GOODWILL AND PURCHASED INTANGIBLE ASSETS

3 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

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