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Intangible Assets and Goodwill | 12 Months Ended
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Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract] |
Intangible Assets and Goodwill | Intangible Assets and Goodwill In the fourth quarter of 2018 and 2017, the Company performed its annual goodwill impairment analysis for the MID and RSD reporting units, which are the only reporting units with goodwill. The Company estimated the fair value of the reporting units using the income approach which was determined using Level 3 fair value inputs. The utilization of the income approach to determine fair value requires estimates of future operating results and cash flows discounted using an estimated discount rate. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. As of December 31, 2018, the fair value of the MID reporting unit, with $66.6 million of goodwill, exceeded the carrying value of its net assets by approximately 17% and the fair value of the RSD reporting unit, with $140.5 million of goodwill, exceeded the carrying value of its net assets by approximately 72%. Key assumptions used to determine the fair value of the MID and RSD reporting units at December 31, 2018, were the revenue growth rates for the forecast period and terminal year, terminal growth rates and discount rates. Certain estimates used in the income approach involve information for new product lines with limited financial history and developing revenue models which increase the risk of differences between the projected and actual performance. The discount rate of 16% for MID and 16.5% for RSD is based on the reporting units’ overall risk profile relative to other guideline companies, market adoption of the Company's technology, the reporting units’ respective industry as well as the visibility of future expected cash flows. The terminal growth rate applied to determine fair value for both reporting units was 3%, which was based on historical experience as well as anticipated economic conditions, industry data and long term outlook for the business. These assumptions are inherently uncertain. As of December 31, 2017, the fair value of the MID reporting unit, with $66.6 million of goodwill, exceeded the carrying value of its net assets by approximately 270% and the fair value of the RSD reporting unit, with $143.0 million of goodwill, exceeded the carrying value of its net assets by approximately 155%. Key assumptions used to determine the fair value of the MID and RSD reporting units at December 31, 2017, were the revenue growth rates for the forecast period and terminal year, terminal growth rates and discount rates. Certain estimates used in the income approach involve information for new product lines with limited financial history and developing revenue models which increase the risk of differences between the projected and actual performance. The discount rate of 12% for MID and 16.5% for RSD is based on the reporting units’ overall risk profile relative to other guideline companies, market adoption of the Company's technology, the reporting units’ respective industry as well as the visibility of future expected cash flows. The terminal growth rate applied to determine fair value for both reporting units was 3%, which was based on historical experience as well as anticipated economic conditions, industry data and long term outlook for the business. These assumptions are inherently uncertain. It is reasonably possible that the businesses could perform significantly below the Company's expectations or a deterioration of market and economic conditions could occur. This would adversely impact the Company's ability to meet its projected results, which could cause the goodwill in any of its reporting units or intangible assets in any of its asset groups to become impaired. Significant differences between these estimates and actual cash flows could materially affect the Company's future financial results. If the reporting units are not successful in commercializing new business arrangements, if the businesses are unsuccessful in signing new license agreements or renewing its existing license agreements, or if the Company is unsuccessful in managing its costs, the revenue and income for these reporting units could adversely and materially deviate from their historical trends and could cause goodwill or intangible assets to become impaired. If the Company determines that its goodwill or intangible assets are impaired, it would be required to record a non-cash charge that could have a material adverse effect on its results of operations and financial position. Goodwill The following tables present goodwill information for each of the reportable segments for the years ended December 31, 2018 and December 31, 2017:
Reportable Segment: | December 31, 2017 |  | Impairment Charge of Goodwill |  | Effect of Exchange Rates (1) |  | December 31, 2018
| (In thousands)
MID | $ | 66,643 |  |  | $ | — |  |  | $ | — |  |  | $ | 66,643 |
RSD | 143,018 |  |  | — |  |  | (2,483 | ) |  | 140,535 |
Total | $ | 209,661 |  |  | $ | — |  |  | $ | (2,483 | ) |  | $ | 207,178 |
(1) Effect of exchange rates relates to foreign currency translation adjustments for the period.
