Goodwill and Acquired Intangibles

9 Months Ended

Sep. 29, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Cadence completed its annual goodwill impairment test during the three months ended September 29, 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 the nine months ended September 29, 2012 were as follows:



	Gross Carrying Amount
	(In thousands)
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	429
Balance as of September 29, 2012	$	233,275

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* 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 September 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	$	112,947	$	(26,561	)	$	86,386
Agreements and relationships	134,982		(35,705		)	99,277
Distribution rights	30,100		(27,843		)	2,257
Tradenames, trademarks and patents	12,485		(7,637		)	4,848
Total acquired intangibles	$	290,514	$	(97,746	)	$	192,768

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

Amortization of acquired intangibles for the three and nine months ended September 29, 2012 and October 1, 2011 was as follows:



	Three Months Ended				Nine Months Ended
	September 29, 2012		October 1, 2011		September 29, 2012		October 1, 2011
	(In thousands)
Cost of product	$	3,605	$	2,906	$	9,395	$	7,585
Cost of maintenance	269		—		269		—
Amortization of acquired intangibles	3,876		3,786		11,305		12,750
Total amortization of acquired intangibles	$	7,750	$	6,692	$	20,969	$	20,335

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.

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



	(In thousands)
2012 – remaining period	$	7,764
2013	27,976
2014	25,178
2015	24,831
2016	24,309
Thereafter	82,710
Total estimated amortization expense	$	192,768

- 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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