GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Jul. 02, 2011

NOTE 4: GOODWILL AND INTANGIBLE ASSETS

Goodwill

Intangible assets classified as goodwill are not amortized. The Company performs an annual impairment test of its goodwill during the fourth quarter of each fiscal year, which coincides with the completion of its annual forecasting process. The Company performed its annual impairment test in the fourth quarter of fiscal 2010 and no impairment charge was required.

The Company also tests for impairment between annual tests if a “triggering” event occurs that may have the effect of reducing the fair value of a reporting unit below its respective carrying value.

On October 3, 2008, the Company completed the acquisition of Orthodyne Electronics Corporation (“Orthodyne”) and agreed to pay Orthodyne an additional amount in the future based upon the gross profit realized by the acquired business over a three year period from date of acquisition pursuant to an Earnout Agreement (the “Earnout”). As of July 2, 2011, the maximum potential payout under the Earnout was $30.0 million, and the Company has accrued $12.5 million as an adjustment to goodwill.

The following table reflects Goodwill as of July 2, 2011 and October 2, 2010:

	As of
(in thousands)	July 2, 2011		October 2, 2010
Beginning of period, Goodwill	$	26,698	$	26,698
Increase to Goodwill for Earnout		12,498		0

End of period, Goodwill	$	39,196	$	26,698

Intangible Assets

Intangible assets with determinable lives are amortized over their estimated useful lives. The Company’s intangible assets consist primarily of wedge bonder developed technology and customer relationships.

The following table reflects net intangible assets as of July 2, 2011and October 2, 2010:

	As of						Average estimated
(dollar amounts in thousands)	July 2, 2011			October 2, 2010			useful lives (in years)
Wedge bonder developed technology	$	33,200		$	33,200			7.0
Accumulated amortization		(13,043	)		(9,486	)
Net wedge bonder developed technology		20,157			23,714

Wedge bonder customer relationships		19,300			19,300			5.0
Accumulated amortization		(10,615	)		(7,720	)
Net wedge bonder customer relationships		8,685			11,580

Wedge bonder trade name		4,600			4,600			8.0
Accumulated amortization		(1,581	)		(1,150	)
Net wedge bonder trade name		3,019			3,450

Wedge bonder other intangible assets		2,500			2,500			1.9
Accumulated amortization		(2,408	)		(2,133	)
Net wedge bonder other intangible assets		92			367

Net intangible assets	$	31,953		$	39,111

The following table reflects estimated annual amortization expense related to intangible assets as of July 2, 2011:

(in thousands)
Remaining fiscal 2011	$	2,386
Fiscal 2012		9,178
Fiscal 2013		9,178
Fiscal 2014		5,318
Fiscal 2015-2016		5,893

Total amortization expense	$	31,953

- 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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