XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.20.4

Goodwill and Other Identifiable Intangible Assets, Net | 3 Months Ended
--- | ---
Dec. 31, 2020
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):
| December 31, 2020 |  | September 30, 2020
| Gross carrying amount |  | Accum. amort. |  | Net |  | Gross carrying amount |  | Accum. amort. |  | Net
Purchased and core technology | $ | 76,473 |  |  | $ | (57,017) |  |  | $ | 19,456 |  |  | $ | 76,011 |  |  | $ | (55,482) |  |  | $ | 20,529 |
License agreements | 112 |  |  | (112) |  |  | — |  |  | 112 |  |  | (112) |  |  | — |
Patents and trademarks | 22,936 |  |  | (13,968) |  |  | 8,968 |  |  | 22,836 |  |  | (13,535) |  |  | 9,301 |
Customer relationships | 125,805 |  |  | (36,957) |  |  | 88,848 |  |  | 125,500 |  |  | (34,232) |  |  | 91,268 |
Non-compete agreements | 600 |  |  | (480) |  |  | 120 |  |  | 600 |  |  | (450) |  |  | 150 |
Total | $ | 225,926 |  |  | $ | (108,534) |  |  | $ | 117,392 |  |  | $ | 225,059 |  |  | $ | (103,811) |  |  | $ | 121,248 |
Amortization expense was $4.0 million and $2.4 million for the three months ended December 31, 2020 and 2019, respectively. Amortization expense is recorded on our condensed 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 2021 and the five succeeding fiscal years is (in thousands):
2021 (nine months) | $ | 11,616 |
2022 | $ | 14,720 |
2023 | $ | 12,518 |
2024 | $ | 11,815 |
2025 | $ | 8,358 |
2026 | $ | 8,126 |
The changes in the carrying amount of goodwill by reportable segments are (in thousands):
| Three months ended December 31,
| IoT Products and Services |  | IoT Solutions |  | Total
Balance on September 30, 2020 | $ | 160,365 |  |  | $ | 49,770 |  |  | $ | 210,135 |
Adjustment (see Note 2) | 846 |  |  | — |  |  | 846 |
Foreign currency translation adjustment | 834 |  |  | 551 |  |  | 1,385 |
Balance at December 31, 2020 | $ | 162,045 |  |  | $ | 50,321 |  |  | $ | 212,366 |
Goodwill represents the excess of cost over the fair value of net identifiable assets acquired. Goodwill is quantitatively tested for impairment on an annual basis as of June 30, or more frequently if events or circumstances occur which could indicate impairment. We continue to have two reportable segments, our IoT Products & Services segment and our IoT Solutions segment (see Note 8). Effective with the reorganization announcement on October 7, 2020 (see Note 13), our IoT Products & Services business is now structured to include four operating segments, each with a segment manager: Cellular Routers, Console Servers, OEM Solutions and Infrastructure Management. We have concluded that these operating segments along with our IoT Solutions segment constitute separate reporting units and will be tested individually for impairment. As of December 31, 2020, we have performed a qualitative assessment and concluded that there is no impairment or triggering events. For our fiscal 2020 annual impairment test we concluded that the IoT Products & Services segment and the IoT Solutions segment constitute separate reporting units for purposes of the ASC 350-20-35 "Goodwill Measurement of Impairment" assessment and both units were tested individually for impairment. For our quantitative goodwill impairment tests, we determine the estimated fair value of each reporting unit and compare it to the carrying value of the reporting unit, including goodwill. If the carrying amount of a reporting unit is higher than its estimated fair value, then an impairment loss must be recognized for the excess. Fair values for both reporting units were each estimated on a standalone basis using a weighted combination of the income approach and market approach. 6. GOODWILL AND OTHER INTANGIBLE ASSETS, NET (CONTINUED) 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 our prior acquisitions. 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. Assumptions and estimates to determine fair values under the income and market approaches are complex and often subjective. They can be affected by a variety of factors. These include external factors such as industry and economic trends. They also include internal factors such as changes in our business strategy and our internal forecasts. Changes in circumstances or a potential event could negatively affect the estimated fair values. We will continue to monitor potential COVID-19 industry and demand impacts as this could potentially affect our cash flows and market capitalization. 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. Results of our Fiscal 2020 Annual Impairment Test As of June 30, 2020, we had a total of $157.1 million of goodwill for the IoT Products & Services reporting unit and $49.6 million of goodwill for the IoT Solutions reporting unit. At June 30, 2020, fair value exceeded the carrying value by more than 10% for both reporting units. 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 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 $338.2 million as of June 30, 2020. This implied a range of control premiums of 17.0% to 29.1%. 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.

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