Goodwill And Intangible Assets

12 Months Ended

Oct. 29, 2011

Goodwill And Intangible Assets [Abstract]

4. Goodwill and Intangible Assets

The following table summarizes goodwill activity by reportable segment during the fiscal years ended October 29, 2011 and October 30, 2010 (in thousands):


	Data Storage Products			Ethernet Products			Global Services			Total
Balance at October 31, 2009
Goodwill	$	176,989		$	1,371,688		$	157,089		$	1,705,766
Accumulated impairment losses (1)		—			(45,832	)		—			(45,832	)

		176,989			1,325,856			157,089			1,659,934
Tax and other adjustments (2)		—			(14,984	)		—			(14,984	)
Balance at October 30, 2010
Goodwill	$	176,989		$	1,356,704		$	157,089		$	1,690,782
Accumulated impairment losses		—			(45,832	)		—			(45,832	)

	$	176,989		$	1,310,872		$	157,089		$	1,644,950
Goodwill disposed (3)		—			—			(1,673	)		(1,673	)
Tax and other adjustments (4)		(21	)		(12,289	)		—			(12,310	)
Balance at October 29, 2011
Goodwill	$	176,968		$	1,344,415		$	155,416		$	1,676,799
Accumulated impairment losses		—			(45,832	)		—			(45,832	)

	$	176,968		$	1,298,583		$	155,416		$	1,630,967

(1)

During the second quarter of fiscal year 2009, the Company made a decision to no longer offer its suite of Files products and concluded that the fair value of the Files reporting unit was less than its carrying amount. The fair value of the Files business was determined using comparable companies' data. The Company conducted the second step of the goodwill impairment test and determined that all of the Files goodwill was impaired. Accordingly, the Company recorded a goodwill impairment charge of $45.8 million for the three months ended May 2, 2009.

(2)	The goodwill adjustment of $15.0 million was primarily a result of realization of deferred tax assets and tax benefit of stock options exercised from acquired companies, partially offset by the impact of adoption of the new accounting standard for its convertible debt from acquired companies.

(3)	Goodwill disposed relates to sale of Strategic Business Systems, Inc. ("SBS"), a wholly owned subsidiary, see Note 17, "Loss on Sale of Subsidiary," of the Notes to Consolidated Financial Statements.

(4)	The goodwill adjustment of $12.3 million was primarily a result of tax benefit from the exercise of stock awards of acquired companies.

The Company conducts its goodwill impairment test annually, as of the first day of the second fiscal quarter, or whenever events or changes in facts and circumstances indicate that the fair value of the reporting unit may be less than its carrying amount. For the annual goodwill impairment test, the Company uses the income approach, the market approach, or a combination thereof, to determine each reporting unit's fair value. The income approach provides an estimate of fair value based on discounted expected future cash flows. The market approach provides an estimate of fair value using various prices or market multiples applied to the reporting unit's operating results and then applying an appropriate control premium. During the fiscal year 2011 annual goodwill impairment test under the first step, the Company used a combination of approaches to estimate each reporting unit's fair value. The Company believed that at the time of impairment testing performed in second fiscal quarter of 2011, the income approach and the market approach were equally representative of a reporting unit's fair value.

Determining the fair value of a reporting unit or an intangible asset requires judgment and involves the use of significant estimates and assumptions. The Company based its fair value estimates on assumptions it believes to be reasonable, but that are unpredictable and inherently uncertain. Estimates and assumptions with respect to the determination of the fair value of its reporting units using the income approach include, among other inputs:

•

The Company's operating forecasts;

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Revenue growth rates; and

•

Risk-commensurate discount rates and costs of capital.

The Company's estimates of revenues and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of the Company's regular long-range planning process. The control premium used in market or combined approaches is determined by considering control premiums offered as part of the acquisitions that have occurred in the reporting units' comparable market segments. Based on goodwill impairment analysis results during the second fiscal quarter of 2011, the Company determined that no impairment needed to be recorded. During the fiscal year ended October 29, 2011, there were no facts and circumstances that indicated that the fair value of the reporting units may be less than their current carrying amount.

The Company records impairment losses on long-lived assets used in operations when indications of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. If such assets are considered to be impaired, the impairment charge recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. As a result of the impairment of the Files reporting unit in fiscal year 2009, the Company performed an impairment analysis for long-lived Files assets, including its intangible assets. The analysis indicated that all of the intangible assets associated with the Files business were not recoverable. As a result, the Company recorded an acquisition-related intangible assets impairment charge associated with the Files business of $7.5 million during the second quarter of fiscal year 2009.

Intangible assets other than goodwill are amortized over the following estimated remaining useful lives, unless the Company has determined these lives to be indefinite. The decrease in intangible assets during the year ended October 29, 2011 resulted from the sale of SBS, see Note 17, "Loss on Sale of Subsidiary," of the Notes to Consolidated Financial Statements. The following tables present details of the Company's intangible assets (in thousands, except for weighted-average remaining useful life):


	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (in years)
October 29, 2011
Trade name	$	10,441	$	10,422	$	19		1.17
Core/developed technology		337,858		245,855		92,003		2.04
Customer relationships		352,581		229,906		122,675		2.12

Total intangible assets	$	700,880	$	486,183	$	214,697		2.08


	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (in years)
October 30, 2010
Trade name	$	13,941	$	11,150	$	2,791		9.24
Core/developed technology		338,158		189,643		148,515		2.75
Customer relationships		364,981		172,287		192,694		3.23

Total intangible assets	$	717,080	$	373,080	$	344,000		3.07

The following table presents the amortization of intangible assets included on the Consolidated Statements of Operations (in thousands):


	Fiscal Year Ended
	October 29, 2011		October 30, 2010		October 31, 2009
Cost of revenues	$	57,489	$	61,249	$	65,803
Operating expenses	$	60,713	$	65,623	$	68,718

Total	$	118,202	$	126,872	$	134,521

The following table presents the estimated future amortization of intangible assets as of October 29, 2011 (in thousands):


Fiscal Year	Estimated Future Amortization
2012	$	105,432
2013		93,109
2014		16,156

Total	$	214,697

- 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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