Goodwill and Intangible Assets

9 Months Ended

Sep. 29, 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
Acquisition	115,775
Adjustment	601
Balance as of September 29, 2013	$	318,111

Goodwill increased by approximately $115.8 million due to the Company’s acquisition of SMART Storage Systems (“SMART Storage”) during the third quarter of fiscal year 2013. See Note 13, “Business Acquisition” regarding this acquisition. In addition, goodwill increased by $0.6 million during the first quarter of fiscal year 2013 due to the resolution of a legal contingency matter during the measurement period for an acquisition from fiscal year 2012.

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



	September 29, 2013
	Gross Carrying Amount		Accumulated Amortization			Impairment			Net Carrying Amount
Developed product technology	$	347,060	$	(101,688	)	$	(44,216	)	$	201,156
Customer relationships	20,650		(13,351		)	—			7,299
Trademarks	14,200		(3,052		)	(2,812		)	8,336
Covenants not to compete	3,100		(2,659		)	—			441
Acquisition-related intangible assets	385,010		(120,750		)	(47,028		)	217,232
Technology licenses and patents	133,909		(83,625		)	—			50,284
Total intangible assets subject to amortization	518,919		(204,375		)	(47,028		)	267,516
Acquired in-process research and development	43,825		—			(36,200		)	7,625
Total intangible assets	$	562,744	$	(204,375	)	$	(83,228	)	$	275,141



	December 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Impairment			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

Gross acquisition-related intangible assets and acquired in-process research and development (“IPR&D”) increased $168.5 million in the nine months ended September 29, 2013 due to the acquisition of SMART Storage.

The Company performs tests for impairment of long-lived assets whenever events or circumstances suggest that long-lived assets may be impaired. In the third quarter of fiscal year 2013, due to additional product delays in the development timeline related to an IPR&D project from the Pliant Technology, Inc. (“Pliant”) acquisition, the Company performed impairment tests on the amortizable intangible and IPR&D assets for this acquisition. The Company also considered the impact of the recent SMART Storage acquisition and the decision to integrate more of the SMART Storage architecture into its future enterprise product roadmap. In conducting an impairment review of the Pliant amortizable intangible assets, the Company first compared the undiscounted cash flows to the carrying value of these amortizable intangible assets. Since the undiscounted cash flows were less than the carrying value, the Company then compared the estimated fair value based upon forecasted discounted cash flows to the carrying value and determined there was an impairment of $47.0 million. In addition, the Company performed an impairment analysis for the IPR&D by comparing the estimated fair value based upon forecasted discounted cash flows related to the Pliant IPR&D to the carrying value and determined there was a full impairment of $36.2 million. The Company recorded an impairment of the amortizable intangible assets and IPR&D assets totaling $83.2 million in the third quarter of fiscal year 2013, which was included in Impairment of acquisition-related intangible assets in the Condensed Consolidated Statements of Operations. The Company will continue to monitor for any events or circumstances that could indicate whether an impairment of the remaining $41.4 million of Pliant acquisition-related intangible assets is required. The amortization schedule for the remaining Pliant acquisition related intangible assets has been adjusted to fifteen months primarily based upon the estimated remaining cash flows.

The annual expected amortization expense of intangible assets as of September 29, 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 three months)	$	21,131	$	5,665
2014	82,787		21,231
2015	48,114		20,055
2016	40,544		3,333
2017	24,656		—
Total intangible assets subject to amortization	$	217,232	$	50,284

- 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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