AEHR TEST SYSTEMS Goodwill & Intangibles Disclosure
5. GOODWILL AND PURCHASED INTANGIBLE ASSETS
Goodwill
The Company's goodwill activity during the year ended May 30, 2025 was as follows:
(In thousands) |
| Total |
| |
Balance as of May 31, 2024 |
| $ | - |
|
Addition due to business combination |
|
| 10,719 |
|
Balance as of May 30, 2025 |
| $ | 10,719 |
|
Goodwill was tested for impairment in the fourth quarter at the reporting unit level. There were no impairments to goodwill during the year ended May 30, 2025.
Purchased Intangible Assets
The Company’s purchased intangible assets, net, were as follows:
|
| May 30, 2025 |
| |||||||||
(In thousands) |
|
|
|
| Accumulated |
|
|
|
| |||
Finite-lived intangible assets: |
| Gross |
|
| Amortization |
|
| Net |
| |||
| Developed technology |
| $ | 9,130 |
|
| $ | (634 | ) |
| $ | 8,496 |
|
| Trade names |
|
| 1,050 |
|
|
| (88 | ) |
|
| 962 |
|
| Customer relationships |
|
| 810 |
|
|
| (61 | ) |
|
| 749 |
|
| Non-compete agreements and others |
|
| 1,010 |
|
|
| (436 | ) |
|
| 574 |
|
| Total |
| $ | 12,000 |
|
| $ | (1,219 | ) |
| $ | 10,781 |
|
Amortization expense related to purchased intangible assets with finite lives was $1.2 million for the year ended May 30, 2025.
As of May 30, 2025, the estimated future amortization expense of purchased intangible assets with finite lives is as follows:
| (In thousands) |
| Amount |
| |
|
|
|
| |
2026 |
| $ | 1,229 |
|
2027 |
|
| 1,183 |
|
2028 |
|
| 981 |
|
2029 |
|
| 939 |
|
2030 |
|
| 939 |
|
Thereafter |
|
| 5,510 |
|
| Total |
| $ | 10,781 |
|
There were no impairment charges related to purchased intangible assets for the year ended May 30, 2025.
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.