Goodwill and Other Intangible Assets |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Other Intangible Assets |
Note 6. Goodwill and Other Intangible Assets Goodwill Changes in the carrying amount of the Company’s goodwill for the six months ended June 30, 2021 were as follows:
*The goodwill was acquired as part of Origin acquisition. See Note 3. **The goodwill was acquired as part of RPS acquisition. See Note 3. The goodwill balance as of June 30, 2020 had amounted to $385.6 in respect of the Stratasys-Objet reporting unit.
During the third quarter of 2020, the
Company noted that indicators of potential impairment existed which required an
interim goodwill impairment analysis for Stratasys-Objet reporting unit. These
indicators included longer and deeper than expected reduction in the business,
refinement to the company’s business focus into additional inorganic
technologies and sustained decline in the Company’s market capitalization
during the prior two quarters, in each case, primarily as a result of the COVID-19 impact
on the global economy and the Company’s business.
As a result of the factors discussed
above, the Company revisited its assumptions supporting the cash
flow projections for its Stratasys-Objet reporting unit, including: (i) the
expected duration and depth of revenue reduction and certain revenue growth
assumptions; (ii) the associated operating profit margins; and (iii) the long
term growth rate. In estimating the discounted cash flow, the Company used the
following key assumptions: the Company currently expects it will take
approximately two years to regain the loss of revenue and return to its pre
COVID-19 activity levels considering the impact of both volume and price with a
similar effect on profitability. Following such period, the Company expects to
return to similar growth rates as estimated in prior valuations. The Company
assumes a long term terminal growth rate of 2.5%, which is lower than the 3.1% used in
prior valuations. In addition, changes in business focus due to introduction of new technologies is expected to lower the total revenues related to the
Stratasys-Objet reporting unit. The resulting cash flow amounts were discounted
using the same discount rate of 13.5%.
Based on the revised cash flow
projections, the value of the reporting unit had decreased below its carrying value, and the Company
recorded in the third quarter of 2020, goodwill impairment charge of $386.2 million,
the entire reporting unit’s goodwill.
Other Intangible Assets Other intangible assets consisted of the following:
Amortization expenses relating to intangible assets for the three-month periods ended June 30, 2021 and 2020 were approximately $7.7 million and $6.2 million, respectively. Amortization expenses relating to intangible assets for the six-month periods ended June 30, 2021 and 2020 were approximately $15.2 million and $12.4 million, respectively. As of June 30, 2021, the estimated amortization expenses relating to intangible assets for each of the following future periods were as follows:
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