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Goodwill and Identified Intangible Assets | 12 Months Ended
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Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Identified Intangible Assets | GOODWILL AND IDENTIFIED INTANGIBLE ASSETS Goodwill Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. The Company has two reporting units, Video and Cable Access. The Company tests for goodwill impairment at the reporting unit level on an annual basis, or more frequently if events or changes in circumstances indicate that the asset is more likely than not impaired. The Company’s annual goodwill impairment test is performed in the fiscal fourth quarter, with a testing date at the end of fiscal October. In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value (including goodwill). If the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then no further testing is required. However, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the two-step goodwill impairment test is performed to identify a potential goodwill impairment and measure the amount of impairment to be recognized, if any. The first step requires comparing the fair value of the reporting unit to its net book value, including goodwill. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process, which is performed only if a potential impairment exists, involves determining the difference between the fair value of the reporting unit’s net assets other than goodwill and the fair value of the reporting unit. If this difference is less than the net book value of goodwill, an impairment exists and is recorded. In the first step, the fair value of each of the Company’s reporting units is determined using both the income and market valuation approaches. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows that the reporting unit is expected to generate over its remaining life. Under the market approach, the value of the reporting unit is based on an analysis that compares the value of the reporting unit to values of publicly-traded companies in similar lines of business. In the application of the income and market valuation approaches, the Company is required to make estimates of future operating trends and judgments on discount rates and other variables. Determining the fair value of a reporting unit is highly judgmental in nature and involves the use of significant estimates and assumptions. The Company bases its fair value estimates on assumptions the Company believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results related to assumed variables could differ from these estimates. In addition, the Company makes certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of its reporting units. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to execute on the projected cash flows. Under the market approach, the Company estimates the fair value based on market multiples of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting units, and then apply a control premium which is determined by considering control premiums offered as part of the acquisitions that have occurred in market segments that are comparable with its reporting units. During the fourth quarter of 2019, the Company performed the first step of goodwill impairment testing for the two reporting units as part of our annual goodwill impairment test and concluded that goodwill was not impaired. The Company has not recorded any impairment charges related to goodwill for any prior periods. If future economic conditions are different than those projected by management, future impairment charges may be required. The changes in the Company’s carrying amount of goodwill are as follows (in thousands):
|  | Video |  | Cable Access |  | Total
Balance as of December 31, 2017 |  | $ | 182,012 |  |  | $ | 60,815 |  |  | $ | 242,827 |
Foreign currency translation adjustment |  | (2,173 | ) |  | (36 | ) |  | (2,209 | )
Balance as of December 31, 2018 |  | $ | 179,839 |  |  | $ | 60,779 |  |  | $ | 240,618 |
Foreign currency translation adjustment |  | (857 | ) |  | 19 |  |  | (838 | )
Balance as of December 31, 2019 |  | $ | 178,982 |  |  | $ | 60,798 |  |  | $ | 239,780 |
Intangible Assets, Net The following table provides a summary of the Company’s identified intangible assets (in thousands):
|  |  | December 31, 2019 |  | December 31, 2018
| Weighted Average Remaining Life (Years) |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Developed core technology | 0.2 |  | $ | 31,707 |  |  | $ | (30,757 | ) |  | $ | 950 |  |  | $ | 31,707 |  |  | $ | (25,576 | ) |  | $ | 6,131 |
Customer relationships/contracts | 1.2 |  | 44,577 |  |  | (41,092 | ) |  | 3,485 |  |  | 44,650 |  |  | (38,146 | ) |  | 6,504 |
Trademarks and tradenames | 0.2 |  | 609 |  |  | (583 | ) |  | 26 |  |  | 623 |  |  | (441 | ) |  | 182 |
Maintenance agreements and related relationships | N/A |  | 5,500 |  |  | (5,500 | ) |  | — |  |  | 5,500 |  |  | (5,500 | ) |  | — |
Order Backlog | N/A |  | 3,085 |  |  | (3,085 | ) |  | — |  |  | 3,112 |  |  | (3,112 | ) |  | — |
Total identifiable intangibles |  |  | $ | 85,478 |  |  | $ | (81,017 | ) |  | $ | 4,461 |  |  | $ | 85,592 |  |  | $ | (72,775 | ) |  | $ | 12,817 |
Amortization expense for the identifiable intangible assets was allocated as follows (in thousands):
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Included in cost of revenue | $ | 5,180 |  |  | $ | 5,180 |  |  | $ | 5,180 |
Included in operating expenses | 3,139 |  |  | 3,187 |  |  | 3,142 |
Total amortization expense | $ | 8,319 |  |  | $ | 8,367 |  |  | $ | 8,322 |
The estimated future amortization expense of identifiable intangible assets with definite lives as of December 31, 2019 is as follows (in thousands):
| Cost of Revenue |  | Operating Expenses |  | Total
Year ended December 31, |  |  |  |  |
2020 | $ | 951 |  |  | $ | 3,012 |  |  | $ | 3,963 |
2021 | — |  |  | 498 |  |  | 498 |
Total future amortization expense | $ | 951 |  |  | $ | 3,510 |  |  | $ | 4,461 |

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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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