Goodwill and Acquired Intangibles

12 Months Ended

Jan. 02, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The changes in the carrying amount of goodwill during fiscal 2015 and 2014 were as follows:



	Gross Carrying Amount
	(In thousands)
Balance as of December 28, 2013	$	456,905
Goodwill resulting from acquisitions	102,025
Measurement period adjustments	(3,476		)
Effect of foreign currency translation	(1,687		)
Balance as of January 3, 2015	553,767
Effect of foreign currency translation	(1,995		)
Balance as of January 2, 2016	$	551,772

Measurement period adjustments to goodwill are applied based on new information obtained about preliminary amounts recognized for a business combination. During fiscal 2014, Cadence recorded measurement period adjustments associated with revisions to initial estimates of certain liabilities assumed with its acquisition of Jasper and certain tax estimates and assumptions made for one of its other fiscal 2014 acquisitions. These adjustments resulted in a decrease to goodwill.

Cadence completed its annual goodwill impairment test during the third quarter of fiscal 2015 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.

Acquired Intangibles, Net

Acquired intangibles as of January 2, 2016 were as follows, excluding intangibles that were fully amortized as of January 3, 2015:



	Gross Carrying Amount		Accumulated Amortization			Acquired Intangibles, Net
	(In thousands)
Existing technology	$	329,627	$	(124,097	)	$	205,530
Agreements and relationships	173,325		(86,808		)	86,517
Tradenames, trademarks and patents	10,119		(5,684		)	4,435
Total acquired intangibles	513,071		(216,589		)	296,482

During fiscal 2015, Cadence completed certain projects previously included in in-process technology and transferred approximately $1.6 million to existing technology.

Acquired intangibles as of January 3, 2015 were as follows, excluding intangibles that were fully amortized as of December 28, 2013:



	Gross Carrying Amount		Accumulated Amortization			Acquired Intangibles, Net
	(In thousands)
Existing technology	$	328,325	$	(84,822	)	$	243,503
Agreements and relationships	175,202		(65,512		)	109,690
Tradenames, trademarks and patents	10,619		(4,480		)	6,139
Total acquired intangibles with definite lives	514,146		(154,814		)	359,332
In-process technology	1,600		—			1,600
Total acquired intangibles	$	515,746	$	(154,814	)	$	360,932

Amortization expense from existing technology and maintenance agreements is included in cost of product and maintenance. Amortization expense for fiscal 2015, 2014 and 2013, by consolidated income statement caption, was as follows:



	2015		2014		2013
	(In thousands)
Cost of product and maintenance	$	40,532	$	36,907	$	24,023
Amortization of acquired intangibles	23,716		24,017		19,416
Total amortization of acquired intangibles	$	64,248	$	60,924	$	43,439

Estimated amortization expense for intangible assets with definite lives for the following five fiscal years and thereafter is as follows:



	(In thousands)
2016	$	57,450
2017	52,770
2018	49,112
2019	43,132
2020	37,944
Thereafter	56,074
Total estimated amortization expense	$	296,482

- 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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