XML 36 R13.htm IDEA: XBRL DOCUMENT

Goodwill and Intangible Assets

12 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

7. Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired. Goodwill is reviewed at least annually for impairment charge during the quarter ending March 31, or more frequently if events and circumstances indicate that the asset might be impaired, in accordance with the authoritative guidance provided by FASB. There are two steps in the determination of the impairment of goodwill. The first step compares the carrying amount of the net assets to the fair value of the reporting unit. The second step, if necessary, recognizes an impairment loss to the extent the carrying value of the reporting unit's net assets exceed the implied fair value of goodwill. An impairment loss would be recognized to the extent that the carrying amount exceeds the fair value of the reporting unit.

We use the income approach, based on estimated future cash flows, to perform the goodwill impairment test. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, discount rates and future economic and market conditions. Our estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. By their nature, these assumptions would not reflect unanticipated events and circumstances that may occur. Due to the significant unobservable inputs inherent in discounted cash flow methodologies, this method is classified as Level 3 in the fair value hierarchy.

During fiscal 2010, we completed two acquisitions and recorded goodwill in connection with those acquisitions. Refer to Note 3, “Business Combinations” for details of goodwill resulting from each of the acquisitions of Zilog and Leadis businesses. The acquisition of Zilog was completed in February 2010 and the acquisition of Leadis businesses was completed in September 2009. The goodwill was evaluated based on the factors affecting the business and management concluded that there was no impairment of goodwill at the end of fiscal 2010.

After completing our annual impairment review in fiscal 2011, we concluded that the goodwill associated with the Leadis reporting unit was completely impaired. As a result, we wrote off all of the outstanding goodwill related to the Leadis acquisition and recorded an impairment charge of $304,000. We concluded that the goodwill associated with the Zilog reporting unit was not impaired as of March 31, 2011. In addition, during fiscal 2011, we recorded goodwill adjustments in respect of the Zilog acquisition, primarily related to an increase to the deferred tax assets as a result of completion of income tax related valuation reports.

During fiscal 2012, our Zilog reporting unit experienced a significant decline in net revenues and earnings. We performed our annual impairment review based on the declining business outlook of the reporting unit. The material assumptions used for the income approach were five years of projected net cash flows, a discount rate of 20% and a long-term growth rate of 2%. We considered historical rates and current market conditions to determine the discount and growth rates for the analysis. We concluded that the goodwill associated with the Zilog reporting unit was completely impaired. As a result, we wrote off all the outstanding goodwill related to the Zilog acquisition and recorded an impairment charge of $6.4 million.

The changes in the carrying amount of goodwill for the years ended March 31, 2012 and 2011 are as follows (in thousands):

		March 31,
		2012		2011
Goodwill		$	13,192	$	13,192
Accumulated impairment losses			(6,744)		(6,440)
	Net goodwill at beginning of period		6,448		6,752
Goodwill acquired in acquisitions			-		-
Impairment losses			(6,448)		(304)
	Net goodwill at end of period	$	-	$	6,448

	Identifiable Intangible Assets

		Identified intangible assets consisted of the following as of March 31, 2012 (in thousands):

			Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
Developed intellectual property			$	4,800	$	1,658	$	3,142
Customer relationships				6,100		4,840		1,260
Contract backlog				2,000		2,000		-
Other intangible assets				1,187		445		742
Total identifiable intangible assets			$	14,087	$	8,943	$	5,144

		Identified intangible assets consisted of the following as of March 31, 2011 (in thousands):

			Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
Developed intellectual property			$	4,800	$	858	$	3,942
Customer relationships				6,100		3,316		2,784
Contract backlog				2,000		2,000		-
Other intangible assets				1,187		239		948
Total identifiable intangible assets			$	14,087	$	6,413	$	7,674

In the fourth quarter of fiscal 2011, we concluded that the intangible assets associated with the acquisition of Leadis businesses were completely impaired. Therefore, we wrote off all of the intangible assets related to the acquisition and recorded an impairment charge for the remaining unamortized net book value of $398,000. In the fourth quarter of fiscal 2012, before performing step two of the goodwill impairment test, we performed an impairment test of the Zilog net intangible assets and concluded that they were not impaired.

The following table summarizes the components of the acquired identifiable intangible assets associated with the acquisitions of Leadis and Zilog. The fair value of the amortizable intangible assets was determined using the income approach, royalty savings approach and cost approach.

			Acquisition Date			Estimated
			Fair Value		Amortization	Useful Life
			(In thousands)		Method	(In months)
Leadis
	Developed intellectual property		$	1,200	Straight-line	24
	Customer relationships			210	Straight-line	24
	Contract backlog			1,170	Straight-line	12
	Non-compete agreement			20	Straight-line	24
	Trade name			210	Straight-line	24
		Total for Leadis	$	2,810
Zilog
	Developed intellectual property		$	4,800	Straight-line	72
	Customer relationships			6,100	Accelerated	37
	Contract backlog			2,000	Straight-line	12
	Trade name			1,100	Straight-line	72
		Total for Zilog	$	14,000
Total acquired intangible assets			$	16,810

The amortization of intangible assets is expected to be approximately $2.2 million, $989,000, $989,000, $908,000, and $7,000 in fiscal 2013, 2014, 2015, 2016 and 2017 and thereafter, respectively.

- 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