Goodwill And Intangible Assets

12 Months Ended

Apr. 01, 2012

Goodwill And Intangible Assets [Abstract]

Goodwill And Intangible Assets

NOTE 9.    GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. We evaluate goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conduct our annual impairment analysis in the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss. Because we have one reporting unit, we utilize an entity-wide approach to assess goodwill for impairment.

In the fourth quarter of fiscal years 2012, 2011 and 2010, we conducted our annual impairment review comparing the fair value of our one reporting unit with its carrying value. As of the test date and as of year-end, and before consideration of a control premium, the fair value, which was estimated as our market capitalization, exceeded the carrying value of our net assets. As a result, no impairment was recorded for fiscal years 2012, 2011 and 2010.

The changes in the carrying amount of goodwill for fiscal years 2012 and 2011 were as follows (in thousands):

	Amount
Balance as of March 28, 2010	$	3,085
Goodwill additions, impairments and adjustments		99
Balance as of March 27, 2011	$	3,184
Goodwill additions, impairments and adjustments		—
Balance as of April 1, 2012	$	3,184

Intangible Assets

Our purchased intangible assets at April 1, 2012 and March 27, 2011, respectively are as follow (in thousands):

	April 1, 2012							March 27, 2011
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technology	$	34,848	$	(27,286	)	$	7,562	$	33,613	$	(22,095	)	$	11,518
Patents/Core technology		3,736		(2,855	)		881		3,906		(2,340	)		1,566
In-process research and development		—		—			—		300		—			300
Research and development reimbursement contract		4,500		(4,500	)		—		4,500		(4,500	)		—
Customer backlog		1,400		(1,400	)		—		1,400		(1,400	)		—
Distributor relationships		1,264		(1,119	)		145		1,264		(1,019	)		245
Customer relationships		2,905		(1,751	)		1,154		2,905		(1,424	)		1,481
Non-compete agreement		77		(77	)		—		77		(77	)		—
Tradenames/Trademarks		1,025		(1,012	)		13		1,025		(745	)		280
Total	$	49,755	$	(40,000	)	$	9,755	$	48,990	$	(33,600	)	$	15,390

Long-lived assets are amortized on a straight-line basis over their respective estimated useful lives. We evaluate the remaining useful life of our long-lived assets that are being amortized each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the long-lived asset is amortized prospectively over the remaining useful life. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an indicator of impairment exists, we compare the carrying value of long-lived assets to our projection of future undiscounted cash flows attributable to such assets and, in the event that the carrying value exceeds the future undiscounted cash flows, we record an impairment charge equal to the excess of the carrying value over the asset’s fair value. Although the assumptions used in projecting future revenues and gross margins are consistent with those used in our annual strategic planning process, intangible asset impairment charges might be required in future periods if our assumptions are not achieved.

IPR&D assets are considered indefinite-lived intangible assets and are not subject to amortization until their useful life is determined to be no longer indefinite. IPR&D assets are evaluated for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.

During the fourth quarter of fiscal year 2012 we exited the OTN market, and, in connection therewith, discontinued development of our OTN products. We also ceased development of our de-duplication products. In both instances, we determined that the current economic and market environment did not provide the potential to deliver acceptable returns on the required investments. As a result, in the fourth quarter of fiscal year 2012 we expensed the costs for the related IPR&D and intangible assets. We recorded total charges of $1.7 million in restructuring charges and exit costs line item in our consolidated statements of operations.

The intangible asset charges related to the exiting of the OTN and de-duplication products of $1.7 million consists of $0.3 million write off of the IPR&D acquired from Galazar, $1.1 million of amortization of purchased intangible assets related to the OTN products acquired from Galazar and $0.3 million amortization of the existing technology acquired from Hifn. See “Note 7—Restructuring Charges and Exist Cost.”

During the fourth quarter of fiscal year 2011, we exited the data center virtualization market, and, in connection therewith, discontinued development of our 10GbE network interface cards. We determined that the current economic and market environment did not provide the potential to deliver acceptable returns on the required investments in these products. As a result, in the fourth quarter of fiscal year 2011 we abandoned all related in-process research and development. In addition, we began to actively market for sale the related assets of our 10GbE technology, consisting primarily of underlying existing and core technology intangible assets. Charges related to this decision in the fourth quarter of fiscal year 2011 included $7.5 million for the impairment of intangible assets, which is included within the impairment of intangible assets and goodwill line in our consolidated statements of operations.

The intangible asset impairment charge of $7.5 million consists of $0.8 million to the write-off abandoned IPR&D acquired in the Neterion acquisition and $6.7 million to write-down the carrying value of intangible assets that were held for sale to $0.2 million at March 27, 2011, which represented their estimated fair value less costs to sell based on third-party bids received as of that date. In June 2011, we completed the asset sale process and received $0.2 million, net of selling costs.

The aggregate amortization expenses for our purchased intangible assets for fiscal years ended April 1, 2012, March 27, 2011 and March 28, 2010 were as follows (in thousands, except weighted average lives):

	Weighted Average Lives		April 1, 2012		March 27, 2011		March 28, 2010
	(in months)		(in thousands)
Existing technology		65	$	5,491	$	6,361	$	4,936
Patents/Core technology		61		515		652		499
Research and development reimbursement contracts		24		—		2,004		2,496
Customer backlog		6		—		75		985
Distributor relationships		72		100		100		102
Customer relationships		80		327		647		317
Non-compete agreement		15		—		74		3
Tradenames/Trademarks		35		267		320		275
Total			$	6,700	$	10,233	$	9,613

The estimated future amortization expenses for our purchased intangible assets are summarized below (in thousands):

Fiscal Year	Amount
2013	$	4,170
2014		3,616
2015		1,225
2016		628
2017 and thereafter		116
Total estimated amortization	$	9,755