| As of December 31, 2018
Reportable Segment: | Gross Carrying Amount |  | Accumulated Impairment Losses |  | Net Carrying Amount
| (In thousands)
MID | $ | 66,643 |  |  | $ | — |  |  | $ | 66,643 |
RSD | 140,535 |  |  | — |  |  | 140,535 |
Other | 21,770 |  |  | (21,770 | ) |  | — |
Total | $ | 228,948 |  |  | $ | (21,770 | ) |  | $ | 207,178 |
Reportable Segment: | December 31, 2016 |  | Addition to Goodwill (1) |  | Impairment Charge of Goodwill |  | Effect of Exchange Rates (2) |  | December 31, 2017
MID | $ | 66,643 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 66,643 |
RSD | 138,151 |  |  | 803 |  |  | — |  |  | 4,064 |  |  | 143,018 |
Total | $ | 204,794 |  |  | $ | 803 |  |  | $ | — |  |  | $ | 4,064 |  |  | $ | 209,661 |
(1) During the first quarter of 2017, the Company corrected an immaterial error related to an overstatement in prepaids and other current assets that originated in 2016. (2) Effect of exchange rates relates to foreign currency translation adjustments for the period.
| As of December 31, 2017
Reportable Segment: | Gross Carrying Amount |  | Accumulated Impairment Losses |  | Net Carrying Amount
MID | $ | 66,643 |  |  | $ | — |  |  | $ | 66,643 |
RSD | 143,018 |  |  | — |  |  | 143,018 |
Other | 21,770 |  |  | (21,770 | ) |  | — |
Total | $ | 231,431 |  |  | $ | (21,770 | ) |  | $ | 209,661 |
Intangible Assets The components of the Company’s intangible assets as of December 31, 2018 and December 31, 2017 were as follows:
|  |  | As of December 31, 2018
| Useful Life |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
|  |  | (In thousands)
Existing technology | 3 to 10 years |  | $ | 258,903 |  |  | $ | (213,824 | ) |  | $ | 45,079 |
Customer contracts and contractual relationships | 1 to 10 years |  | 67,667 |  |  | (54,410 | ) |  | 13,257 |
Non-compete agreements and trademarks | 3 years |  | 300 |  |  | (300 | ) |  | — |
In-process research and development | Not applicable |  | 1,600 |  |  | — |  |  | 1,600 |
Total intangible assets |  |  | $ | 328,470 |  |  | $ | (268,534 | ) |  | $ | 59,936 |
|  |  | As of December 31, 2017
| Useful Life |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
|  |  | (In thousands)
Existing technology | 3 to 10 years |  | $ | 258,008 |  |  | $ | (191,554 | ) |  | $ | 66,454 |
Customer contracts and contractual relationships | 1 to 10 years |  | 68,794 |  |  | (48,626 | ) |  | 20,168 |
Non-compete agreements and trademarks | 3 years |  | 300 |  |  | (300 | ) |  | — |
In-process research and development | Not applicable |  | 5,100 |  |  | — |  |  | 5,100 |
Total intangible assets |  |  | $ | 332,202 |  |  | $ | (240,480 | ) |  | $ | 91,722 |
Included in customer contracts and contractual relationships are favorable contracts which are acquired software and service agreements where the Company has no performance obligations. Cash received from these acquired favorable contracts reduce the favorable contract intangible asset. During 2018 and 2017, the Company received $1.5 million and $3.6 million related to the favorable contracts, respectively. As of December 31, 2018 and 2017, the net balance of the favorable contract intangible assets was $0.9 million and $1.7 million, respectively. The estimated useful life is based on expected payment dates related to the favorable contracts. During the years ended December 31, 2018 and 2017, the Company acquired patents related to its memory technology for an immaterial amount. During the years ended December 31, 2018, 2017 and 2016, the Company did not sell any intangible assets. Amortization expense for intangible assets for the years ended December 31, 2018, 2017, and 2016 was $29.3 million, $42.0 million, and $37.1 million, respectively. The estimated future amortization expense of intangible assets as of December 31, 2018 was as follows (amounts in thousands):
Years Ending December 31: | Amount
2019 | $ | 20,177 |
2020 | 19,892 |
2021 | 12,975 |
2022 | 2,047 |
2023 | 1,526 |
Thereafter | 1,719 |
Total amortizable purchased intangible assets | 58,336 |
In-process research and development | 1,600 |
Total intangible assets | $ | 59,936 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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