Note 10 - Goodwill and Intangible Assets

12 Months Ended

Mar. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 10.    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. Estimations and assumptions regarding the number of reporting units, future performances, results of our operations and comparability of our market capitalization and net book value will be used. 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 single operating segment and one chief operating decision maker, the President and Chief Executive Officer (“CEO”), with highly integrated business, we utilize an entity-wide approach to assess goodwill for impairment.

In the fourth quarter of fiscal year 2014, we conducted our annual impairment review comparing the fair value of our single reporting unit with its carrying value. As of the test date and as of fiscal 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 goodwill impairment was recorded for fiscal year 2014. However, we recorded an impairment charge for certain purchased technologies due to a decrease in valuation based on decline in our business forecasts related to these technologies.

In the fourth quarter of fiscal years 2013 and 2012, we conducted our annual impairment. 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 2013 or 2012.

The changes in the carrying amount of goodwill for fiscal years 2014 and 2013 were as follows (in thousands):

	March 30, 2014		March 31, 2013
Beginning balance	$	10,356	$	3,184
Goodwill additions		20,054		7,172
Ending balance	$	30,410	$	10,356

The goodwill additions during fiscal year 2014 consist of $19.4 million and $0.7 million residual allocation from the Cadeka and Stretch acquisition purchase price accounting, respectively. Goodwill additions during the fiscal year ended March 31, 2013 consisted of $7.2 million residual allocation from the Altior acquisition purchase price accounting.

Intangible Assets

Our purchased intangible assets as of the dates indicated below were as follows (in thousands):

	March 30, 2014										March 31, 2013
	Carrying Amount		Impair- ment			Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Existing technology	$	64,678	$	(1,635	)	$	(37,510	)	$	25,533	$	42,858	$	(30,668	)	$	12,190
Customer relationships		6,095		—			(2,762	)		3,333		2,905		(2,079	)		826
Patents/Core technology		3,459		—			(3,378	)		81		3,459		(3,182	)		277
Distributor relationships		1,264		—			(1,260	)		4		1,264		(1,219	)		45
Tradenames		210		—			(51	)		159		—		—			—
Total intangible assets subject to amortization		75,706		(1,635	)		(44,961	)		29,110		50,486		(37,148	)		13,338
In-process research and development		2,280		—			—			2,280		—		—			—
Total	$	77,986	$	(1,635	)	$	(44,961	)	$	31,390	$	50,486	$	(37,148	)	$	13,338

Long-lived assets are amortized on a straight-line basis over their respective estimated useful lives. Existing technology is amortized over two to nine years. Patents/core technology is amortized over five to six years. Distributor relationships are amortized over six years. Customer relationships are amortized over five to seven years. Tradenames are amortized over three years. We expect the amortization of IPR&D to start in fiscal year 2015. 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 business circumstances indicate that the carrying amount of the assets (or asset group) may not be fully recoverable. Whenever events or changes in circumstances suggest that the carrying amount of long-lived assets may not be recoverable, we estimate the future cash flows expected to be generated by the assets (or asset group) from its use or eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Significant management judgment is required in the grouping of long-lived assets and forecasts of future operating results that are used in the discounted cash flow method of valuation. If our actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges.

Due to the decline in forecasted revenue related to certain acquired intangible assets, we recorded $1.6 million impairment charges for fiscal year 2014. No impairment charges were recorded for fiscal year 2013 or fiscal year 2012.

During the second quarter of fiscal year 2013, we sold certain patents for $500,000 and recorded a gain of approximately $223,000.

During the fourth quarter of fiscal year 2012 we exited the OTN market, and, in connection therewith, stopped 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 8—Restructuring Charges and Exit Costs.”

The aggregate amortization expenses for our purchased intangible assets for fiscal years indicated below were as follows (in thousands):

	March 30, 2014		March 31, 2013		April 1, 2012
Amortization expense	$	7,813	$	4,150	$	6,700

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

Amortization Expense (by fiscal year)
2015	$	6,159
2016		5,578
2017		4,645
2018		4,432
2019		3,231
2020 and thereafter		5,065
Total future amortization excluding IPR&D	$	29,110