GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

Goodwill

Goodwill resulting from the Company's acquisitions consisted of the following at June 30, 2012 and December 31, 2011 (in thousands):



				(Revised)
	June 30, 2012			December 31, 2011
Goodwill acquired (a)	$	418,282		$	418,492
Accumulated impairment losses	(171,900		)	(171,900		)
Allocated to assets held for sale	(8,044		)	—
Goodwill (a)	$	238,338		$	246,592


(a)	The June 30, 2012 gross and net goodwill amounts include total foreign currency translation decreases of approximately $0.2 million from the December 31, 2011 amounts.

The Company performs a goodwill impairment analysis annually in the fourth quarter of each year, or whenever events and circumstances occur that indicate that the recorded goodwill may be impaired, in accordance with ASC Subtopic 350-20, Intangibles - Goodwill and Others - Goodwill, a two-step process is used to test for goodwill impairment. The first step determines if there is an indication of impairment by comparing the estimated fair value of each reporting unit to its carrying value including existing goodwill. Upon an indication of impairment from the first step, a second step is performed to determine if goodwill impairment exists.

At September 30, 2011, as a result of a decline in the Company's stock price since its fourth quarter 2010 goodwill impairment testing, lower than expected year-to-date 2011 revenues and operating results, and a reduction in forecasted 2011 results, the Company performed an interim step one goodwill impairment test. The interim step one test at September 30, 2011 indicated that the estimated fair value of the Company's single reporting unit (approximately $530 million) exceeded its carrying value of $414.9 million by approximately 28%. Therefore, no goodwill impairment existed at September 30, 2011, and the Company was not required to perform step two. In connection with its interim goodwill step one impairment test at September 30, 2011, the Company weighted the direct market capitalization approach at 67%, the income approaches at 11%, the guideline public company market approaches at 11%, and the guideline transaction market approaches at 11%. The estimated fair value under the direct market capitalization approach was calculated by applying control premiums of approximately 45% to the Company's market capitalization. The Company's market capitalization was calculated using the average stock price of the Company's common stock for the 20 trading days prior to September 30, 2011 ($8.73 per share). If the Company had used the closing stock price of its common stock on September 30, 2011 ($7.74 per share) in the direct market capitalization described above and applied similar weightings described above, the estimated fair value of the Company's single reporting would have exceeded its carrying value by approximately 20% at September 30, 2011. The Company's market capitalization based on the closing stock price at September 30, 2011 was approximately $298.3 million, compared to the carrying value of the Company's single reporting unit of $414.9 million. This implied a control premium of approximately 39%.

The Company's annual goodwill analyses performed in the fourth quarter of 2011 indicated there was no goodwill impairment at December 31, 2011. The step one test at December 31, 2011 indicated that the estimated fair value of the Company's single reporting unit (approximately $506 million) exceeded its carrying value of $417.0 million by approximately 21%. Therefore, no goodwill impairment existed at December 31, 2011, and the Company was not required to perform step two. In connection with its annual goodwill step one impairment test at December 31, 2011, the Company weighted the direct market capitalization approach at 67%, the income approaches at 11%, the guideline public company market approaches at 11%, and the guideline transaction market approaches at 11%. The estimated fair value under the direct market capitalization approach was calculated by applying control premiums of approximately 45% to the Company's market capitalization. The Company's market capitalization was calculated using the average stock price of the Company's common stock for the 20 trading days prior to December 31, 2011 ($8.04 per share). If the Company used the closing stock price of its common stock on December 31, 2011 ($8.53 per share), the last trading day in 2011, in the direct market capitalization described above and applied similar weightings described above, the estimated fair value of the Company's single reporting would have exceeded its carrying value by approximately 26%. The Company's market capitalization based on the closing stock price at December 31, 2011 was approximately $329.3 million, compared to the carrying value of the Company's single reporting unit of $417.0 million. This implied a control premium of approximately 27%.

