Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

5. Goodwill and Intangible Assets

Goodwill

There were no changes to goodwill during the six months ended June 30, 2016. The $3.3 million of goodwill on the balance sheet was recorded in February 2015 as part of the purchase accounting for the Nexgen acquisition and was assigned to the RF Solutions segment. For evaluation purposes, this goodwill is part of the products reporting unit within the RF Solutions segment. There were no triggering events for the products reporting unit of the RF Solutions segment during the quarter ended June 30, 2016. The Company will continue to monitor goodwill going forward.

Intangible Assets

The Company amortizes intangible assets with finite lives on a straight-line basis over the estimated useful lives, which range from one to eight years. Amortization expense was approximately $0.7 million and $1.2 million for the three months ended June 30, 2016 and 2015, respectively. Amortization expense was approximately $1.5 million and $1.8 million for the six months ended June 30, 2016 and 2015, respectively. Amortization for technology assets is included in cost of revenues and included in operating expenses for all other intangible assets. For the three and six months ended June 30, 2016, $0.2 million and $0.3 million of the amortization expense was included in cost of revenues. For the three and six months ended June 30, 2015, $0.2 million and $0.3 million of the amortization expense was included in cost of revenues.

The summary of other intangible assets, net is as follows:

	June 30, 2016						December 31, 2015
			Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value
Customer contracts and relationships	$	25,497	$	24,235	$	1,262	$	25,497	$	18,616	$	6,881
Patents and technology		10,114		7,670		2,444		10,114		7,337		2,777
Trademarks and trade names		4,960		3,928		1,032		4,960		3,738		1,222
Other		2,743		2,340		403		2,743		2,245		498
	$	43,314	$	38,173	$	5,141	$	43,314	$	31,936	$	11,378

The $6.2 million decrease in the net book value of intangible assets at June 30, 2016 compared to December 31, 2015 consists of amortization expense of $1.5 million recorded for the six months ended June 30, 2016 and $4.7 million recorded for impairment of customer relationships.

During the second quarter of 2016 the revenue and contribution margin of the services reporting unit within the RF Solutions segment were below the forecast that was used during the intangible asset impairment test at March 31, 2016. While the sequential quarterly revenue and contribution margin improved, it is still reflective of a long-term slowdown in the DAS market which is the primary market addressed by our service offering. The Company considered the changes to its forecast and the industry and market trends as a triggering event to assess the intangible assets of the service reporting unit for impairment. The Company reviewed its intangible assets for impairment by performing a test of recoverability. This test of recoverability failed because the undiscounted cash flows were below the carrying value of the services reporting unit. Based on this result, the Company calculated the fair value of the services reporting unit with the assistance of a third-party valuation firm. The cash flow forecast prepared by the Company included assumptions for revenues, gross margins, operating expenses, and the fair value included an assumption for the discount rate. The fair value of the services reporting unit was calculated at $4.7 million below its carrying value. The Company allocated the shortfall to the long-lived assets of the services reporting unit to derive new fair values of the individual long-lived assets. The Company compared these adjusted fair values of the individual long-lived assets with the individually calculated or determined fair values of each long-lived asset. Based on this analysis, the Company recorded 100% of the shortfall to its customer relationships as an impairment charge. The Company will amortize the remaining balance of the customer relationships for the services reporting unit over its remaining useful life.

The assigned lives and weighted average amortization periods by intangible asset category is summarized below:

Intangible Assets	Assigned Life	Weighted Average Amortization Period
Customer contracts and relationships	4 to 6 years		4.2
Patents and technology	3 to 6 years		4.5
Trademarks and trade names	3 to 8 years		4.7
Other	1 to 6 years		4.4

The Company’s scheduled amortization expense for 2016 and the next five years is as follows:

Fiscal Year	Amount
2016	$	2,318
2017	$	1,497
2018	$	1,419
2019	$	1,221
2020	$	199

- 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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