GOODWILL & INTANGIBLE ASSETS

12 Months Ended

Mar. 31, 2013

NOTE 8 – GOODWILL & INTANGIBLE ASSETS

Goodwill

The Company has two reporting units: (1) Unified Service Delivery and (2) Test Automation. As of March 31, 2013 and March 31, 2012, goodwill attributable to the Unified Service Delivery reporting unit was $199.5 million and $170.4 million, respectively and goodwill attributable to the Test Automation reporting unit was $3.0 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 completed its annual impairment test on January 31, 2013. No indicators of impairment were noted at that time. Additionally, the market capitalization of the Company as a whole significantly exceeded its carrying value.

The changes in the carrying amounts of goodwill for the fiscal years ended March 31, 2013 and 2012 are due to the addition of goodwill resulting from acquisitions and the impact of foreign currency translation adjustments related to asset balances that are recorded in non-U.S. currencies.

The change in the carrying amount of goodwill for the fiscal years ended March 31, 2013 and 2012 is as follows (in thousands):


Balance as of March 31, 2011	$	128,177
Goodwill recorded in connection with business acquisitions		42,505
Purchase accounting adjustments		(7	)
Foreign currency translation impact		(291	)

Balance as of March 31, 2012	$	170,384

Goodwill recorded in connection with business acquisitions		31,747
Foreign currency translation impact		322

Balance as of March 31, 2013	$	202,453

Intangible Assets

The net carrying amounts of intangible assets were $63.8 million and $54.7 million as of March 31, 2013 and 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 is evaluated for potential impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.

During the fiscal year ended March 31, 2013, the Company early adopted authoritative guidance that gives entities an option to first assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If based on its qualitative assessment an entity concludes that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if an entity concludes otherwise, quantitative impairment testing is not required.

The Company completed its annual impairment test of the indefinite lived intangible as of January 31, 2013, using the qualitative Step 0 assessment described above which largely mirrors the Unified Service Delivery goodwill impairment assessment, as the tradenames apply to a majority of the products and branding within that reporting unit. No impairment indicators were observed as of January 31, 2013. As such the Company concluded the indefinite lived intangible was not impaired.

Intangible assets include an indefinite lived trade name with a carrying value to $18.6 million and the following amortizable intangible assets as of March 31, 2013 (in thousands):


	Cost		Accumulated Amortization			Net
Developed technology	$	30,848	$	(21,343	)	$	9,505
Customer relationships		38,718		(11,038	)		27,680
Distributor relationships		1,895		(219	)		1,676
Core technology		7,446		(1,455	)		5,991
Net beneficial leases		336		(336	)		0
Non-compete agreements		334		(167	)		167
Other		483		(275	)		208

	$	80,060	$	(34,833	)	$	45,227

Intangible assets include an indefinite lived trade name with a carrying value to $18.6 million and the following amortizable intangible assets 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
Core technology		4,760		(306	)		4,454
Net beneficial leases		336		(334	)		2
Non-compete agreements		343		(57	)		286
Other		200		(95	)		105

	$	63,312	$	(27,227	)	$	36,085

Amortization of software and core technology included as cost of product revenue was $4.5 million, $4.7 million and $4.0 million for the fiscal years ended March 31, 2013, 2012 and 2011, respectively. Amortization of other intangible assets included as operating expense was $3.1 million, $2.2 million and $1.9 million for the fiscal years ended March 31, 2013, 2012 and 2011, respectively.

The following is the expected future amortization expense as of March 31, 2013 for the years ended March 31 (in thousands):


2014	$	6,730
2015		6,855
2016		6,336
2017		5,756
2018		4,979
Thereafter		14,571

Total	$	45,227

The weighted average amortization period of acquired software and core technology is 6.7 years. The weighted average amortization period for customer 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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