Intangible Assets

12 Months Ended

Jan. 29, 2012

Note 8. Intangible Assets

Goodwill—Goodwill is not amortized, but is tested for impairment using a two-step method on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability of goodwill is measured at the reporting unit level by comparing the reporting unit's carrying amount, including goodwill, to the fair market value of the reporting unit.

The fair value of goodwill is tested for impairment on a non-recurring basis in the accompanying consolidated financial statements using Level 3 inputs.

In fiscal years 2012 and 2011, the Company reorganized its reporting structure in a manner that changed the composition of its product lines within its reporting units. As a result of the change in fiscal year 2011, the goodwill associated with Xemics SA and Sierra Monolithics Inc. acquisitions have been aggregated. As of January 30, 2011 all of the goodwill reported by the Company was associated with the Advanced Communications and Sensing reporting unit. In connection with the reorganizations in fiscal year 2012 and 2011, the Company assessed whether an indicator of impairment existed prior to the reorganizations and concluded that no such indicators were present in fiscal year 2012 and 2011.

In fiscal year 2012, the components of the Advanced Communications and Sensing reporting unit were split into two reporting units consisting of the Advanced Communications and the Wireless and Sensing reporting units. As a result of the change, in fiscal year 2012, goodwill was reassigned to the reporting units affected using a relative fair value allocation approach. Subsequent to the reorganization in the third quarter of fiscal year 2012, the goodwill associated with the Advanced Communications and Sensing reporting unit was reassigned (as of November 2011)such that 10% of goodwill is allocated to the Wireless and Sensing reporting unit and 90% of the goodwill is allocated to the Advanced Communications reporting unit. In connection with the reorganizations in fiscal years 2012 and 2011, the Company assessed whether an indicator of impairment existed prior to the reorganizations and concluded that no such indicators were present in fiscal year 2012 and 2011.

Goodwill was tested for impairment as of November 30, 2011, the date of the Company's annual impairment review. The Company concluded that the fair value of the goodwill associated with the Advanced Communications and Sensing reporting unit exceeded the carrying value and no impairment existed.

Purchased Intangibles—Purchased intangibles are amortized on a straight-line basis over their estimated useful lives. In-process research and development is recorded at fair value as of the date of acquisition as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. Upon completion of development, acquired in-process research and development assets are transferred to finite-lived assets and amortized over their useful lives.

The following table sets forth the Company's finite-lived intangible assets resulting from business acquisitions, which continue to be amortized:


(in thousands)		January 29, 2012							January 30, 2011
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Core technologies	2-10 years	$	65,900	$	(21,031	)	$	44,869	$	65,900	$	(14,006	)	$	51,894
Customer relationships	8-10 years		12,130		(2,929	)		9,201		12,130		(1,571	)		10,559
Technology licenses (1)	5 years		3,000		(250	)		2,750		—		—			—

Total finite-lived intangbile assets		$	81,030	$	(24,210	)	$	56,820	$	78,030	$	(15,577	)	$	62,453

(1)

Technology licenses relate to licensing agreements entered into by the Company. Amortization expense related to technology licenses is reported as "Product development & engineering" in the Consolidated Statements of Income.

Core technologies include $59.9 million of finite-lived intangible assets from the December 9, 2009 acquisition of SMI. These developed technology intangibles include current optical products, wireless products and microwave products. The Company concluded that the intangibles classified as core technologies were identifiable intangible assets, separate from goodwill, since they were capable of being separated from SMI and sold, transferred or licensed, regardless of whether the Company intended to do so. The fair value of these core technologies was determined using the multi-period excess earnings method. Each product technology was valued separately since each was determined to have a different remaining useful life.

Amortization expense related to finite-lived intangible assets is reported as "Intangible amortization and impairments" in the Consolidated Statements of Income.

For the fiscal years 2012, 2011 and 2010, amortization expense related to finite-lived intangible assets was $8.4 million, $9.5 million and $2.4 million, respectively.

The following table sets forth the Company's indefinite-lived intangible assets resulting from business acquisitions:


(in thousands)	January 29, 2012							January 30, 2011
	Gross Carrying Amount		Accumulated Impairment Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Impairment Loss		Net Carrying Amount
In-process research and development	$	12,370	$	(2,470	)	$	9,900	$	12,370	$	—	$	12,370

Total indefinite-lived intangbile assets	$	12,370	$	(2,470	)	$	9,900	$	12,370	$	—	$	12,370

We review indefinite-lived intangible assets for impairment annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability of indefinite-lived intangible assets is measured by comparing the carrying amount of the asset to the future discounted cash flows the asset is expected to generate. Acquired in-process research and development was tested for impairment as of November 30, 2011, the date of the Company's annual impairment review. The Company concluded that the fair value of the remaining acquired in-process research and developments exceeded the carrying value and no impairment existed.

During the third quarter of fiscal year 2012, the Company abandoned certain development efforts related to acquired intangible assets. As a result of these actions, the Company concluded that a portion of the net carrying amount of in-process research and development was not recoverable and therefore it recorded an impairment charge against the net carrying value in the three month period ended October 30, 2011, as summarized below:


In-process research and development impairment	Net Carrying Amount		Impairment
High-speed switching technology for power management applications (1)	$	2,070	$	(2,070	)
Integrated driver for telecommunications applications (2)		400		(400	)

Total	$	2,470	$	(2,470	)

(1)

related to the February 2009 Leadis Technology Inc. acquisition.

(2)

related to the December 2009 Sierra Monolithics, Inc. acquisition.

These impairment charges are included in "Intangible amortization and impairments" on the Consolidated Statements of Income.

Assuming no subsequent impairment of the underlying assets, the annual amount of future amortization expense for all intangible assets will be as follows:


(in thousands)
To be recognized in:	Technology license		Sierra Monolithics		Total
Fiscal year 2013	$	600	$	8,770	$	9,370
Fiscal year 2014		600		9,183		9,783
Fiscal year 2015		600		9,200		9,800
Fiscal year 2016		600		9,200		9,800
Fiscal year 2017		350		9,200		9,550
Thereafter		—		18,417		18,417

Total expected amortization expense	$	2,750	$	63,970	$	66,720

- 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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