Goodwill and Intangible Assets

12 Months Ended

Jan. 31, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

6.	Goodwill and Intangible Assets

Goodwill, net

Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed. We are required to perform impairment tests related to our goodwill annually, which we perform during the third quarter of each fiscal year, or when we identify certain triggering events or circumstances that would more likely than not reduce the estimated fair value of the goodwill of the Company below its carrying amount. At January 31, 2018 and 2017, we had goodwill of $25.6 million and $23.3 million, respectively. The change in the carrying amount of goodwill for fiscal year 2018 is due to the impact of foreign currency translation adjustments related to goodwill balances that are recorded in currencies other than the U.S. dollar. The following table represents the changes in goodwill for the fiscal years ended January 31, 2018 and 2017 (amounts in thousands):

Balance as of January 31, 2016:
Goodwill, gross	$	55,962
Accumulated impairment losses		(15,787	)
Goodwill, net		40,175
Acquisition of DCC Labs		7,255
Goodwill impairment charge		(23,492	)
Cumulative translation adjustment		(651	)
Balance as of January 31, 2017:
Goodwill, gross		62,566
Accumulated impairment losses		(39,279	)
Goodwill, net		23,287
Cumulative translation adjustment		2,292
Balance as of January 31, 2018
Goodwill, gross		64,858
Accumulated impairment losses		(39,279	)
Goodwill, net	$	25,579

In the third quarter of fiscal 2018, we finalized the “Step 1” analysis of our annual goodwill impairment test for fiscal 2018. Based on this analysis, we determined that fair value of our reporting unit exceeded its carrying value, which was $64.2 million at August 1, 2017. As a result, no impairment charge was required related to the annual test. See “Critical Accounting Policies and Significant Judgement and Estimates – Goodwill” in Part II, Item 7 of this Form 10-K for more information.

During the third quarter of fiscal 2018, we determined that there was a significant decrease in fair value of the Corporate Headquarters (see Note 2, “Summary of Significant Accounting Policies – Impairment of Assets,” for more information). We considered this significant decrease in fair value a triggering event. As a result, we were required to complete an additional goodwill impairment test as of the date of the triggering event. We completed the additional goodwill impairment test and determined that the implied fair value of the reporting unit exceeds its carrying value as of the date of the triggering event. Accordingly, no impairment charge was recognized.

While no impairment resulted from our annual test, impairment charges may occur in the future as a result of changes in projected growth and other factors. No triggering events have occurred during the fourth quarter of fiscal 2018 that would indicate a potential impairment of goodwill exists.

We determined based on “Step 1” of our fiscal 2017 annual impairment test, that the fair value of our reporting unit was less than its carrying value, which was $102.5 million at August 1, 2016. Since the estimated fair value of our reporting unit was less than its carrying value, we determined that it was necessary to perform “Step 2” of the impairment test. In “Step 2” of the impairment test we compared the implied fair value of our goodwill to its carrying value. After adjusting the carrying value of all assets, liabilities and equity to fair value at August 1, 2016, the estimated implied fair value of goodwill was calculated to be $22.3 million. Since the implied fair value of goodwill of $22.3 million is less than the carrying value of $45.8 million as of August 1, 2016, we recorded an impairment charge of $23.5 million to loss on impairment of long-lived assets in our consolidated statements of operations and comprehensive income (loss).

Intangible assets, net

Intangible assets, net, consisted of the following at January 31, 2018 and 2017:

			January 31, 2018							January 31, 2017
	Weighted average remaining life (Years)		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
			(Amounts in thousands)
Finite-lived intangible assets:
Customer contracts		1.7	$	30,818	$	(29,836	)	$	982	$	30,056	$	(28,019	)	$	2,037
Non-compete agreements		0.5		2,639		(2,635	)		4		2,374		(2,356	)		18
Completed technology		1.8		11,479		(11,203	)		276		10,496		(9,997	)		499
Trademarks, patents and other		2.5		7,189		(7,148	)		41		7,125		(7,076	)		49
Total finite-lived intangible assets		1.7	$	52,125	$	(50,822	)	$	1,303	$	50,051	$	(47,448	)	$	2,603

Amortization expense for intangible assets was $2.4 million, $3.3 million and $4.8 million for fiscal 2018, 2017 and 2016, respectively.

The total amortization expense for each of the next five fiscal years is as follows (amounts in thousands):

	Estimated
	Amortization
For the Fiscal Years Ended January 31,	Expense
2019	$	914
2020		385
2021		4
2022		—
2023		—
2024 and thereafter		—
Total	$	1,303

Actual amortization may differ from estimated amounts in the table above due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization, or other events.

- 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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