Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

The carrying values of intangible assets were as follows:


	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(In thousands)						(In thousands)
Goodwill	$	1,152,472	$	—	$	1,152,472	$	1,251,938	$	—	$	1,251,938
Definite-lived intangible assets subject to amortization:
Developed technology	$	471,931	$	(383,922)	$	88,009	$	428,187	$	(369,849)	$	58,338
Customer relationships	297,395		(143,197)		154,198		295,382		(128,796)		166,586
Trademarks	70,619		(41,771)		28,848		65,861		(36,539)		29,322
Backlog	14,580		(11,827)		2,753		11,421		(11,421)		—
In-service research and development	11,550		(10,997)		553		11,536		(9,774)		1,762
Non-compete agreements	618		(283)		335		—		—		—
Total intangible assets subject to amortization	$	866,693	$	(591,997)	$	274,696	$	812,387	$	(556,379)	$	256,008
Indefinite-lived intangible assets not subject to amortization:
Trademarks	$	27,000	$	—	$	27,000	$	31,063	$	—	$	31,063

Total intangible assets not subject to amortization	$	27,000	$	—	$	27,000	$	31,063	$	—	$	31,063
Intangible assets	$	893,693	$	(591,997)	$	301,696	$	843,450	$	(556,379)	$	287,071

Segment Allocation of Goodwill and Trademarks

The changes in the carrying amount of goodwill assigned to reporting units in our reportable segments are as follows:


	Enterprise Solutions		Industrial Solutions		Consolidated
	(In thousands)
Balance at December 31, 2019	$	470,031	$	773,638	$	1,243,669
Acquisitions and purchase accounting adjustments	2,420		—		2,420
Translation impact	2,296		3,553		5,849
Balance at December 31, 2020	$	474,747	$	777,191	$	1,251,938
Acquisitions and purchase accounting adjustments	—		41,749		41,749
Impairment	—		(132,843)		(132,843)
Translation impact	(1,506)		(6,866)		(8,372)
Balance at December 31, 2021	$	473,241	$	679,231	$	1,152,472

The changes in the carrying amount of indefinite-lived trademarks are as follows:


	Enterprise Solutions		Industrial Solutions		Consolidated
	(In thousands)
Balance at December 31, 2019	$	27,000	$	13,106	$	40,106
Reclassify to definite-lived	—		(9,043)		(9,043)

Balance at December 31, 2020	$	27,000	$	4,063	$	31,063
Reclassify to definite-lived	—		(4,063)		(4,063)

Balance at December 31, 2021	$	27,000	$	—	$	27,000

Annual Impairment Test

The annual measurement date for our goodwill and indefinite-lived intangible assets impairment test is our fiscal November month-end. For our 2021 goodwill impairment test, we performed a quantitative assessment for all six of our reporting units and determined the estimated fair values of our reporting units by calculating the present values of their estimated future cash flows using Level 3 inputs. We did not perform a qualitative assessment over our reporting units. We determined that the fair values for five of the six reporting units were in excess of their carrying values; therefore, we did not record any goodwill impairment for these reporting units. The estimated fair value for the Tripwire reporting unit in our Industrial Solutions segment was $131.2 million less than its carrying value, and as such, we recognized a goodwill impairment charge of $131.2 million during the fourth quarter of 2021. For the Tripwire reporting unit, we determined the estimated fair value by calculating the present value of estimated future cash flows, which was based in part on the assumed proceeds from a divestiture of Tripwire. On February 7, 2022, we signed an agreement to sell Tripwire. See Note 26. We did not recognize any goodwill impairment from continuing operations in 2020 or 2019 based upon the results of our annual goodwill impairment testing.

For our annual impairment test in 2021, the excess of the fair values over the carrying values for the reporting units other than Tripwire ranged from 51% - 436%. The assumptions used to estimate fair values were based on the past performance of the reporting unit as well as the projections incorporated in our strategic plan. Significant assumptions included sales growth, profitability, and related cash flows, along with cash flows associated with taxes and capital spending. The discount rate used to estimate fair value was risk adjusted in consideration of the economic conditions in effect at the time of the impairment test. We also considered assumptions that market participants may use. In our assessments, the discount rates ranged from 11.3% to 13.7%, the 2022 to 2031 compounded annual revenue growth rates ranged from 3.8% to 9.7%, and the revenue growth rates beyond 2031 ranged from 2.0% to 3.0%. By their nature, these assumptions involve risks and uncertainties. There is inherent risk associated with using an income approach to estimate fair values. If actual results are significantly different from our estimates or assumptions, we may have to recognize additional impairment charges that could be material.

We test our indefinite-lived intangible asset, a trademark, for impairment on an annual basis during the fourth quarter. The accounting guidance related to impairment testing for such intangible assets allows for the performance of an optional qualitative assessment, similar to that described above for goodwill. We did not perform any qualitative assessments as part of our indefinite-lived intangible asset impairment testing for 2021. Rather, we performed a quantitative assessment over our indefinite-lived trademark in 2021. Under the quantitative assessments, we determined the fair value of the trademark using a relief from royalty methodology and compared the fair value to the carrying value. Significant assumptions to determine fair value included sales growth, royalty rates, and discount rates. We did not recognize any indefinite-lived intangible asset impairment charges in 2021, 2020, or 2019.

Disposal Group Impairment

During the fourth quarter of 2019, we committed to a plan to sell Grass Valley, and at such time, met all of the criteria to classify the assets and liabilities of this business as held for sale. Furthermore, we determined a divestiture of Grass Valley represents a strategic shift that is expected to have a major impact on our operations and financial results. As a result, the Grass Valley disposal group, previously included in our Enterprise Solutions segment, was reported within discontinued operations. We also ceased depreciating and amortizing the assets of the disposal group once they met the held for sale criteria in the fourth quarter of 2019. During 2019, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $521.4 million, which consisted of impairments to goodwill, customer relationships, and trademarks of $326.1 million, $14.4 million, and $1.6 million, respectively, as well as an impairment of the disposal group of $179.3 million ($180.4 million translated at year-end exchange rates). During 2020, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $113.0 million. We determined the estimated fair values of the assets and of the reporting unit by calculating the present values of their estimated future cash flows, which was based in part on the assumed proceeds from a divestiture of Grass Valley. See Note 5.

Amortization Expense

We recognized amortization expense in income from continuing operations of $41.2 million, $66.2 million, and $74.6 million in 2021, 2020, and 2019, respectively. We expect to recognize annual amortization expense of $38.1 million in 2022, $36.1 million in 2023, $34.0 million in 2024, $29.5 million in 2025, and $24.9 million in 2026 related to our intangible assets balance as of December 31, 2021.

The weighted-average amortization period for our customer relationships, developed technology, trademarks, and in-service research and development is 18.2 years, 9.0 years, 8.8 years, and 5.0 years, respectively.

At the beginning of 2021, we re-evaluated the useful life of a certain trademark in our Industrial Solutions segment and concluded that an indefinite life for this trademark was no longer appropriate. We have estimated a useful life of five years for the trademark and will re-evaluate this estimate if and when our expected use of the trademark changes. We began amortizing the trademark in the first quarter of 2021, which resulted in amortization expense of $0.8 million for the year ended December 31, 2021. As of December 31, 2021, the net book value of this trademark was $3.3 million.