Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill. Goodwill balances are presented below (in thousands):



	Carrying Amount
Balance as of December 30, 2012	$	201,735
Adjustment	601
Balance as of June 30, 2013	$	202,336

Goodwill increased by $0.6 million due to the resolution of a legal contingency matter during the first quarter of fiscal year 2013 related to an acquisition from fiscal year 2012.

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



	June 30, 2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed product technology	$	200,960	$	(87,764	)	$	113,196
Customer relationships	13,050		(12,784		)	266
Trademarks	5,700		(2,499		)	3,201
Covenants not to compete	3,100		(2,359		)	741
Acquisition-related intangible assets	222,810		(105,406		)	117,404
Technology licenses and patents	133,909		(77,955		)	55,954
Total intangible assets subject to amortization	356,719		(183,361		)	173,358
Acquired in-process research and development	37,525		—			37,525
Total intangible assets	$	394,244	$	(183,361	)	$	210,883



	December 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Adjustments			Net Carrying Amount
Developed product technology	$	200,960	$	(68,104	)	$	—		$	132,856
Core technology	79,800		(79,800		)	—			—
Customer relationships	13,050		(10,043		)	—			3,007
Trademarks	5,700		(1,870		)	—			3,830
Covenants not to compete	3,100		(1,618		)	—			1,482
Acquisition-related intangible assets	302,610		(161,435		)	—			141,175
Technology licenses and patents	133,909		(65,690		)	—			68,219
Total intangible assets subject to amortization	436,519		(227,125		)	—			209,394
Acquired in-process research and development	38,385		—			(860		)	37,525
Total intangible assets	$	474,904	$	(227,125	)	$	(860	)	$	246,919

The Company performs tests for impairment of long-lived assets whenever events or circumstances suggest that long-lived assets may be impaired. In the first quarter of fiscal year 2013, due to an increase in overall cost estimates and delays in the development timeline related to an in-process research and development (“IPR&D”) project from the Pliant Technology, Inc. (“Pliant”) acquisition, the Company performed impairment tests on the related amortizable intangible assets and indefinite-lived IPR&D intangible asset and determined that none were impaired. Due to continued project delays, including subsequent to the end of the second quarter of fiscal year 2013, which resulted in the same impairment indicators identified in the first quarter of fiscal year 2013, the Company again tested the recoverability of the amortizable intangible assets and noted that as of the end of the second quarter of fiscal year 2013, the undiscounted cash flows were in excess of the net book value of the amortizable intangible assets, indicating no impairment. In addition, the Company performed a qualitative impairment assessment of the indefinite-lived IPR&D intangible asset and determined that it was not more-than-likely-than-not that the fair value of the indefinite-lived IPR&D intangible asset was lower than its carrying value. Therefore the Company did not proceed to a quantitative impairment analysis of the indefinite-lived intangible asset. While these delays related to the IPR&D project did not indicate that an impairment is required at this time, additional future delays, additional increases in overall cost estimates, program cancellation or other significant events or circumstances affecting the IPR&D project could result in the indefinite-lived IPR&D intangible asset or the amortizable intangible assets being partially or fully impaired. Due to these IPR&D project delays, the Company expects to assess the indefinite-lived IPR&D intangible asset for impairment at the end of the third quarter of fiscal year 2013 and on a quarterly basis until completion of the development of the technology and will continue to monitor any events or circumstances that could indicate the amortizable intangible assets are impaired. As of June 30, 2013, the net book value of the Pliant indefinite-lived IPR&D intangible asset was $36.2 million and the net book value of the related Pliant amortizable intangible assets was $96.8 million, and a potential complete impairment of both would result in a charge of up to $133.0 million.

The annual expected amortization expense of intangible assets as of June 30, 2013, excluding acquired IPR&D intangible assets, is presented below (in thousands):



	Estimated Amortization Expense
	Acquisition-related Intangible Assets		Technology Licenses and Patents
Fiscal year:
2013 (remaining six months)	$	21,156	$	11,334
2014	40,545		21,231
2015	40,380		20,056
2016	15,323		3,333
Total intangible assets subject to amortization	$	117,404	$	55,954

On July 2, 2013, the Company entered into a definitive agreement to acquire SMART Storage Systems, a developer of enterprise solid state drives. Under the terms of the agreement, the Company will pay approximately $307 million in cash and certain equity-based incentive awards to acquire SMART Storage Systems. The transaction, which has been approved by the boards of directors of both companies, is subject to customary closing conditions, including regulatory review and approval, and is expected to close in August 2013.

- 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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