Goodwill and Intangible Assets, Net

12 Months Ended

Dec. 31, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Note 8. Goodwill and Intangible Assets, net

The goodwill and intangible assets were acquired as part of the acquisition of MEC and CEE acquisitions referred to in Note 1, Organization.

The change in the carrying value of goodwill is as follows (in thousands):

Balance—January 1, 2015	$	51,786
Acquisition of CEE (Note 3)		35,757
Balance—December 31, 2015 and 2016	$	87,543

The Company performs its annual impairment test of goodwill on October 1 of each fiscal year or whenever events or circumstances change or occur that would indicate that goodwill might be impaired. The Company has determined that it has one reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the qualitative step is not passed, the Company performs a two-step impairment test whereby in step one, the Company must compare the fair value of the Company with its carrying amount. If the carrying amount exceeds its fair value, the Company performs the step two of the goodwill impairment test to determine the amount of impairment.

As of October 1, 2016, due to the decline in the Company’s market capitalization from the 2015 annual impairment test, the Company performed step one of the impairment test. As of October 1, 2016, the Company concluded that the fair value of the Company exceeded its carrying value, as the Company’s market capitalization exceeded total stockholders’ equity.

The Company considered the continued decrease in market capitalization from October 1, 2016 to December 31, 2016 to be an impairment indicator and the Company also performed the step one test for potential impairment as of December 31, 2016. As of December 31, 2016, total stockholders’ equity exceeded the Company’s market capitalization. The estimated fair value of the Company was estimated using a combination of a market approach and an income approach, giving equal weighting to both. Under the market approach, the Company utilizes publicly traded comparable company information to determine revenue multiples that are used to value the Company. Under the income approach, the Company determines fair value based on estimated future cash flows of the Company discounted by an estimated weighted average cost of capital, reflecting the overall level of inherent risk of the Company and the rate of return an outside investor would expect to earn. The forecast and related assumptions were derived from the most recent annual financial forecast for which the planning process commenced in the fourth quarter of 2016. Based on the fair value analysis as of December 31, 2016, the Company had an estimated fair value which exceeded its carrying value by approximately 8%. Therefore, no impairment of goodwill has been recorded for the year ended December 31, 2016.

Intangible assets, net as of December 31, 2016 consist of the following (in thousands, except weighted average remaining life):

								Weighted
								average
			Accumulated			Carrying		remaining life
	Cost		amortization			value		(in years)
Customer relationships	$	14,660	$	(4,317	)	$	10,343		6.4
Developed technology		6,820		(2,600	)		4,220		3.1
Trade names		6,990		(3,054	)		3,936		4.6
Total	$	28,470	$	(9,971	)	$	18,499

Intangible assets, net as of December 31, 2015 consist of the following (in thousands, except weighted average remaining life):

								Weighted
								average
			Accumulated			Carrying		remaining life
	Cost		amortization			value		(in years)
Customer relationships	$	14,660	$	(2,618	)	$	12,042		7.4
Developed technology		6,820		(1,235	)		5,585		4.1
Trade names		6,990		(1,912	)		5,078		5.3
Total	$	28,470	$	(5,765	)	$	22,705

The Company recorded amortization of intangible assets expense of $4.2 million, $3.7 million and $2.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. As of December 31, 2016, expected amortization of intangible assets for each of the five succeeding fiscal years and thereafter is as follows (in thousands):

2017	$	4,205
2018		4,205
2019		3,335
2020		2,143
2021		1,750
Thereafter		2,861
Total	$	18,499

- 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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