Goodwill and Acquired Intangibles

12 Months Ended

Dec. 31, 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 third quarter of fiscal 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 fiscal 2011 and 2010 were as follows:

	Gross Carrying Amount
	(In thousands)
Balance as of January 2, 2010	$	----
Goodwill resulting from acquisitions during the period		156,103
Additions due to contingent consideration*		2,790
Balance as of January 1, 2011	$	158,893
Goodwill resulting from the acquisitions during the period		32,250
Additions due to contingent consideration*		1,347
Effect of foreign currency translation		(365	)
Balance as of December 31, 2011	$	192,125

* 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 finite 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

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 fiscal 2011 and is being amortized over its useful life of five years.

Amortization expense for fiscal 2011, fiscal 2010 and fiscal 2009, by Consolidated Statements of Operations caption, was as follows:

	2011		2010		2009
	(In thousands)
Cost of product	$	10,480	$	5,603	$	4,341
Cost of maintenance		----		1,045		4,180
Amortization of acquired intangibles		16,536		14,160		11,420
Total amortization of acquired intangibles	$	27,016	$	20,808	$	19,941

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)
2012	$	26,653
2013		23,111
2014		20,303
2015		19,989
2016		19,550
Thereafter		63,628
Total estimated amortization expense	$	173,234