Goodwill and Intangible Assets

12 Months Ended

Jan. 01, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill. Goodwill balances as of January 1, 2012 and January 2, 2011 are presented below (in thousands):



	Carrying Amount
Balance as of January 2, 2011	$	—
Acquisition of Pliant Technology, Inc.	154,899
Balance as of January 1, 2012	$	154,899

Goodwill increased by approximately $154.9 million due to the Company’s acquisition of Pliant Technology, Inc. (“Pliant”) during the second quarter of fiscal year 2011. See Note 15, “Business Acquisition.”

Goodwill is not amortized, but is reviewed and tested for impairment at least annually, on the first day of the Company’s fourth quarter and whenever events or circumstances occur that indicate that goodwill might be impaired. Impairment of goodwill is tested at the Company’s reporting unit level. The Company early adopted the new authoritative guidance issued by the FASB in September 2011 for its fiscal year 2011 annual goodwill impairment test. This new authoritative guidance modifies the two-step goodwill impairment test by allowing companies to assess qualitatively whether it is “more likely than not” that a reporting unit’s carrying amount is greater than its fair value. If it is not “more likely than not” that the fair value of a reporting unit is greater than its fair value, companies are not required to proceed to a two-step impairment test. In performing the analysis, the Company first assessed qualitative factors, including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other relevant entity-specific events and events affecting the reporting unit, to determine whether the existence of events or circumstances led to a determination that it was “more likely than not” that the fair value of its reporting unit was less than its carrying amount. In addition, the Company also considered the short duration between the goodwill impairment test date and the date of the Company’s acquisition of Pliant. Based on the assessment of the factors above, the Company concluded that it was not “more likely than not” that the fair value of its reporting unit was less than its carrying amount. As a result, the Company did not proceed to the two-step goodwill impairment test and determined that goodwill was not impaired.

Intangible Assets. Intangible asset balances are presented below (in thousands):



	January 1, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Core technology	$	79,800	$	(75,349	)	$	4,451
Developed product technology	172,800		(30,014		)	142,786
Trademarks	5,300		(633		)	4,667
Customer relationships	12,200		(3,643		)	8,557
Covenants not to compete	700		(209		)	491
Acquisition-related intangible assets	270,800		(109,848		)	160,952
Technology licenses and patents	131,340		(40,801		)	90,539
Total intangible assets subject to amortization	402,140		(150,649		)	251,491
Acquired in-process research and development	36,200		—			36,200
Total intangible assets	$	438,340	$	(150,649	)	$	287,691



	January 2, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Core technology	$	79,800	$	(57,546	)	$	22,254
Developed product technology	11,400		(8,075		)	3,325
Acquisition-related intangible assets	91,200		(65,621		)	25,579
Technology licenses and patents	31,340		(19,515		)	11,825
Total intangible assets	$	122,540	$	(85,136	)	$	37,404

Acquisition-related intangible assets increased in the year ended January 1, 2012 due to the acquisition of Pliant. Acquired in-process research and development relates to the acquisition of Pliant and is accounted for as an indefinite-lived intangible asset. Indefinite-lived intangible assets are reviewed for impairment at least annually until technological feasibility is achieved or development is complete. Upon completion of development, the acquired in-process research and development will be considered an amortizable finite-lived intangible asset. Technology licenses and patents increased in the year ended January 1, 2012 due to a technology license purchased from a third party. Amortization expense of technology licenses and patents is recorded to cost of product revenues or research and development based upon the use of the technology.

Amortization expense of intangible assets totaled $65.5 million, $20.7 million and $20.2 million in fiscal years 2011, 2010 and 2009, respectively.

The annual expected amortization expense of intangible assets as of January 1, 2012, excluding acquired in-process research and development, is presented below (in thousands):



	Estimated Amortization Expense
	Acquisition-related Intangible Assets		Technology Licenses and Patents
Fiscal year:
2012	$	44,906	$	23,971
2013	35,938		22,670
2014	33,340		20,564
2015	33,340		20,000
2016	13,428		3,334
Total intangible assets subject to amortization	$	160,952	$	90,539

- Definition

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.

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