182,226 The acquired intangible assets are being amortized using the following methodologies and over the following estimated useful lives: Intangible Asset Amortization Methodology Estimated Useful Life Weighted Average Amortization Period Developed technology Straight-line 2 - 4 years 3.1 years In-process research and development Straight-line 3 years 3.0 years Customer relationships Straight-line 10 years 10.0 years Backlog Amortized when revenue is recognized 0.5 - 1.5 years 0.8 years Total intangible assets 4.5 years The allocation of purchase price consideration to assets and liabilities is not yet finalized. The preliminary allocation of the purchase price was based upon preliminary estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date). The primary areas of preliminary purchase price allocation that are not yet finalized are certain tax matters. We are also still in the process of determining how much of the goodwill may be deductible for income tax purposes. In the thirteen week period ended April 3, 2016 , the acquired business contributed revenue of $13.8 million and a net loss of $1.8 million to our consolidated financial results. No pro forma financial information has been provided for this acquisition as it is not significant compared to our overall consolidated financial position. Intangible Assets Patents, trademarks and other acquired intangible assets are amortized using the straight-line method over their estimated useful lives ranging from 6 months to 10 years. Customer relationships are amortized using the straight-line method over their estimated useful lives ranging from 5 to 10 years. Developed technology is amortized using the straight-line method over the estimated useful life of the related technology ranging from 2 to 10 years. In-process research and development costs are amortized using the straight-line method over their estimated useful lives ranging from 3 to 5.5 years. The gross amount of our acquired intangible assets and the related accumulated amortization was as follows (in thousands): April 3, December 31, Patents, trademarks and other $ 25,754 $ 24,278 Accumulated amortization (15,257 ) (13,923 ) Net patents, trademarks and other 10,497 10,355 Customer relationships 28,922 21,245 Accumulated amortization (9,226 ) (8,083 ) Net customer relationships 19,696 13,162 Developed technology 33,533 22,155 Accumulated amortization (12,577 ) (10,517 ) Net developed technology 20,956 11,638 In-process research and development 15,850 2,669 Accumulated amortization (2,003 ) (1,881 ) Net in-process research and development 13,847 788 Total intangible assets, net $ 64,996 $ 35,943 Amortization expense was as follows (in thousands): Thirteen Weeks Ended April 3, March 29, Patents, trademarks and other $ 980 $ 1,011 Customer relationships 843 639 Developed technology 1,710 853 In-process research and development 76 60 Total amortization expense $ 3,609 $ 2,563 Expected amortization, without consideration for foreign currency effects, is as follows over the next five years and thereafter (in thousands): Patents, Trademarks and Other Customer Relationships Developed Technology In-Process Research and Development Total 2016 $ 2,777 $ 2,596 $ 5,253 $ 234 $ 10,860 2017 2,665 3,092 5,515 2,696 13,968 2018 2,004 3,131 2,878 4,367 12,380 2019 1,913 2,569 2,878 4,367 11,727 2020 1,132 2,316 1,501 2,183 7,132 Thereafter 6 5,992 2,931 — 8,929 Total future amortization expense $ 10,497 $ 19,696 $ 20,956 $ 13,847 $ 64,996 |
