XML 29 R14.htm IDEA: XBRL DOCUMENT
v3.19.1

Goodwill and Other Identifiable Intangible Assets, Net | 6 Months Ended
--- | ---
Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS, NET | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Amortizable intangible assets were (in thousands):
| March 31, 2019 |  | September 30, 2018
| Gross carrying amount |  | Accum. amort. |  | Net |  | Gross carrying amount |  | Accum. amort. |  | Net
Purchased and core technology | $ | 58,011 |  |  | $ | (49,938 | ) |  | $ | 8,073 |  |  | $ | 58,102 |  |  | $ | (48,693 | ) |  | $ | 9,409 |
License agreements | 102 |  |  | (60 | ) |  | 42 |  |  | 102 |  |  | (46 | ) |  | 56 |
Patents and trademarks | 15,835 |  |  | (12,777 | ) |  | 3,058 |  |  | 15,701 |  |  | (12,242 | ) |  | 3,459 |
Customer relationships | 46,530 |  |  | (23,226 | ) |  | 23,304 |  |  | 46,605 |  |  | (21,049 | ) |  | 25,556 |
Non-compete agreements | 600 |  |  | (270 | ) |  | 330 |  |  | 600 |  |  | (210 | ) |  | 390 |
Order backlog | 1,800 |  |  | (1,800 | ) |  | — |  |  | 1,800 |  |  | (1,350 | ) |  | 450 |
Total | $ | 122,878 |  |  | $ | (88,071 | ) |  | $ | 34,807 |  |  | $ | 122,910 |  |  | $ | (83,590 | ) |  | $ | 39,320 |
Amortization expense was $2.1 million and $2.6 million for the three month periods ended March 31, 2019 and 2018, respectively, and $4.6 million and $4.3 million for the six month periods ended March 31, 2019 and 2018, respectively. Amortization expense is recorded on our consolidated statements of operations within cost of sales and in general and administrative expense. Estimated amortization expense related to intangible assets for the remainder of fiscal 2019 and the five succeeding fiscal years is (in thousands):
2019 (six months) | $ | 4,193 |
2020 | 8,237 |
2021 | 7,430 |
2022 | 6,568 |
2023 | 4,392 |
2024 | 3,701 |
7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS, NET (CONTINUED) The changes in the carrying amount of goodwill by reportable segments are (in thousands):
| Six Months Ended March 31, 2019
| IoT Products and Services |  | IoT Solutions |  | Total
Beginning balance, October 1 | $ | 104,358 |  |  | $ | 50,177 |  |  | $ | 154,535 |
Acquisitions | — |  |  | — |  |  | — |
Foreign currency translation adjustment | (122 | ) |  | (364 | ) |  | (486 | )
Ending balance, March 31 | $ | 104,236 |  |  | $ | 49,813 |  |  | $ | 154,049 |
Goodwill is tested for impairment on an annual basis as of June 30, or more frequently if events or circumstances occur which could indicate impairment. The calculation of goodwill impairment requires us to make assumptions about the fair value of our reporting unit(s), which historically has been approximated by using our market capitalization plus a control premium for our reporting unit(s). Control premium assumptions require judgment and actual results may differ from assumed or estimated amounts. As we have two reportable operating segments, we concluded that the IoT Solutions segment and the IoT Products & Services segment each constitute a separate reporting unit for purposes of the ASC 350-20-35 “Goodwill Measurement of Impairment” assessment. As such, both units were tested individually for impairment. Our test for potential goodwill impairment is a two-step approach. We first assess qualitative factors to determine whether the existence of events or circumstances to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we determine based on this assessment that it is more likely than not that the fair value of a reporting units is less than its carrying amount, we perform the goodwill impairment test. This test requires us to determine the fair value of the reporting unit and compare it to the carrying amount, including goodwill, of such reporting unit. If the fair value exceeds the carrying amount, no impairment loss is recognized. However, if the carrying amount of the reporting unit exceeds its fair value, the goodwill of the reporting units is impaired and an impairment loss would be recognized. At June 30, 2018, we had a total of $104.6 million of goodwill on our Condensed Consolidated Balance Sheet for the IoT Products & Services reporting unit and the implied fair value of this reporting unit exceeded its carrying value by approximately 36%. At June 30, 2018, we had a total of $50.0 million of goodwill on our Condensed Consolidated Balance Sheet for the IoT Solutions reporting unit and the implied fair value of this reporting unit exceeded its carrying value by approximately 7%. Based on that data, we concluded that no impairment was indicated for either reporting unit. No goodwill impairment charges were recorded. Implied fair values for both reporting units were each calculated on a standalone basis using a weighted combination of the income approach and market approach. The income approach indicates the fair value of a business based on the value of the cash flows the business or asset can be expected to generate in the future. A commonly used variation of the income approach used to value a business is the discounted cash flow (“DCF”) method. The DCF method is a valuation technique in which the value of a business is estimated on the earnings capacity, or available cash flow, of that business. Earnings capacity represents the earnings available for distribution to stockholders after consideration of the reinvestment required for future growth. Significant judgment is required to estimate the amount and timing of future cash flows for each reporting unit and the relative risk of achieving those cash flows. The market approach indicates the fair value of a business or asset based on a comparison of the business or asset to comparable publicly traded companies or assets and transactions in its industry as well as prior company or asset transactions. This approach can be estimated through the guideline company method. This method indicates fair value of a business by comparing it to publicly traded companies in similar lines of business. After identifying and selecting the guideline companies, we make judgments about the comparability of the companies based on size, growth rates, profitability, risk, and return on investment in order to estimate market multiples. These multiples are then applied to the reporting units to estimate a fair value. 7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS, NET (CONTINUED) The implied fair values of each reporting unit were added together to get an indicated value of total equity to which a range of indicated value of total equity was derived. This range was compared to the total market capitalization of $359.6 million as of June 30, 2018, which implied a range of control premiums of 5.7% to 16.4%. This range of control premiums fell below the control premiums observed in the last five years in the communications equipment industry. As a result, the market capitalization reconciliation analysis proved support for the reasonableness of the fair values estimated for each individual reporting unit. During the second quarter of fiscal 2019, we assessed various qualitative factors to determine whether or not an additional goodwill impairment assessment was required as of March 31, 2019. We concluded that no additional impairment assessment was required. Should the facts and circumstances surrounding our assumptions change, the first step of our goodwill impairment analysis may fail. Assumptions and estimates to determine fair values are complex and often subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. For example, if our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units, we may be required to record future impairment charges for goodwill. An impairment could have a material effect on our consolidated balance sheet and results of operations. We have had no goodwill impairment losses since the adoption of ASC 350, Intangibles-Goodwill and Others, in fiscal 2003.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration