GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Jun. 30, 2018

5. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for fiscal 2017 and 2018 are as follows (in thousands):

	Security Division			Healthcare Division			Optoelectronics and Manufacturing Division			Consolidated
Balance as of June 30, 2016	$	32,922		$	42,574		$	47,323		$	122,819
Goodwill acquired or adjusted during the period		122,022			—			—			122,022
Goodwill reduced as part of a divestiture		—			(2,200	)		—			(2,200	)
Foreign currency translation adjustment		139			(245	)		(406	)		(512	)

Balance as of June 30, 2017	$	155,083		$	40,129		$	46,917		$	242,129
Goodwill acquired or adjusted during the period		36,889			—			13,986			50,875
Foreign currency translation adjustment		(162	)		28			(657	)		(791	)

Balance as of June 30, 2018	$	191,810		$	40,157		$	60,246		$	292,213

The measurement periods for the valuation of assets and liabilities acquired may extend up to one year. Adjustments in purchase price allocations may require a change in the amounts allocated to goodwill during the periods in which the adjustments are determined.

Intangible assets subject to amortization consisted of the following (in thousands):

		June 30, 2017							June 30, 2018
	Weighted Average Lives	Gross Carrying Value		Accumulated Amortization			Intangibles Net		Gross Carrying Value		Accumulated Amortization			Intangibles Net
Amortizable assets:
Software development costs	9 years	$	26,753	$	(6,291	)	$	20,462	$	28,474	$	(9,586	)	$	18,888
Patents	19 years		8,386		(1,676	)		6,710		8,401		(1,618	)		6,783
Developed technology	10 years		37,446		(5,530	)		31,916		51,780		(9,656	)		42,124
Customer relationships/backlog	7 years		38,289		(7,667	)		30,622		63,098		(17,728	)		45,370
IPR&D	5 years		3,200		—			3,200		3,290		(50	)		3,240

Total amortizable assets			114,074		(21,164	)		92,910		155,043		(38,638	)		116,405
Non-amortizable assets:
Trademarks			25,540		—			25,540		25,596		—			25,596

Total intangible assets		$	139,614	$	(21,164	)	$	118,450	$	180,639	$	(38,638	)	$	142,001

During fiscal 2017 and fiscal 2018, we recorded impairment charges related to intangible assets of $1.8 million and $2.5 million, respectively, due to changes in facts and circumstances associated with the shift in strategic direction which led us to conclude that the carrying value of the intangible assets was not recoverable. These intangible assets impairment charges were included in impairment, restructuring and other charges in our consolidated statement of operations.

Amortization expense for fiscal 2016, 2017 and 2018 was $5.7 million, $12.3 million and $19.5 million, respectively. Future acquisitions could cause these amounts to increase. At June 30, 2018, estimated future amortization expense was as follows (in thousands):

2019	$	19,384
2020		18,600
2021		17,842
2022		13,539
2023		12,743
Thereafter, including assets that have not yet begun to be amortized		34,297

Total	$	116,405

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 amount computed using the ratio that current revenues for a product bear to the total current and anticipated future revenues for that product. In the event that future revenues are not estimable, such costs are amortized on a straight line basis 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. During fiscal 2016, 2017 and 2018, we capitalized software development costs in the amount of $2.7 million, $2.3 million and $1.8 million, respectively.

- 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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