Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

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Goodwill and Intangible Assets
12 Months Ended
Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
Goodwill

Goodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. The fair values of net tangible assets and intangible assets acquired are based upon preliminary valuations and the Company’s estimates and assumptions are subject to change within the measurement period (potentially up to one year from the acquisition date).

The following table presents the changes in the carrying amount of goodwill for the periods indicated:    
Years Ended December 31,
2021 2020
(in thousands)
Beginning balance $ 302,828  $ 238,330 
Acquisitions (Note 3) 3,840  64,498 
Ending balance $ 306,668  $ 302,828 

The Company performs an annual goodwill impairment assessment on October 31st each year, using a quantitative assessment comparing the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded.
As a result of the Company's impairment assessment, no goodwill impairment was recognized as of October 31, 2021. In addition to its annual review, the Company performs a test of impairment when indicators of impairment are present. During the years ended December 31, 2021, 2020, and 2019, there were no indications of impairment of the Company’s goodwill balances.
Acquired Intangibles
Finite-lived Intangible Assets
The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and other purchases, which are amortized over their estimated useful lives:
December 31, 2021 December 31, 2020
Weighted
Average
Useful Life
(in Years)
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Value Accumulated Amortization Net Carrying Amount
(in thousands)
Licensed technology 6.0 $ 16,850  $ (2,218) $ 14,632  $ 4,869  $ (2,006) $ 2,863 
Developed technology 7.0 308,661  (189,244) 119,417  304,061  (146,252) 157,809 
Trademarks and trade names 6.2 14,800  (11,221) 3,579  14,800  (8,818) 5,982 
Customer relationships 5.0 128,800  (116,847) 11,953  128,800  (96,047) 32,753 
Non-compete covenants —  —  —  1,100  (1,100) — 
Backlog 2.4 1,300  (941) 359  1,300  (641) 659 
6.2 $ 470,411  $ (320,471) $ 149,940  $ 454,930  $ (254,864) $ 200,066 
The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows:
Years Ended December 31,
2021 2020 2019
(in thousands)
Cost of net revenue $ 43,078  $ 37,784  $ 33,932 
Research and development 48 
Selling, general and administrative 23,625  23,529  23,035 
$ 66,707  $ 61,318  $ 57,015 

Amortization of finite-lived intangible assets in cost of net revenue in the consolidated statements of operations results primarily from acquired developed technology.

The following table sets forth the activity related to finite-lived intangible assets:
Year Ended December 31,
2021 2020
(in thousands)
Beginning balance $ 200,066  $ 187,971 
Acquisitions (Note 3) 4,400  70,700 
Additions 7,581  2,799 
Amortization (66,707) (61,318)
Impairment losses —  (86)
Ending balance $ 149,940  $ 200,066 
The Company regularly reviews the carrying amount of its long-lived assets subject to depreciation and amortization, as well as the related useful lives, to determine whether indicators of impairment may exist that warrant adjustments to carrying values or estimated useful lives. An impairment loss is recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. Should impairment exist, the impairment loss is measured based on the excess of the carrying amount of the asset over the asset’s fair value. During the years ended December 31, 2021 and 2019, no impairment losses related to finite-lived intangible assets were recognized. During the year ended December 31, 2020, the Company recognized impairment losses related to finite-lived intangible assets of $0.1 million, which was attributable to certain purchased licensed technology.
The following table presents future amortization of the Company’s finite-lived intangible assets at December 31, 2021:
Amount
(in thousands)
2022 $ 51,471 
2023 39,677 
2024 24,100 
2025 12,658 
2026 11,547 
Thereafter 10,487 
Total $ 149,940 
Indefinite-lived Intangible Assets
Indefinite-lived intangible assets consist entirely of acquired in-process research and development technology, or IPR&D. The following table sets forth the Company’s activities related to indefinite-lived intangible assets:
Years Ended December 31,
2021 2020
(in thousands)
Beginning balance $ 7,200  $ — 
Acquisitions (Note 3) —  7,200 
Transfers to developed technology from IPR&D (4,600) — 
Ending balance $ 2,600  $ 7,200 
The Company performs its annual assessment of indefinite-lived intangible assets on October 31st each year or more frequently if events or changes in circumstances indicate that the asset might be impaired utilizing a qualitative test as a precursor to the quantitative test comparing the fair value of the assets with their carrying amount. Based on the qualitative test, if it is more likely than not that indicators of impairment exists, the Company proceeds to perform a quantitative analysis. Based on the Company’s assessment as of October 31, 2021, no indicators of impairment were identified. During the years ended December 31, 2021, 2020, and 2019, no indicators of impairment were identified and, as a result, no IPR&D impairment losses were recorded.