GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

Goodwill

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



	September 30, 2012			December 31, 2011 (Revised)
Goodwill acquired (a)	$	418,497		$	418,492
Accumulated impairment losses	(171,900		)	(171,900		)
Allocated to loss on sales of assets	(8,044		)	—
Goodwill (a)	$	238,553		$	246,592


(a)	The September 30, 2012 gross and net goodwill amounts include total foreign currency translation increases of approximately $0.1 million from the December 31, 2011 (Revised) 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.

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 September 30, 2012, as a result of lower than expected year-to-date 2012 revenues and operating results and a reduction in forecasted 2012 results, the Company performed an interim step one goodwill impairment test. The interim step one test at September 30, 2012 indicated that the estimated fair value of the Company's single reporting unit (approximately $510 million) exceeded its carrying value of approximately $349.3 million by approximately 46%. Therefore, no goodwill impairment existed at September 30, 2012, and the Company was not required to perform step two. In connection with its interim goodwill step one impairment test at September 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 September 30, 2012 ($9.60 per share). If the Company had used the closing stock price of its common stock on September 28, 2012 ($9.46 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 unit would have exceeded its carrying value by approximately 45% at September 30, 2012. The Company's market capitalization based on the closing stock price at September 28, 2012 was approximately $367.8 million, compared to the carrying value of the Company's single reporting unit of $349.3 million.

The Company's market capitalization based on the closing price at November 5, 2012 ($6.30 per share) was approximately $245.2 million compared to the carrying value of the Company's single reporting unit of $349.3 million at September 30, 2012. This implies a control premium of 43%.

The Company will perform its annual goodwill impairment test during the fourth quarter of 2012. Given the recent decline and continued volatility in the price of the Company's common stock, it is possible that the Company will fail the step one goodwill impairment test and will be required to perform step two of the goodwill impairment test. Step two would require the Company to perform a hypothetical purchase price allocation for its single reporting unit, allocating the reporting unit's estimated fair value to its assets and liabilities, and to determine the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss would be recognized for the difference. While the Company cannot make a determination at this time, it is possible that a goodwill impairment loss will be recorded in the fourth quarter of 2012.

Acquisition-Related Identifiable Intangible Assets

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



	September 30, 2012							December 31, 2011 (Revised)
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Completed technologies and patents	$	52,646	$	(50,459	)	$	2,187	$	74,624	$	(70,536	)	$	4,088
Customer relationships (a)	49,475		(42,122		)	7,353		68,226		(54,396		)	13,830
Trade names	5,965		(5,965		)	—		14,763		(14,577		)	186
License agreements	—		—			—		560		(560		)	—
Non-compete covenants	1,159		(1,062		)	97		1,368		(948		)	420
Total (b)	$	109,245	$	(99,608	)	$	9,637	$	159,541	$	(141,017	)	$	18,524


(a)	In connection with the divestitures referenced in Note 7, during the nine-month period ended September 30, 2012, approximately $3.5 million of net customer relationships, related to the consumer audio product line, was allocated to the divestiture and included in the loss on sales of assets in our consolidated statements of operations.

(b) In the nine months ended September 30, 2012 the company wrote off approximately $40.1 million of fully amortized intangible assets.

Amortization expense related to all intangible assets in the aggregate was $1.4 million and $2.8 million, respectively, for the

three months ended September 30, 2012 and September 30, 2011 (Revised), and $5.4 million and $8.5 million, respectively, for

the nine months ended September 30, 2012 and 2011. The Company expects amortization of these intangible assets to be

approximately $2.0 million for the remainder of 2012, $4.0 million in 2013, $2.0 million in 2014, $1.0 million in 2015 and $1.0 million in 2016.

In connection with the Company's goodwill impairment test at September 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 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 September 30, 2012 and December 31, 2011 (Revised) (in thousands):



	September 30, 2012							December 31, 2011 (Revised)
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Capitalized software costs	$	5,934	$	(4,873	)	$	1,061	$	6,876	$	(4,730	)	$	2,146

Capitalized software development costs amortized to cost of product revenues were $0.1 million and $0.3 million for the three months ended September 30, 2012 and September 30, 2011 (Revised), respectively, and $0.7 million and $0.9 million for the nine months ended September 30, 2012 and 2011 (Revised), respectively. In connection with the divestitures referenced in Note 7, during the nine-month period ended September 30, 2012, approximately $0.4 million of net capitalized software related to the consumer audio and consumer video product lines was allocated to the divestiture and included in the loss on sales of assets in our consolidated statements of operations. The Company expects amortization of capitalized software costs to be approximately $0.1 million for the remainder of 2012, $0.4 million in 2013 and $0.6 million thereafter.