Goodwill and Identified Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identified Intangible Assets

GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2013 are as follows (in

thousands):




Balance as of December 31, 2012	$	212,518
Reduction in goodwill associated with the sale of the cable access HFC Business	(14,547		)
Foreign currency translation adjustment	51
Balance as of December 31, 2013	198,022
Foreign currency translation adjustment	(138		)
Balance as of December 31, 2014	$	197,884

Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed. The Company tests for goodwill impairment at the reporting unit level on an annual basis in the fourth quarter of each of its fiscal years, or at any other time at which events occur or circumstances indicate that the carrying amount of goodwill may exceed its fair value.

Prior to the fourth quarter of 2014, the Company operated its business in one reportable segment. In connection with the 2015 annual planning process, the Company changed its operating segments to align with how the Company's CODM expected to evaluate the financial information used to allocate resources and assess performance of the Company. The new reporting structure consists of two operating segments: Video and Cable Edge. The change in operating segments also resulted in a change in the Company's reporting units, which led to a reassignment of goodwill amongst the two reporting units, which are the same as the operating segments. Goodwill is assigned to the reporting units using the relative fair values of the reporting units and the fair values of the reporting units were determined utilizing a blend of the income approach and the market approach. The carrying value of the goodwill for the video segment and cable edge segment as of December 31, 2014 was $137.0 million and $60.9 million, respectively. There was no impairment of goodwill resulting from the Company’s fiscal 2014 annual impairment testing performed in the fourth quarter of 2014. In addition, the Company has not recorded any impairment charges related to goodwill for any prior periods.

Identified Intangible Assets

The following is a summary of identified intangible assets (in thousands):



		December 31, 2014							December 31, 2013
	Range of Useful Lives	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Identifiable intangibles:
Developed core technology	4-6 years	$	136,145	$	(135,426	)	$	719	$	136,145	$	(121,681	)	$	14,464
Customer relationships/contracts	5-6 years	67,098		(58,784		)	8,314		67,098		(53,772		)	13,326
Trademarks and tradenames	4-5 years	11,361		(11,361		)	—		11,361		(10,565		)	796
Maintenance agreements and related relationships	6-7 years	7,100		(5,534		)	1,566		7,100		(4,567		)	2,533
Total identifiable intangibles		$	221,704	$	(211,105	)	$	10,599	$	221,704	$	(190,585	)	$	31,119

Amortization expense for the identifiable purchased intangible assets for the years ended December 31, 2014, 2013 and 2012 was allocated as follows (in thousands):



	December 31,
	2014		2013		2012
Included in cost of revenue	$	13,745	$	19,233	$	20,499
Included in operating expenses	6,775		8,096		8,705
Total amortization expense	$	20,520	$	27,329	$	29,204

The estimated future amortization expense of purchased intangible assets with definite lives is as follows (in thousands):



	Cost of Revenue		Operating Expenses		Total
Year ended December 31,
2015	$	719	$	5,783	$	6,502
2016	—		4,097		4,097
2017	—		—		—
2018	—		—		—
2019	—		—		—
Total future amortization expense	$	719	$	9,880	$	10,599

- 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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