Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets (Table)

v3.6.0.2
Goodwill and Other Intangible Assets (Table)
12 Months Ended
Dec. 31, 2016
Goodwill and Other Intangible Assets  
Schedule of changes in the carrying amount of goodwill

Changes in the carrying amount of Skyhook goodwill is as follows (amounts in thousands):

 

 

 

 

 

Balance at January 1, 2014

 

$

20,669

 

Acquisitions (1)

 

 

24,931

 

Impairments (2)

 

 

(18,434)

 

Balance at December 31, 2014

 

 

27,166

 

Impairments (3)

 

 

(20,669)

 

Balance at December 31, 2015

 

 

6,497

 

Other

 

 

 —

 

Balance at December 31, 2016

 

$

6,497

 


(1)

As discussed in note 2, Skyhook Holding, Inc. acquired Skyhook Wireless, Inc. on February 14, 2014.

(2)

In mid-November 2014, Skyhook was notified that one of its significant customers was not expected to renew its contract related to Wi-Fi location software solution for 2015. As a result, approximately 30-40% of Skyhook’s Wi-Fi location software solution revenue was not expected to recur during 2015. Due to this anticipated decline in Skyhook’s operations, the Company determined the fair value of Skyhook and performed a Step 2 impairment test. The fair value of Skyhook, including the related intangibles and goodwill, was determined using Skyhook’s projections of future operating performance and applying a combination of market multiples (market approach) and discounted cash flow (income approach) calculations (Level 3). The impairment test resulted in a $35.2 million impairment loss recorded to Skyhook’s goodwill and intangible assets related to Skyhook’s Wi-Fi location software solution during December 2014. 

Skyhook’s legacy U-TDOA service was historically largely dependent on one wireless carrier (AT&T), which accounted for approximately 80% - 90% of Skyhook’s overall revenue related to its U-TDOA service. During September 2015, AT&T gave notice that it did not intend to renew its contract, which expired on December 31, 2015. The Company believed that the receipt of the notification represented a significant change in circumstances since we last performed our annual goodwill impairment test. Accordingly, we performed a goodwill impairment test upon receipt of the notification. At that time, the estimated fair value of the reporting unit was primarily determined based on the cash and cash equivalents held by the reporting unit, and when compared to its carrying value, it was concluded that a goodwill impairment did not exist. The carrying value of Skyhook included a $35.5 million deferred revenue liability related to the contract with AT&T. Upon expiration of the contract on December 31, 2015, the deferred revenue was recognized, as all contractual obligations were satisfied at that time. The recognition of this deferred revenue liability increased the reporting unit carrying value. As a result, the Company determined the fair value of Skyhook. As the reporting unit’s carrying value exceeded the fair value, we performed a Step 2 impairment test. The fair value of Skyhook, including the related intangibles and goodwill, was determined using Skyhook’s projections of future operating performance and applying a combination of market multiples (market approach) and discounted cash flow (income approach) calculations (Level 3). The impairment test resulted in a $20.7 million impairment loss related to Skyhook’s goodwill related to Skyhook’s legacy U-TDOA service during December 2015.

Schedule of intangible assets subject to amortization

Intangible assets subject to amortization are comprised of the following (amounts in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

December 31, 2015

 

 

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

 

 

Amount

 

Amortization

 

Amount

 

Amount

 

Amortization

 

Amount

 

Acquired patents

    

$

10,823

    

(8,450)

    

2,373

    

 

10,823

    

(6,872)

    

3,951

 

Tradename

 

 

2,838

 

(1,528)

 

1,310

 

 

2,838

 

(1,154)

 

1,684

 

Capitalized software

 

 

850

 

(710)

 

140

 

 

10,973

 

(10,857)

 

116

 

Customer relationships

 

 

10,213

 

(5,440)

 

4,773

 

 

10,212

 

(4,076)

 

6,136

 

 

 

$

24,724

 

(16,128)

 

8,596

 

 

34,846

 

(22,959)

 

11,887

 

 

Schedule of estimated future amortization expense for the next five years related to intangible assets with definite lives

The estimated future amortization expense for the next five years related to intangible assets with definite lives as of December 31, 2016 is as follows (amounts in thousands):

 

 

 

 

 

2017

    

$

3,368

 

2018

 

 

2,573

 

2019

 

 

1,786

 

2020

 

 

869

 

2021

 

 

 —

 

Total

 

$

8,596