GOODWILL & INTANGIBLE ASSETS

Goodwill

The Company has two reporting units: (1) Service Assurance and (2) Security. At March 31, 2019, goodwill attributable to the Company's Service Assurance and Security reporting units was $1.2 billion and $555.1 million, respectively. At March 31, 2018, goodwill attributable to the Company's Service Assurance and Security reporting units was $1.2 billion and $555.9 million, respectively. Goodwill is tested for impairment at a reporting unit level at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value. The Company completed its annual impairment test on January 31, 2019.

In fiscal years 2019 and 2018, the Company's quantitative impairment tests indicated that goodwill was not impaired. The Company determined the fair values of its reporting units by preparing a discounted cash flow analysis using forward looking projections of the reporting units’ future operating results and by comparing the value of the reporting units to the implied market value of selected peers. The significant assumptions used in the discounted cash flow analysis include: revenue and revenue growth, selling margins, other operating expenditures, the discounted rate used to present value future cash flows and terminal growth rates. The discount rate used is a cost of equity method, which is essentially equal to the "market participant" weighted-average cost of capital (WACC). The Service Assurance and Security reporting units' goodwill fair value substantially exceeded their respective carrying value.

The change in the carrying amount of goodwill for the fiscal year ended March 31, 2019 is due to the divestiture of the HNT tools business and impact of foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S. Dollar.

The changes in the carrying amount of goodwill for the fiscal years ended March 31, 2019 and 2018 are as follows (in thousands):




Balance at March 31, 2017	$	1,718,162
Goodwill attributable to the Efflux acquisition	6,077
Foreign currency translation impact	(11,475		)
Balance as of March 31, 2018	$	1,712,764
Divestiture of the HNT tools business	(4,414		)
Foreign currency translation impact	7,135
Balance as of March 31, 2019	$	1,715,485

Intangible Assets

The net carrying amounts of intangible assets were $669.1 million and $831.4 million at March 31, 2019 and 2018, respectively. Intangible assets acquired in a business combination are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. The Company amortizes intangible assets over their estimated useful lives, except for the acquired trade name which resulted from the Network General acquisition, which has an indefinite life and thus is not amortized. The carrying value of the indefinite lived trade name is evaluated for potential impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.

During fiscal year 2019, the Company performed a quantitative analysis on certain intangible assets related to the HNT tools business, which has since been divested. The fair value for the intangible assets related to the HNT tools business was calculated considering a range of potential transaction prices which the Company considers to be a Level 3 measurement. The fair value of these intangible assets was determined to be less than the carrying value, and as a result, the Company recognized an impairment charge of $35.9 million in the twelve months ended March 31, 2019. The impairment charge was recorded within a separate operating expense line item in the Company's consolidated statements of operations during the twelve months ended March 31, 2019.

In September 2018, the Company completed the divestiture of the HNT tools business. As a result, the net carrying value of the Company's intangible assets was reduced by $10.2 million.

In fiscal year 2019 and 2018, the Company's annual impairment tests indicated that the acquired trade name was not impaired. In the fourth quarter of fiscal year 2019, the Company completed its annual impairment test of the indefinite lived intangible at January 31, 2019, using the qualitative Step 0 assessment. No impairment indicators were observed at January 31, 2019.

The Company did not acquire any technology licenses during the fiscal year ended March 31, 2019. During the fiscal year ended March 31, 2018, the Company acquired technology licenses for $0.5 million. This amount is included within distributor relationships and is being amortized using the economic benefit method over a useful life of 3 years.

Intangible assets include the indefinite lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at March 31, 2019 (in thousands):



	Cost		Accumulated Amortization			Net
Developed technology	$	242,259	$	(168,289	)	$	73,970
Customer relationships	772,969		(218,043		)	554,926
Distributor relationships and technology licenses	6,882		(5,237		)	1,645
Definite-lived trademark and trade name	39,304		(20,586		)	18,718
Core technology	7,192		(6,845		)	347
Net beneficial leases	336		(336		)	—
Non-compete agreements	292		(292		)	—
Leasehold interest	500		(500		)	—
Backlog	16,397		(16,397		)	—
Capitalized software	3,317		(2,690		)	627
Other	1,208		(923		)	285
	$	1,090,656	$	(440,138	)	$	650,518

Intangible assets include the indefinite lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at March 31, 2018 (in thousands):



	Cost		Accumulated Amortization			Net
Developed technology	$	259,758	$	(148,937	)	$	110,821
Customer relationships	845,490		(176,425		)	669,065
Distributor relationships and technology licenses	9,019		(5,389		)	3,630
Definite-lived trademark and trade name	44,387		(18,138		)	26,249
Core technology	7,345		(6,712		)	633
Net beneficial leases	336		(336		)	—
Non-compete agreements	317		(317		)	—
Leasehold interest	2,600		(2,130		)	470
Backlog	18,544		(18,544		)	—
Capitalized software	3,183		(1,621		)	1,562
Other	1,247		(903		)	344
	$	1,192,226	$	(379,452	)	$	812,774

Amortization included as product revenue consists of amortization of backlog. Amortization included as cost of product revenue consists of amortization of developed technology, distributor relationships and technology licenses, core technology and software. Amortization included as operating expense consists of all other intangible assets. The following table provides a summary of amortization expense during the fiscal years ended March 31, 2019, 2018, and 2017 (in thousands).



	Years Ended March 31,
	2019		2018		2017
Amortization of intangible assets included as:
Product revenue	$	—	$	9	$	11,438
Cost of product revenue	34,039		40,286		44,326
Operating expense	74,325		76,661		70,325
	$	108,364	$	116,956	$	126,089

The following is the expected future amortization expense at March 31, 2019 for the fiscal years ended March 31 (in thousands):



2020	$	90,924
2021	79,643
2022	69,232
2023	61,511
2024	53,403
Thereafter	295,805
Total	$	650,518

The weighted average amortization period of developed technology and core technology is 11.3 years. The weighted average amortization period for customer and distributor relationships is 15.9 years. The weighted average amortization period for trademarks and trade names is 8.6 years. The weighted average amortization period for capitalized software is 3.0 years. The weighted average amortization period for all amortizing intangible assets is 14.6 years.