Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2017

Note 5. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the three years ended December 31, 2017 are as follows (in thousands):


	CPE			N & C			Enterprise		Total
Goodwill		682,582			710,037			—	$	1,392,619
Accumulated impairment losses		—			(378,656	)		—		(378,656	)

Balance as of December 31, 2015	$	682,582		$	331,381		$	—	$	1,013,963

Changes in year 2016:
Goodwill acquired (disposed), net		698,106			291,331			—		989,437
Currency translation		10,483			(60	)		—		10,423
Other		—			2,346			—		2,346

Balance as of December 31, 2016	$	1,391,171		$	624,998		$	—	$	2,016,169

Goodwill		1,391,171			1,003,654			—		2,394,825
Accumulated impairment losses		—			(378,656	)		—		(378,656	)

Balance as of December 31, 2016	$	1,391,171		$	624,998		$	—	$	2,016,169

Changes in year 2017:
Goodwill acquired, net		—			—			318,034		318,034
Impairment		—			(51,200	)		—		(51,200	)
Other		(4,491	)		—			—		(4,491	)

Balance as of December 31, 2017	$	1,386,680		$	573,798		$	318,034	$	2,278,512

Goodwill		1,386,680			1,003,654			318,034		2,708,368
Accumulated impairment losses		—			(429,856	)		—		(429,856	)

Balance as of December 31, 2017	$	1,386,680		$	573,798		$	318,034	$	2,278,512

During 2017, the Company recorded preliminary estimated goodwill of $318.0 million related to the Ruckus Network acquisition. In addition, during the quarter ended December 31, 2017, as a result of a change in strategy for our Cloud TV reporting unit associated with our Active Video acquisition, the Company expects lower future projected cash flows for the business, and as such, the Company has recorded a partial impairment of $51.2 million for the amount by which the Cloud TV reporting unit carrying amount exceeded its fair value of which $17.9 million is attributable to noncontrolling interest. The partial impairment was included in impairment of goodwill and intangible assets on the Consolidated Statements of Income.

During 2016, the Company recorded $989.5 million of goodwill related to the Pace combination, and disposed of $(0.1) million of goodwill related to a business divestiture.

Intangible Assets

The gross carrying amount and accumulated amortization of the Company’s intangible assets as of December 31, 2017 and December 31, 2016 are as follows (in thousands):


	December 31, 2017						December 31, 2016
	Gross Amount		Accumulated Amortization		Net Book Value		Gross Amount		Accumulated Amortization		Net Book Value
Definite-lived intangible assets:
Customer relationships	$	1,672,470	$	780,655	$	891,815	$	1,572,947	$	624,719	$	948,228
Developed technology, patents & licenses		1,521,893		771,200		750,693		1,248,719		571,808		676,911
Trademarks, trade and domain names		87,472		41,885		45,587		83,472		41,433		42,039
Backlog		35,000		5,833		29,167		16,400		16,400		—

Sub-total	$	3,316,835	$	1,599,573	$	1,717,262	$	2,921,538	$	1,254,360	$	1,667,178

Indefinite-lived intangible assets:
Trademarks and trade names		—		—		—		5,900		—		5,900
In-process research and development		54,100		—		54,100		4,100		—		4,100

Sub-total		54,100		—		54,100		10,000		—		10,000

Total	$	3,370,935	$	1,599,573	$	1,771,362	$	2,931,538	$	1,254,360	$	1,677,178

During 2017, the Company recorded $472.5 million of intangible assets (other than goodwill) associated with the Ruckus Networks acquisition, see Note 4 Business Acquisitions of Notes to the Consolidated Financial Statements for further discussion. Due to lower projected cashflows of its Cloud TV reporting unit, the Company recorded a $3.8 million partial impairment of indefinite-lived trademarks and tradenames, determined using a “relief from royalty income” approach. The partial impairment was included in impairment of goodwill and intangible assets on the Consolidated Statements of Income. The remaining carrying amount was reclassified as a definite-lived intangible asset. Certain fully amortized intangible assets have been eliminated from both the gross and accumulated amortization amounts.

During 2016, the Company recorded $1,258.7 million of intangible assets (other than goodwill) associated with the Pace combination, along with $5.4 million related to acquired technology licenses and $8.3 million for foreign currency translation. In addition, in-process research and development of $2.2 million was written off related to projects for which development efforts were abandoned subsequent to the Pace combination. The write off related to the Company’s CPE segment and was included in impairment of goodwill and intangible assets on the Consolidated Statements of Income.

Amortization expense is reported in the Consolidated Statements of Income within cost of goods sold and operating expenses. The following table presents the amortization of intangible assets (in thousands):


	Years Ended December 31,
	2017		2016		2015
Cost of sales	$	3,174	$	2,963	$	670
Selling, general & administrative expense		3,835		4,048		3,480
Amortization of acquired intangible assets		375,407		397,464		227,440

Total	$	382,416	$	404,475	$	231,590

The estimated total amortization expense for finite-lived intangibles for each of the next five fiscal years is as follows (in thousands):


2018	$	402,005
2019		326,807
2020		315,077
2021		180,290
2022		146,499
Thereafter		344,484

- 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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