Goodwill And Intangible Assets

3 Months Ended

Apr. 29, 2012

Goodwill And Intangible Assets [Abstract]

Note 9: Goodwill and 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 unaudited consolidated condensed financial statements using Level 3 inputs. The Company concluded that there were no indicators of impairment as of April 29, 2012.

Goodwill balances as of April 29, 2012 and January 29, 2012 are presented below:


	Carrying Amount
Balance as of January 29, 2012	$	129,651
Acquisition of Gennum Corporation		263,758
Acquisition of Cycleo SAS		5,314

Balance as of April 29, 2012	$	398,723

During the first three months of fiscal year 2013, goodwill increased by approximately $269.1 million due to the Company's acquisitions of Gennum and Cycleo (see Note 2).

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)			April 29, 2012							January 29, 2012
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Core technologies		2-10 years	$	171,837	$	(24,518	)	$	147,319	$	65,900	$	(21,031	)	$	44,869
Customer relationships		7-10 years		40,130		(3,719	)		36,411		12,130		(2,929	)		9,201
Technology licenses (1)		5 years		3,000		(400	)		2,600		3,000		(250	)		2,750
Other intangibles assets		1-5 years		6,737		(601	)		6,136		—		—			—

Total finite-lived intangible assets			$	221,704	$	(29,238	)	$	192,466	$	81,030	$	(24,210	)	$	56,820

(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 Unaudited Consolidated Condensed Statements of Income.

During the first three months of fiscal year 2013, acquired finite-lived intangible assets increased by approximately $129.9 million due to the acquisition of Gennum and $10.8 million from the acquisition of Cycleo.

Core technologies include $95.1 million and $10.8 million of finite-lived intangible assets from the acquisition of Gennum and the acquisition of Cycleo, respectively (see Note 2). 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 Gennum or Cycleo and sold, transferred or licensed, regardless of whether the Company intended to do so. Each product technology was valued separately since each was determined to have a different remaining useful life. The preliminary value for the underlying core IP technology from the acquisition of Gennum and Cycleo was assessed utilizing a discount cash flow methodology and/or a relief from royalty method.

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

For the three months ended April 29, 2012 and May 1, 2011, amortization expense related to finite-lived intangible assets was $4.9 million and $2.1 million, respectively.

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


(in thousands)	April 29, 2012							January 29, 2012
	Gross Carrying Amount		Accumulated Impairment Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Impairment Loss			Net Carrying Amount
In-process research and development	$	47,470	$	(3,170	)	$	44,300	$	12,370	$	(2,470	)	$	9,900

Total indefinite-lived intangible assets	$	47,470	$	(3,170	)	$	44,300	$	12,370	$	(2,470	)	$	9,900

The Company reviews 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 development exceeded the carrying value and no impairment existed.

During the first three months of fiscal year 2013, acquired indefinite-lived intangible assets increased by approximately $35.1 million due to the acquisition of Gennum.

The estimated annual amount of future amortization expense for finite-lived intangible assets will be as follows:


(in thousands)
To be recognized in:	Technology license		Sierra Monolithics		Gennum		Cycleo		Total
Remainder of fiscal year 2013	$	450	$	5,932	$	17,124	$	990	$	24,496
Fiscal year 2014		600		8,210		18,778		1,320		28,908
Fiscal year 2015		600		8,210		18,132		1,320		28,262
Fiscal year 2016		600		8,210		17,586		1,320		27,716
Fiscal year 2017		350		8,210		17,499		1,320		27,379
Thereafter		—		13,629		38,009		4,067		55,705

Total expected amortization expense	$	2,600	$	52,401	$	127,128	$	10,337	$	192,466

- 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.

+ References+ Details