Intangible Assets and Goodwill

12 Months Ended

Nov. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets are comprised of the following significant classes (in thousands):



	November 30, 2017							November 30, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	154,301	$	(88,224	)	$	66,077	$	109,886	$	(68,116	)	$	41,770
Customer-related	67,802		(46,230		)	21,572		67,602		(35,852		)	31,750
Trademarks and trade names	17,740		(10,495		)	7,245		15,140		(7,833		)	7,307
Total	$	239,843	$	(144,949	)	$	94,894	$	192,628	$	(111,801	)	$	80,827

We amortize intangible assets assuming no expected residual value. Amortization expense related to these intangible assets was $33.1 million, $28.2 million and $29.6 million in fiscal years 2017, 2016 and 2015, respectively.

The increase in intangible assets during fiscal year 2017 is primarily related to the acquisitions of DataRPM Corporation (DataRPM) in March 2017 and Kinvey Inc. (Kinvey) in June 2017 (Note 7).

During the third quarter of fiscal year 2016, we evaluated the ongoing value of the intangible assets associated with the technology obtained in connection with the acquisition of Modulus. As a result of our decision to abandon the related assets due to a change in our expected ability to use the technology internally, we determined that the intangible assets were fully impaired. As a result, we incurred an impairment charge of $5.1 million in the third quarter of fiscal year 2016.

Future amortization expense for intangible assets as of November 30, 2017 is as follows (in thousands):



2018	$	36,378
2019	35,253
2020	10,272
2021	9,550
2022	3,441
Total	$	94,894

Goodwill

Changes in the carrying amount of goodwill for fiscal years 2017 and 2016 are as follows (in thousands):



	November 30, 2017		November 30, 2016
Balance, beginning of year	$	278,067	$	369,985
Additions	36,934		—
Impairment	—		(92,000		)
Translation adjustments	40		82
Balance, end of year	$	315,041	$	278,067

The additions to goodwill during fiscal year 2017 are related to the acquisitions of DataRPM in March 2017 and Kinvey in June 2017 (Note 7).

Changes in the carrying amount of goodwill by reportable segment for fiscal year 2017 are as follows (in thousands):



	November 30, 2016		Additions		Translation Adjustments		November 30, 2017
OpenEdge	$	212,062	$	36,934	$	40	$	249,036
Data Connectivity and Integration	19,040		—		—		19,040
Application Development and Deployment	46,965		—		—		46,965
Total goodwill	$	278,067	$	36,934	$	40	$	315,041

Impairment of Goodwill

We assess the impairment of goodwill on an annual basis and whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

During fiscal year 2017, we tested goodwill for impairment for each of our reporting units as of October 31, 2017. Our reporting units each had fair values which significantly exceeded their carrying values as of the annual impairment date. We did not recognize any goodwill impairment charges during fiscal years 2017 or 2015.

During fiscal year 2016, we recognized a $92 million goodwill impairment loss related to our Application Development and Deployment reporting unit. To determine the fair value of our Application Development and Deployment reporting unit as part of the two-step test for goodwill impairment as of October 31, 2016, we concluded that a combination of the income approach and the market approach was most appropriate. The fair value of this reporting unit was negatively impacted by reduced future growth expectations resulting from a comprehensive review of our strategy and operations by our Chief Executive Officer, our Board of Directors, and the executive management team. Based on this analysis, the implied fair value of goodwill was substantially lower than the carrying value of goodwill for the reporting unit, resulting in the $92 million goodwill impairment loss. This impairment loss was recorded to impairment of goodwill within operating expenses in our fiscal year 2016 consolidated statement of operations.

The evaluation of goodwill for impairment requires significant judgment. While we believe that the assumptions used in our impairment test are reasonable, the analysis is sensitive to adverse changes used in the assumptions of the valuations. In particular, changes in the projected cash flows, the discount rate, the terminal year growth rate and market multiple assumptions could produce significantly different results for the impairment analyses. In the event of future changes in business conditions, we will be required to reassess and update our forecasts and estimates used in future impairment analyses. If the results of these analyses are lower than current estimates, a material impairment charge may result at that time.

- 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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