Annual report pursuant to Section 13 and 15(d)

Intangible Assets and Goodwill

v3.3.1.900
Intangible Assets and Goodwill
 12 Months Ended
Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
Intangible Assets
The Company’s amortizable intangible assets consisted of the following (in thousands):
 
December 31, 2015
 
Customer Relationships
 
Developed Technology
 
Trademarks / Trade-Names
 
Covenants Not to Compete
 
Total
Original cost
$
5,115

 
$
8,567

 
$
2,190

 
$
38

 
$
15,910

Accumulated amortization
(1,075
)
 
(3,261
)
 
(528
)
 
(14
)
 
(4,878
)
Net identifiable intangible assets
$
4,040

 
5,306

 
1,662

 
24

 
$
11,032

Weighted-average useful lives (years)
10

 
6

 
15

 
2

 
9

 
December 31, 2014
 
Customer Relationships
 
Developed Technology
 
Trademarks / Trade-Names
 
Covenants Not to Compete
 
Total
Original cost
$
5,226

 
$
8,770

 
$
2,193

 
$
40

 
$
16,229

Accumulated amortization
(671
)
 
(1,832
)
 
(334
)
 
(8
)
 
(2,845
)
Net identifiable intangible assets
$
4,555

 
6,938

 
1,859

 
32

 
$
13,384

Weighted-average useful lives (years)
10

 
6

 
15

 
2

 
9

Changes to the carrying amount of net amortizable intangible assets for the year ended December 31, 2015 consisted of the following (in thousands):
 
Year Ended 
 December 31, 2015
Balance, beginning of period
$
13,384

Amortization expense
(2,066
)
Currency translation
(286
)
Balance, end of period
$
11,032


Amortization expense of intangible assets consisted of the following (in thousands):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Amortization expense associated with the developed technology included in cost of revenues
$
1,268

 
$
650

 
$
560

Amortization expense associated with other acquired intangible assets included in operating expenses
798

 
652

 
627

Total amortization expense
$
2,066

 
$
1,302

 
$
1,187


The Company estimates that amortization expense associated with intangible assets will be as follows (in thousands):
Year Ending December 31,
 
2016
$
2,235

2017
2,234

2018
2,023

2019
1,322

2020
1,020

Thereafter
2,198

Total
$
11,032


Goodwill
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.