Goodwill and Intangible Assets

3. Goodwill and Intangible Assets

The changes in the carrying value of goodwill for the six month period ended December 31, 2013 are as follows (in thousands):

	Security		Healthcare		Optoelectronics and Manufacturing		Consolidated
Balance as of June 30, 2013	$	28,546	$	35,827	$	19,370	$	83,743
Goodwill acquired or adjusted during the period	784		1,018		5,481		7,283
Foreign currency translation adjustment	214		271		535		1,020
Balance as of December 31, 2013	$	29,544	$	37,116	$	25,386	$	92,046

Intangible assets consisted of the following (in thousands):

		June 30, 2013						December 31, 2013
	Weighted Average Lives	Gross Carrying Value		Accumulated Amortization		Intangibles Net		Gross Carrying Value		Accumulated Amortization		Intangibles Net
Amortizable assets:
Software development costs	7 years	$	17,350	$	5,396	$	11,954	$	19,106	$	6,293	$	12,813
Patents	13 years	5,400		635		4,765		6,060		699		5,361
Core technology	10 years	2,058		1,728		330		2,218		1,973		245
Developed technology	10 years	20,002		14,620		5,382		15,611		11,003		4,608
Customer relationships/ backlog	8 years	9,178		5,624		3,554		11,355		6,354		5,001
Total amortizable assets		53,988		28,003		25,985		54,350		26,322		28,028
Non-amortizable assets - Trademarks		10,618		—		10,618		11,985		—		11,985
Total intangible assets		$	64,606	$	28,003	$	36,603	$	66,335	$	26,322	$	40,013

Amortization expense related to intangibles assets was $2.3 million and $2.6 million for the six months ended December 31, 2012 and 2013, respectively. For the three months ended December 31, 2012 and 2013, amortization expense was $1.1 million and $1.2 million, respectively. At December 31, 2013, the estimated future amortization expense was as follows (in thousands):

Fiscal Years
2014 (remaining 6 months)	$	1,914
2015	3,097
2016	3,222
2017	3,134
2018	3,025
2019	2,924
2020 and thereafter, including assets that have not yet begun to be amortized	10,712
Total	$	28,028

Software development costs for software products incurred before establishing technological feasibility are charged to operations. Software development costs incurred after establishing technological feasibility are capitalized on a product by product basis until the product is available for general release to customers at which time amortization begins. Annual amortization, charged to cost of goods sold, is the greater of (i) the amount computed using the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product and (ii) the straight line method over the remaining estimated economic life of the product. Amortizable assets that have not yet begun to be amortized are included in thereafter in the table above. The Company capitalized software development costs in the amount of $1.8 million for both the six months ended December 31, 2012 and 2013, respectively, and $0.5 million for each of the three months ended December 31, 2012 and 2013.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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