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Goodwill and Acquired Intangibles
9 Months Ended
Oct. 01, 2011
Goodwill and Acquired Intangibles [Abstract] 
GOODWILL AND ACQUIRED INTANGIBLES

NOTE 5. GOODWILL AND ACQUIRED INTANGIBLES

Goodwill

Cadence completed its annual goodwill impairment test during the three months ended October 1, 2011 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 the nine months ended October 1, 2011 were as follows:

         
    Gross Carrying
Amount
 
    (In thousands)  

Balance as of January 1, 2011

  $ 158,893  

Goodwill resulting from the acquisitions during the period (Note 4)

    32,250  

Additions due to contingent consideration (Note 4)

    1,347  

Effect of foreign currency translation

    (337
   

 

 

 

Balance as of October 1, 2011

  $ 192,153  
   

 

 

 

Acquired Intangibles, Net

Acquired intangibles with finite lives as of October 1, 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

  $ 90,453     $ (14,225   $ 76,228  

Agreements and relationships

    118,034       (24,343     93,691  

Distribution rights

    30,100       (24,832     5,268  

Tradenames, trademarks and patents

    26,183       (21,325     4,858  
   

 

 

   

 

 

   

 

 

 

Total acquired intangibles

  $ 264,770     $ (84,725   $ 180,045  
   

 

 

   

 

 

   

 

 

 

Acquired intangibles with finite lives as of January 1, 2011 were as follows, excluding intangibles that were fully amortized as of January 2, 2010:

                         
    Gross Carrying
Amount
    Accumulated
Amortization
    Acquired
Intangibles, Net
 
    (In thousands)  

Existing technology

  $ 91,800     $ (27,350   $ 64,450  

Agreements and relationships

    135,773       (36,579     99,194  

Distribution rights

    30,100       (22,575     7,525  

Tradenames, trademarks and patents

    26,183       (18,654     7,529  
   

 

 

   

 

 

   

 

 

 

Total acquired intangibles

  $ 283,856     $ (105,158   $ 178,698  
   

 

 

   

 

 

   

 

 

 

 

As of January 1, 2011, Cadence also had a $0.5 million in-process research and development intangible that had an indefinite useful life. This intangible was placed into service during the nine months ended October 1, 2011 and is being amortized over its useful life.

Amortization of acquired intangibles for the three and nine months ended October 1, 2011 and October 2, 2010 was as follows:

                                 
    Three Months Ended     Nine Months Ended  
    October 1,
2011
    October 2,
2010
    October 1,
2011
    October 2,
2010
 
    (In thousands)  

Cost of product

  $ 2,906     $ 2,196     $ 7,585     $ 3,407  

Cost of maintenance

    —         —         —         1,045  

Amortization of acquired intangibles

    3,786       4,459       12,750       9,701  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total amortization of acquired intangibles

  $ 6,692     $ 6,655     $ 20,335     $ 14,153  
   

 

 

   

 

 

   

 

 

   

 

 

 

Amortization of costs from existing technology is included in Cost of product. Amortization of costs from acquired maintenance contracts is included in Cost of maintenance.

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

         
    (In thousands)  

2011 – remaining period

  $ 6,797  

2012

    26,655  

2013

    24,617  

2014

    23,318  

2015

    23,005  

Thereafter

    75,653  
   

 

 

 

Total estimated amortization expense

  $ 180,045