Intangible Assets and Goodwill
|12 Months Ended|
Dec. 31, 2015
|Goodwill and Intangible Assets Disclosure [Abstract]|
|Goodwill and Intangible Assets||
The Company’s amortizable intangible assets consisted of the following (in thousands):
Changes to the carrying amount of net amortizable intangible assets for the year ended December 31, 2015 consisted of the following (in thousands):
Amortization expense of intangible assets consisted of the following (in thousands):
The Company estimates that amortization expense associated with intangible assets will be as follows (in thousands):
On October 3, 2014, the Company completed the acquisition of Kulu Valley, Ltd. and recognized $8.8 million of goodwill and $6.7 million of intangible assets. The goodwill balance of $8.1 million at December 31, 2015 reflects the impact of foreign currency exchange rate fluctuations since the acquisition date. See Note 2 to the Consolidated Financial Statements for additional information on the acquisition of Kulu Valley. The gross carrying amount of goodwill related to the 2011 acquisition of Qumu, Inc. of $22.2 million was fully impaired in 2012.
During the year ended December 31, 2015, the Company’s stock price traded at levels which caused the Company’s enterprise value, excluding any control premium, to approximate its book value, resulting in increased risk of a potential impairment of goodwill. As of December 31, 2015, the Company’s market capitalization, without a control premium, was less than its book value suggesting a possible goodwill impairment. The Company engaged a third party valuation firm to assist the Company with its goodwill impairment analysis. Based on the analysis, the Company determined its enterprise value using a discounted cash flow analysis and a comparable public company analysis, giving both equal weight, was greater than the Company’s book value by 14%. As a result, the Company concluded there was no goodwill impairment. While not a factor used for the December 31, 2015 goodwill impairment analysis, the Company's market capitalization increased to $48.7 million as of March 14, 2016 which was in excess of its book value at December 31, 2015 by 58%. Declines in the Company’s market capitalization could require the Company to record goodwill and other impairment charges. While a goodwill impairment charge is a non-cash charge, it would have a negative impact on the Company's results of operations.
The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.
Reference 1: http://www.xbrl.org/2003/role/presentationRef