Goodwill and Other Intangible Assets

9 Months Ended

12 Months Ended

Sep. 30, 2020

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

5. Goodwill and Other Intangible Assets

Goodwill

Goodwill relates to the acquisition of Array. At the acquisition date, July 8, 2016, goodwill was $121.6 million. At December 31, 2019 and September 30, 2020 goodwill totaled $69.7 million, net of accumulated impairment of $51.9 million and is not deductible for tax purposes.

Other Intangible Assets

Other intangible assets consisted of the following at (in thousands):

	Estimated Useful Lives (Years)		December 31, 2019		September 30, 2020 (unaudited)
Amortizable:
Costs:
Developed technology		14	$	203,800	$	203,800
Customer relationship		10		89,500		89,500
Internal-use software modification costs		2.5		4,356		4,356
Total Amortizable Intangibles				297,656		297,656
Accumulated amortization:
Developed technology				50,676		61,594
Customer relationship				31,157		37,869
Internal-use software modification costs				2,613		3,920
Total Accumulated Amortization				84,446		103,383
Total Amortizable Intangibles, Net				213,210		194,273
Non-amortizable costs:
Trade name				10,300		10,300
Total Other Intangible Assets, Net			$	223,510	$	204,573

Amortization expense related to intangible assets amounted to $18.9 million for the nine months ended September 30, 2019 and 2020. Estimated future annual amortization expense for the above amortizable intangible assets for the remaining periods through December 31, as follows (in thousands):

	Amortization Expense
2020	$	6,313
2021		23,507
2022		23,507
2023		23,507
2024		23,507
Thereafter		93,932
	$	194,273

5. Goodwill and Other Intangible Assets

Goodwill

Goodwill relates to the acquisition of Array. At the acquisition date, July 8, 2016, goodwill was $121.6 million. At December 31, 2018 and 2019, goodwill totaled $69.7 million, net of accumulated impairment of $51.9 million and is not deductible for tax purposes.

During 2018, the Company early adopted the guidance contained in ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which removes the step 2 requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. Goodwill impairment is the amount by which the Company’s single reporting unit carrying value exceeds its fair value, not to exceed the recorded amount of goodwill. To estimate the fair value of the Company’s equity, the Company used both a market approach based on the guideline companies’ method (“Market Comparable Approach”), and an income approach based on a discounted cash flow analysis.

The Market Comparable Approach estimates fair value using market multiples of various financial measures compared to a set of comparable public companies. In performing the valuations, significant assumptions utilized include unobservable Level 3 inputs including cash flows and long-term growth rates reflective of management’s forecasted outlook, and discount rates inclusive of risk adjustments consistent with current market conditions. Discount rates are based on the development of a weighted average cost of capital using guideline public company data, factoring in current market data and any company specific risk factors. The value indicated by both methods was weighted to arrive at a concluded value.

The Company completes its annual goodwill impairment test as of year-end. At December 31, 2018 and 2019, the fair value of the reporting unit was in excess of the carrying value; therefore, there was no impairment.

Non-Amortizable Intangible Asset

The Company also completed its annual impairment test for its other non-amortizable asset (Trade Name) by comparing the estimated fair value to the carrying value of such asset. Based on the results of the Company’s tests, it recorded no impairment charges for the years ended December 31, 2018 or 2019.

Other Intangible Assets

Other intangible assets consisted of the following at December 31, (in thousands):

	Estimated Useful Lives (Years)		2018		2019
Amortizable:
Costs:
Developed technology		14	$	203,800	$	203,800
Customer relationship		10		89,500		89,500
Internal-use software modification costs		2.5		4,356		4,356
Total Amortizable Intangibles				297,656		297,656
Accumulated amortization:
Developed technology				36,119		50,676
Customer relationship				22,206		31,157
Internal-use software modification costs				871		2,613
Total Accumulated Amortization				59,196		84,446
Total Amortizable Intangibles, Net				238,460		213,210
Non-amortizable costs:
Trade name				10,300		10,300
Total Other Intangible Assets, Net			$	248,760	$	223,510

Amortization expense related to intangible assets amounted to $26.5 million and $25.2 million for the years ended December 31, 2018 and 2019, respectively. Estimated future annual amortization expense for the above amortizable intangible assets are as follows (in thousands):

For the Year Ending December 31,	Amortization Expense
2020	$	25,250
2021		23,507
2022		23,507
2023		23,507
2024		23,507
Thereafter		93,932
	$	213,210