GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company has two reporting units: (1) Service Assurance and (2) Security. The Company assesses goodwill for impairment at the reporting unit level at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value. The Company completed its annual impairment test on January 31, 2018. The Company performed an interim quantitative test as of September 30, 2018 related to the HNT tools business divestiture. The estimated fair value of both reporting units significantly exceeded their carrying value.

At September 30, 2018, goodwill attributable to our Service Assurance and Security reporting units was $1.2 billion and $555.4 million, respectively. At March 31, 2018, goodwill attributable to our Service Assurance and Security reporting units was $1.2 billion and $555.9 million, respectively.

The change in the carrying amount of goodwill for the six months ended September 30, 2018 is due to the impact of the divestiture of the HNT tools business and foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S. Dollar.

The changes in the carrying amount of goodwill for the six months ended September 30, 2018 are as follows (in thousands):



Balance at March 31, 2018	$	1,712,764
Divestiture of the HNT tools business	(4,414		)
Foreign currency translation impact	4,612
Balance at September 30, 2018	$	1,712,962

Intangible Assets

The net carrying amounts of intangible assets were $720.9 million and $831.4 million at September 30, 2018 and March 31, 2018, respectively. Intangible assets acquired in a business combination are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. The Company amortizes intangible assets over their estimated useful lives, except for the acquired trade name which resulted from the Network General Central Corporation (Network General) acquisition, which has an indefinite life and thus is not amortized. The carrying value of the indefinite-lived trade name is evaluated for potential impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

During the three months ended June 30, 2018, the Company performed a quantitative analysis on certain intangible assets related to the HNT tools business, which has since been divested. The fair value for the intangible assets related to the HNT tools business was calculated considering a range of potential transaction prices which the Company considers to be a Level 3 measurement. The fair value of these intangible assets was determined to be less than the carrying value, and as a result, the Company recognized an impairment charge of $35.9 million in the six months ended September 30, 2018. The impairment charge was recorded within a separate operating expense line item in the Company's consolidated statements of operations during the six months ended September 30, 2018.

The Company performed an interim qualitative test as of September 30, 2018 on the non-amortizing trademark as a result of the HNT tools business divestiture. No indicators of impairment were noted at that time.

In September 2018, the Company completed the divestiture of its HNT tools business. As a result, the net carrying value of the Company's intangible assets was reduced by $10.2 million.

Intangible assets include the indefinite-lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at September 30, 2018 (in thousands):



	Cost		Accumulated Amortization			Net
Developed technology	$	243,093	$	(153,856	)	$	89,237
Customer relationships	775,868		(188,347		)	587,521
Distributor relationships and technology licenses	6,931		(4,571		)	2,360
Definite-lived trademark and trade name	39,430		(18,016		)	21,414
Core technology	7,252		(6,761		)	491
Net beneficial leases	336		(336		)	—
Non-compete agreements	301		(301		)	—
Leasehold interest	500		(500		)	—
Backlog	16,486		(16,486		)	—
Capitalized software	3,183		(2,152		)	1,031
Other	1,208		(913		)	295
	$	1,094,588	$	(392,239	)	$	702,349

Intangible assets include the indefinite-lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at March 31, 2018 (in thousands):



	Cost		Accumulated Amortization			Net
Developed technology	$	259,758	$	(148,937	)	$	110,821
Customer relationships	845,490		(176,425		)	669,065
Distributor relationships and technology licenses	9,019		(5,389		)	3,630
Definite-lived trademark and trade name	44,387		(18,138		)	26,249
Core technology	7,345		(6,712		)	633
Net beneficial leases	336		(336		)	—
Non-compete agreements	317		(317		)	—
Leasehold interest	2,600		(2,130		)	470
Backlog	18,544		(18,544		)	—
Capitalized software	3,183		(1,621		)	1,562
Other	1,247		(903		)	344
	$	1,192,226	$	(379,452	)	$	812,774

Amortization included as product revenue consists of amortization of backlog. Amortization included as cost of product revenue consists of amortization of developed technology, distributor relationships and technology licenses, core technology and software. Amortization included as operating expense consists of all other intangible assets. The following table provides a summary of amortization expense for the three and six months ended September 30, 2018 and 2017, respectively (in thousands):



	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Amortization of intangible assets included as:
Product revenue	$	—	$	2	$	—	$	4
Cost of product revenue	8,491		10,129		17,682		19,943
Operating expense	17,986		18,303		41,456		36,692
	$	26,477	$	28,434	$	59,138	$	56,639

The following is the expected future amortization expense at September 30, 2018 for the fiscal years ending March 31 (in thousands):



2019 (remaining six months)	$	49,372
2020	91,165
2021	79,860
2022	69,437
2023	61,733
Thereafter	350,782
	$	702,349

The weighted-average amortization period of developed technology and core technology is 11.3 years. The weighted-average amortization period for customer and distributor relationships is 15.9 years. The weighted-average amortization period for trademarks and trade names is 8.6 years. The weighted-average amortization period for capitalized software is 3.0 years. The weighted-average amortization period for amortizing all intangible assets is 14.6 years.