GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

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, 2020. During the fourth quarter of fiscal year 2020, the Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic to be a triggering event. As such, the Company performed a quantitative analysis as of March 31, 2020. The quantitative impairment test indicated goodwill was not impaired as of March 31, 2020.

Reporting units are determined based on the components of a Company's operating segments that constitute a business for which financial information is available and for which operating results are regularly reviewed by segment management. Through the first half of fiscal year 2020, the Company had two reporting units: (1) Service Assurance and (2) Security. As part of its continued integration efforts, effective during the third quarter of fiscal year 2020, the Company reorganized its business units. As a result of this change, the Company reduced the number of reporting units from two reporting units to one reporting unit. The former Service Assurance and Security reporting units were combined as result of organizational changes made to fully integrate the resources and assets of the Service Assurance and Security business units. The Company completed an assessment of any potential impairment for all reporting units immediately prior to and after the reporting unit change and determined that no impairment existed.

At December 31, 2020 and March 31, 2020, the carrying amount of goodwill was $1.7 billion. The change in the carrying amount of goodwill for the nine months ended December 31, 2020 was due to the impact of foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S. Dollar.

The following table summarizes the changes in the carrying amount of goodwill for the nine months ended December 31, 2020 as follows (in thousands):


Balance at March 31, 2020	$	1,725,680








Foreign currency translation impact	(11,571)
Balance at December 31, 2020	$	1,714,109

Intangible Assets

The net carrying amounts of intangible assets were $535.1 million and $582.2 million at December 31, 2020 and March 31, 2020, 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 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. The Company completed its annual impairment test on January 31, 2020. During the fourth quarter of fiscal year 2020, the Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and concluded that it was not more likely than not that the trade name was impaired and therefore a quantitative Step 1 assessment was not performed as of March 31, 2020.

Intangible assets include the indefinite-lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at December 31, 2020 (in thousands):


	Cost		Accumulated Amortization		Net
Developed technology	$	253,206	$	(208,894)	$	44,312
Customer relationships	779,940		(321,257)		458,683
Distributor relationships and technology licenses	11,539		(7,608)		3,931
Definite-lived trademark and trade name	39,610		(30,369)		9,241
Core technology	7,193		(7,163)		30
Net beneficial leases	336		(336)		—
Non-compete agreements	292		(292)		—
Leasehold interest	500		(500)		—
Backlog	16,613		(16,613)		—
Capitalized software	3,317		(3,270)		47

Other	1,208		(957)		251
	$	1,113,754	$	(597,259)	$	516,495

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, 2020 (in thousands):


	Cost		Accumulated Amortization		Net
Developed technology	$	249,675	$	(191,876)	$	57,799
Customer relationships	767,366		(275,361)		492,005
Distributor relationships and technology licenses	6,785		(6,321)		464
Definite-lived trademark and trade name	39,059		(26,246)		12,813
Core technology	7,192		(7,074)		118
Net beneficial leases	336		(336)		—
Non-compete agreements	292		(292)		—
Leasehold interest	500		(500)		—
Backlog	16,223		(16,223)		—
Capitalized software	3,317		(3,202)		115
Other	1,208		(943)		265
	$	1,091,953	$	(528,374)	$	563,579

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 nine months ended December 31, 2020 and 2019, respectively (in thousands):


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
Amortization of intangible assets included as:

Cost of product revenue	$	5,177	$	6,564	$	15,510	$	20,043
Operating expense	15,278		16,125		45,912		48,410
	$	20,455	$	22,689	$	61,422	$	68,453

The following is the expected future amortization expense at December 31, 2020 for the fiscal years ending March 31 (in thousands):


2021 (remaining three months)	$	20,352
2022	71,881
2023	64,112
2024	55,830
2025	48,729
Thereafter	255,591
	$	516,495

The weighted-average amortization period of developed technology and core technology is 11.2 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.