Goodwill and Intangible Assets, Net

12 Months Ended

Dec. 31, 2016

7. Goodwill and Intangible Assets, Net

Goodwill is tested annually for impairment or more frequently if impairment indicators are present. The Company operates as one operating and reporting segment and, therefore, the Company assesses goodwill for impairment annually as one singular reporting unit, using a two-step approach. The first step is to compare the fair value of the reporting unit to the carrying value of the net assets assigned to the reporting unit. If the fair value of the reporting unit is greater than the carrying value of the net assets assigned to the reporting unit, the assigned goodwill is not considered impaired. If the fair value is less than the reporting unit’s carrying value, step two is performed to measure the amount of the impairment, if any.

The Company did not identify any impairment of the goodwill at December 31, 2016 and 2014, and therefore, for the years ended December 31, 2016 and 2014, no impairment losses related to goodwill were recorded.

During the year ended December 31, 2015, the Company determined that an impairment indicator was present that required us to perform an interim goodwill impairment analysis prior to October 1st for the reporting unit. This impairment indicator was a decrease in market capitalization below the carrying value of the Company’s net assets. During the three months ended September 30, 2015, the Company conducted an interim impairment test on its goodwill, based on which the Company determined that the implied fair value of goodwill was less than the reporting unit’s carrying value. As a result, the Company recorded a goodwill impairment loss of $20,890 to reduce the carrying value of goodwill to the implied fair value. The changes in the carrying amount of goodwill as of December 31, 2016 and 2015 were as follows:

	2016			2015
Beginning balance as of January 1,	$	10,781		$	29,719
Acquisition-related goodwill	—			1,251
Impairment of goodwill	—			(20,890		)
Purchase price adjustment related to acquisition(1)	—			651
Foreign exchange impact	(23		)	50

Ending balance as of December 31,	$	10,758		$	10,781

The Company also reviews certain identifiable intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of intangible assets are measured by a comparison of the carrying amount of the asset or asset group, using an income approach, to future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are not recoverable, the impairment to be recognized, if any, is measured by the amount which the carrying amount of the assets exceeds the estimated fair value of the assets or asset group. As the Company operates as one business unit and the Company’s long-lived assets do not have identifiable cash flows that are independent of the other assets and liabilities of this business unit, the impairment testing on intangible assets is performed at the entity-level.

In connection with the interim impairment testing on goodwill that occurred during the three months ended September 30, 2015, the Company also conducted an impairment testing on certain intangible assets, specifically related to its customer relationships acquired in a historical acquisition, which indicated that the estimated fair value of those intangible assets were below their carrying value. Accordingly, the Company recognized an impairment charge related to its intangible assets of $1,209 during the year ended December 31, 2015 to reduce the carrying values of these intangible assets to their estimated fair values.

Information regarding the Company’s acquisition-related intangible assets, net is as follows:

	December 31, 2016
	Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount
Technology	$	24,500	(21,513	)	2,987
Customer relationships(1)	9,714		(6,016	)	3,698
Trademarks and trade name	1,670		(1,483	)	187
Domain name	50		—		50

Total acquisition-related intangible assets, net	$	35,934	(29,012	)	6,922

	December 31, 2015
	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount
Technology	$	24,500	$	(18,116	)	$	6,384
Customer relationships(2)	9,737		(5,113		)	4,624
Trademarks and trade name(2)	1,670		(1,259		)	411
Domain name(3)	50		—			50

Total acquisition-related intangible assets, net	$	35,957	$	(24,488	)	$	11,469

(1)

The decrease of $23 from December 31, 2015 to December 31,2016 results from the foreign exchange impact

(2)

In connection with the Company’s acquisition of TVN during the year ended December 31, 2015, the Company acquired the following identifiable acquisition-related intangible assets (a) $2,045 (including impact of foreign exchange transaction loss of $3) in customer relationships, and (b) $21 in trademarks and tradenames.

(3)

This intangible asset is considered to have an indefinite useful life and, therefore, not subject to amortization.

Amortization expense amounted to $4,524, $4,940 and $4,835 for the years ended December 31, 2016, 2015 and 2014, respectively. The estimated future amortization expenses of the acquisition-related intangible assets that are considered to have a definite life, as of December 31, 2016, for the next five years and thereafter are as follows:

2017	4,059
2018	884
2019	884
2020	848
2021	197
2022 and thereafter	—

Total(1)	$	6,872

(1)

Total estimated future amortization expenses exclude any intangible assets considered to have an indefinite useful life.

- 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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