Goodwill and Acquired Intangibles

12 Months Ended

Dec. 29, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Cadence completed its annual goodwill impairment test during the third quarter of fiscal 2012 and determined that the fair value of Cadence's single reporting unit substantially exceeded the carrying amount of its net assets and that no impairment existed.

The changes in the carrying amount of goodwill during fiscal 2012 and 2011 were as follows:



	Gross Carrying Amount
	(In thousands)
Balance as of January 1, 2011	$	158,893
Goodwill resulting from acquisitions	32,250
Additions due to contingent consideration*	1,347
Effect of foreign currency translation	(365		)
Balance as of December 31, 2011	$	192,125
Goodwill resulting from acquisitions	39,680
Additions due to contingent consideration*	1,041
Effect of foreign currency translation	420
Balance as of December 29, 2012	$	233,266

_________

* Cadence accounts for business combinations with acquisition dates on or before January 3, 2009 under the purchase method in accordance with accounting standards that were authoritative at that time, whereby contingent consideration is added to goodwill as it is earned.

Acquired Intangibles, Net

Acquired intangibles with definite lives as of December 29, 2012 were as follows, excluding intangibles that were fully amortized as of December 31, 2011:



	Gross Carrying Amount		Accumulated Amortization			Acquired Intangibles, Net
	(In thousands)
Existing technology	$	112,940	$	(30,171	)	$	82,769
Agreements and relationships	133,764		(37,769		)	95,995
Distribution rights	30,100		(28,595		)	1,505
Tradenames, trademarks and patents	12,485		(7,816		)	4,669
Total acquired intangibles	$	289,289	$	(104,351	)	$	184,938

Acquired intangibles with definite lives as of December 31, 2011 were as follows, excluding intangibles that were fully amortized as of January 1, 2011:



	Gross Carrying Amount		Accumulated Amortization			Acquired Intangibles, Net
	(In thousands)
Existing technology	$	90,433	$	(17,119	)	$	73,314
Agreements and relationships	118,060		(27,123		)	90,937
Distribution rights	30,100		(25,585		)	4,515
Tradenames, trademarks and patents	26,183		(21,715		)	4,468
Total acquired intangibles	$	264,776	$	(91,542	)	$	173,234

Amortization expense from existing technology intangible assets is included in cost of product and amortization expense from a maintenance agreement intangible asset is included in cost of maintenance. Amortization expense for fiscal 2012, 2011 and 2010, by consolidated income statement caption, was as follows:



	2012		2011		2010
	(In thousands)
Cost of product	$	13,003	$	10,480	$	5,603
Cost of maintenance	538		—		1,045
Amortization of acquired intangibles	15,077		16,536		14,160
Total amortization of acquired intangibles	$	28,618	$	27,016	$	20,808

Estimated amortization expense for the following five fiscal years and thereafter is as follows:



	(In thousands)
2013	$	27,914
2014	25,178
2015	24,831
2016	24,307
2017	23,257
Thereafter	59,451
Total estimated amortization expense	$	184,938

- 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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