GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Dec. 31, 2012

NOTE 8 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company has two reporting units: (1) Unified Service Delivery and (2) test automation. As of December 31, 2012 and March 31, 2012, goodwill attributable to the Unified Service Delivery reporting unit was $200.1 million and $170.4 million, respectively and goodwill attributable to the test automation reporting unit was $3.1 million and $0, respectively. Goodwill is tested for impairment at a reporting unit level at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting segment below its carrying value. The Company will complete its annual impairment test during the quarter ended March 31, 2013.

The carrying amount of goodwill was $203.3 million and $170.4 million as of December 31, 2012 and March 31, 2012. The following table summarizes the changes in the carrying amount of goodwill (in thousands):


	Nine Months Ended December 31, 2012
Balance at March 31, 2012	$	170,384
Goodwill related to the acquisition of Accanto		11,157
Goodwill related to the acquisition of ONPATH		20,869
Foreign currency translation impact		841

Balance as of December 31, 2012	$	203,251

Intangible Assets

The net carrying amounts of intangible assets were $65.4 million and $54.7 million as of December 31, 2012 and March 31, 2012, respectively. Intangible assets acquired in a business combination are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. The Company amortizes intangible assets over their estimated useful lives, except for the acquired trade name which resulted from the Network General acquisition, which has an indefinite life and thus is not amortized. The carrying value of the indefinite lived trade name will be evaluated for potential impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Intangible assets consist of the following as of December 31, 2012 (in thousands):


	Cost		Accumulated Amortization			Net
Developed technology	$	33,677	$	(21,318	)	$	12,359
Customer relationships		38,743		(10,351	)		28,392
Distributor relationships		1,931		(142	)		1,789
Indefinite lived trade name		18,600		0			18,600
Core technology		4,744		(812	)		3,932
Net beneficial leases		336		(336	)		0
Non-compete agreements		341		(142	)		199
Other		397		(235	)		162

	$	98,769	$	(33,336	)	$	65,433

Intangible assets consist of the following as of March 31, 2012 (in thousands):


	Cost		Accumulated Amortization			Net
Developed technology	$	24,919	$	(17,943	)	$	6,976
Customer relationships		32,754		(8,492	)		24,262
Indefinite lived trade name		18,600		0			18,600
Core technology		4,760		(306	)		4,454
Net beneficial leases		336		(334	)		2
Non-compete agreements		343		(57	)		286
Other		200		(95	)		105

	$	81,912	$	(27,227	)	$	54,685

Amortization of software and core technology included as cost of product revenue was $959 thousand and $3.9 million for the three and nine months ended December 31, 2012, respectively. Amortization of other intangible assets included as operating expense was $906 thousand and $2.2 million for the three and nine months ended December 31, 2012, respectively.

Amortization of software included as cost of product revenue was $1.2 million and $3.4 million for the three and nine months ended December 31, 2011, respectively. Amortization of other intangible assets included as operating expense was $565 thousand and $1.6 million for the three and nine months ended December 31, 2011, respectively.

The following is the expected future amortization expense as of December 31, 2012 for the years ended March 31 (in thousands):


2013 (remaining three months)	$	1,506
2014		6,726
2015		6,888
2016		6,366
2017		5,774
Thereafter		19,573

	$	46,833

The weighted average amortization period of acquired software and core technology is 6.7 years. The weighted average amortization period for customer and distributor relationships is 13.3 years. The weighted average amortization period for amortizing all intangibles is 10.1 years.

- 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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