At June 30, 2012, as a result of the Company's planned divestiture of its consumer audio and video product lines, the Company performed an interim step one goodwill impairment test. Accordingly, after the allocation of goodwill to the assets held-for-sale, the Company performed an interim goodwill impairment analysis as of June 30, 2012 on the remaining goodwill in the Company's single reporting unit. The interim step one test at June 30, 2012 indicated that the estimated fair value of the Company's single reporting unit (approximately $443 million) exceeded its carrying value of approximately $362 million by approximately 22%. Therefore, no goodwill impairment existed at June 30, 2012, and the Company was not required to perform step two. In connection with its interim goodwill step one impairment test at June 30, 2012, the Company weighted the direct market capitalization approach at 67%, the income approaches at 11%, the guideline public company market approaches at 11%, and the guideline transaction market approaches at 11%. The estimated fair value under the direct market capitalization approach was calculated by applying control premiums of approximately 45% to the Company's market capitalization. The Company's market capitalization was calculated using the average stock price of the Company's common stock for the 20 trading days prior to June 30, 2012 ($7.06 per share). If the Company had used the closing stock price of its common stock on June 29, 2012 ($7.43 per share) in the direct market capitalization described above and applied similar weightings described above, the estimated fair value of the Company's single reporting would have exceeded its carrying value by approximately 26% at June 30, 2012. The Company's market capitalization based on the closing stock price at June 29, 2012 was approximately $288.4 million, compared to the carrying value of the Company's single reporting unit of $362.0 million. This implied a control premium of approximately 26%.

Acquisition-Related Identifiable Intangible Assets

Amortizing identifiable intangible assets related to the Company's acquisitions consisted of the following at June 30, 2012 and December 31, 2011 (in thousands):



	June 30, 2012							December 31, 2011
	Gross		Accumulated Amortization			Net (a)		Gross		Accumulated Amortization			Net
Completed technologies and patents	$	74,526	$	(71,749	)	$	2,777	$	74,624	$	(70,536	)	$	4,088
Customer relationships (b)	58,080		(50,062		)	8,018		68,226		(54,396		)	13,830
Trade names	14,756		(14,745		)	11		14,763		(14,577		)	186
License agreements	560		(560		)	—		560		(560		)	—
Non-compete covenants	1,140		(950		)	190		1,368		(948		)	420
	$	149,062	$	(138,066	)	$	10,996	$	159,541	$	(141,017	)	$	18,524


(a)	The June 30, 2012 net amounts include total foreign currency translation decreases of approximately $0.1 million from the December 31, 2011 amounts.


(b)	In connection with the divestitures referenced in Note 7, during the three-month period ended June 30, 2012, approximately $3.5 million of net customer relationships, related to the consumer audio product line, was reclassified to assets held-for-sale in our consolidated balance sheet.

Amortization expense related to all intangible assets in the aggregate was $1.7 million and $2.8 million, respectively, for the three months ended June 30, 2012 and 2011, and $4.0 million and $5.7 million, respectively, for the six months ended June 30, 2012 and 2011. The Company expects amortization of these intangible assets to be approximately $3 million for the remainder of 2012, $4 million in 2013, $2 million in 2014, $1 million in 2015 and $1 million in 2016.

In connection with the Company's goodwill impairment test at September 30, 2011 and June 30, 2012, the Company performed an impairment analysis of its long-lived assets, including its intangible assets, in accordance with ASC Section 360-10-35, Property, Plant and Equipment - Overall - Subsequent Measurement. This analysis included grouping the intangible assets with other operating assets and liabilities that would not otherwise be subject to impairment testing because the grouped assets and liabilities represent the lowest level for which cash flows are largely independent of the cash flows of other groups of assets and liabilities within the Company. The analysis determined that the undiscounted cash flows of the long-lived assets were significantly greater than their carrying value, indicating no impairment existed.

Capitalized Software Development Costs

In accordance with ASC Subtopic 985-20, Software - Costs of Software to be Sold, Leased or Marketed, the Company is required to capitalize certain costs of internally developed or externally purchased software. Capitalized software costs included in “other assets” consisted of the following at June 30, 2012 and December 31, 2011 (in thousands):



	June 30, 2012							December 31, 2011
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Capitalized software costs	$	5,913	$	(4,743	)	$	1,170	$	6,876	$	(4,730	)	$	2,146

Capitalized software development costs amortized to cost of product revenues were $0.3 million and $0.3 million for the three months ended June 30, 2012 and 2011, respectively, and $0.6 million and $0.6 million for the six months ended June 30, 2012 and 2011, respectively. In connection with the divestitures referenced in Note 7, during the three-month period ended June 30, 2012, approximately $0.4 million of net capitalized software related to the consumer audio and consumer video product lines was reclassified to assets held-for-sale in our consolidated balance sheet. The Company expects amortization of capitalized software costs to be approximately $0.3 million for the remainder of 2012, $0.5 million in 2013 and $0.4 million thereafter.