VECO » Topics » Intangible Assets

These excerpts taken from the VECO 10-K filed Mar 2, 2009.

Intangible Assets

 
  December 31, 2008   December 31, 2007  
 
  Purchased
technology
  Other
intangible
assets
  Total
intangible
assets
  Purchased
technology
  Other
intangible
assets
  Total
intangible
assets
 

Gross intangible assets

  $ 111,033   $ 49,113   $ 160,146   $ 108,588   $ 53,426   $ 162,014  

Less accumulated amortization

    (92,094 )   (29,234 )   (121,328 )   (72,481 )   (29,886 )   (102,367 )
                           

Intangible assets, net

  $ 18,939   $ 19,879   $ 38,818   $ 36,107   $ 23,540   $ 59,647  
                           

        The estimated aggregate amortization expense for intangible assets with definite useful lives for each of the next five fiscal years is as follows (in thousands):

2009

  $ 8,696  

2010

    8,100  

2011

    5,387  

2012

    3,566  

2013

    2,029  

F-21


Table of Contents


Veeco Instruments Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

December 31, 2008

        In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we performed an analysis as of December 31, 2008 of our definite-lived intangible and long-lived assets due to impairment indicators noted during the fourth quarter of 2008, pertaining to our Data Storage Process Equipment and AFM reporting units. Indications of impairment included deteriorating economic conditions, reduced orders, reduced revenue projections, and losses in our AFM reporting unit and a significant reduction in our market capitalization. No impairment indicators were present in the other two reporting units. For the purposes of recognition and measurement of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. For the Data Storage Process Equipment reporting unit the long-lived assets were grouped at one level below the reporting unit and at the reporting unit level for AFM. The recoverability of long-lived asset groups was measured by a comparison of the carrying amount of the assets to the estimated undiscounted future cash flows expected to be generated by such assets. Developing the estimate of the undiscounted future cash flows requires significant judgment and projection of future financial performance, including projection of future revenue and expenses, working capital requirements and the time period in which the assets will be utilized. We used the economic life of the primary asset in the long-lived asset group to determine the forecast period of the future cash flows. For the AFM reporting unit, we analyzed long-lived assets with a carrying value of $27.8 million (consisting of $16.6 million of property, plant and equipment and $11.2 million of intangible assets principally patent defense and capitalized software costs) at December 31, 2008 for impairment and determined that no impairment existed. For the Data Storage Process Equipment reporting unit, we analyzed long-lived assets with a carrying value of $38.6 million at December 31, 2008 for impairment and determined that no impairment existed for one of the identifiable long-lived asset groups with a carrying value of $12.8 million (consisting principally of property, plant and equipment). Since the carrying amount of long-lived assets within the other identifiable asset group exceeded the estimated future cash flows of such assets, an impairment existed. This long-lived asset group consists of intangible assets of $24.0 million (primarily purchased technology) and $1.8 million of property, plant and equipment pertaining to its mechanical processing product line of Saws and Lappers. The amount of the impairment is determined by comparing the fair value of the long-lived asset group to the carrying value. As permitted under SFAS 144 we determined the fair value of our long-lived asset groups utilizing a discounted cash flow approach applying a risk free interest rate. The carrying value of the long-lived assets exceeded the fair value by $15.7, million which was recorded as an impairment charge and was allocated on a pro rata basis to the long-lived assets with $14.6 million allocated to intangible assets and $1.1 million allocated to property, plant and equipment. We currently expect to recover the remaining carrying value of the asset group of $10.1 million by cash flows generated by the use of the assets over their remaining useful life. See Note 8 for a summary of the asset impairment charge.

F-22


Table of Contents


Veeco Instruments Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

December 31, 2008

Intangible Assets






















































































































































 
 December 31, 2008  December 31, 2007  
 
 Purchased

technology
 Other

intangible

assets
 Total

intangible

assets
 Purchased

technology
 Other

intangible

assets
 Total

intangible

assets
 

Gross intangible assets

 $111,033 $49,113 $160,146 $108,588 $53,426 $162,014 

Less accumulated amortization

  (92,094) (29,234) (121,328) (72,481) (29,886) (102,367)
              

Intangible assets, net

 $18,939 $19,879 $38,818 $36,107 $23,540 $59,647 
              




        The estimated aggregate amortization expense for intangible assets with definite useful lives for each of the next five fiscal years is as follows
(in thousands):
















































2009

 $8,696 

2010

  8,100 

2011

  5,387 

2012

  3,566 

2013

  2,029 



F-21









HREF="#fa77101a_main_toc">Table of Contents





Veeco Instruments Inc. and Subsidiaries



Notes to Consolidated Financial Statements (Continued)



December 31, 2008



        In
accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, we performed an
analysis as of December 31, 2008 of our definite-lived intangible and long-lived assets due to impairment indicators noted during the fourth quarter of 2008, pertaining to our Data
Storage Process Equipment and AFM reporting units. Indications of impairment included deteriorating economic conditions, reduced orders, reduced revenue projections, and losses in our AFM reporting
unit and a significant reduction in our market capitalization. No impairment indicators were present in the other two reporting units. For the purposes of recognition and measurement of an impairment
loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets
and liabilities. For the Data Storage Process Equipment reporting unit the long-lived assets were grouped at one level below the reporting unit and at the reporting unit level for AFM. The
recoverability of long-lived asset groups was measured by a comparison of the carrying amount of the assets to the estimated undiscounted future cash flows expected to be generated by such
assets. Developing the estimate of the undiscounted future cash flows requires significant judgment and projection of future financial performance, including projection of future revenue and expenses,
working capital requirements and the time period in which the assets will be utilized. We used the economic life of the primary asset in the long-lived asset group to determine the
forecast period of the future cash flows. For the AFM reporting unit, we analyzed long-lived assets with a carrying value of $27.8 million (consisting of $16.6 million of
property, plant and equipment and $11.2 million of intangible assets principally patent defense and capitalized software costs) at December 31, 2008 for impairment and determined that no
impairment existed. For the Data Storage Process Equipment reporting unit, we analyzed long-lived assets with a carrying value of $38.6 million at December 31, 2008 for
impairment and determined that no impairment existed for one of the identifiable long-lived asset groups with a carrying value of $12.8 million (consisting principally of property,
plant and equipment). Since the carrying amount of long-lived assets within the other identifiable asset group exceeded the estimated future cash flows of such assets, an impairment
existed. This long-lived asset group consists of intangible assets of $24.0 million (primarily purchased technology) and $1.8 million of property, plant and equipment
pertaining to its mechanical processing product line of Saws and Lappers. The amount of the impairment is determined by comparing the fair value of the long-lived asset group to the
carrying value. As permitted under SFAS 144 we determined the fair value of our long-lived asset groups utilizing a discounted cash flow approach applying a risk free interest rate.
The carrying value of the long-lived assets exceeded the fair value by $15.7, million which was recorded as an impairment charge and was allocated on a pro rata basis to the
long-lived assets with $14.6 million allocated to intangible assets and $1.1 million allocated to property, plant and equipment. We currently expect to recover the remaining
carrying value of the asset group of $10.1 million by cash flows generated by the use of the assets over their remaining useful life. See Note 8 for a summary of the asset impairment
charge.



F-22









HREF="#fa77101a_main_toc">Table of Contents





Veeco Instruments Inc. and Subsidiaries



Notes to Consolidated Financial Statements (Continued)



December 31, 2008



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Mar 2, 2009
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