Note 6 - Goodwill and Intangible Assets

3 Months Ended

Jun. 29, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. We evaluate goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conduct our annual impairment analysis in the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. Estimations and assumptions regarding the number of reporting units, future performances, results of our operations and comparability of our market capitalization and net book value will be used. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss. Because we have one single operating segment and one chief operating decision maker, our President and Chief Executive Officer (“CEO”), we utilize an entity-wide approach to assess goodwill for impairment. As of June 29, 2014, no events or changes in circumstances suggest that the carrying amount for goodwill may not be recoverable and therefore we did not perform an interim goodwill impairment analysis.

The changes in the carrying amount of goodwill for first fiscal quarter of 2015 and 2014 were as follows (in thousands):

	June 29, 2014		March 30, 2014
Beginning balance	$	30,410	$	10,356
Goodwill additions		14,607		20,054
Ending balance	$	45,017	$	30,410

Goodwill additions during the first quarter of fiscal 2015 consisted of $14.6 million residual allocation from the iML acquisition purchase price accounting. The goodwill additions during fiscal 2014 consist of $19.4 million and $0.7 million residual allocation from the Cadeka and Stretch acquisition purchase price accounting, respectively.

Intangible Assets

Our purchased intangible assets as of the dates indicated below were as follows (in thousands):

	June 29, 2014							March 30, 2014
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Existing technology		118,781	$	(39,357	)	$	79,424	$	63,043	$	(37,510	)	$	25,533
Customer relationships		15,145		(3,082	)		12,063		6,095		(2,762	)		3,333
Distributor relationships		7,244		(1,322	)		5,922		1,264		(1,260	)		4
Patents/Core technology		3,459		(3,395	)		64		3,459		(3,378	)		81
Trade names		1,330		(82	)		1,248		210		(51	)		159
Total intangible assets subject to amortization		145,959		(47,238	)		98,721		74,071		(44,961	)		29,110
In-process research and development		10,320		—			10,320		2,280		—			2,280
Total	$	156,279		(47,238	)		109,041		76,351		(44,961	)		31,390

Long-lived assets are amortized on a straight-line basis over their respective estimated useful lives. Existing technology is amortized over two to nine years. Customer relationships are amortized over five to seven years. Distributor relationships are amortized over six to seven years. Patents/core technology is amortized over five to six years. Trade names are amortized over three to six years. We expect the amortization of IPR&D to start in fiscal 2015. We evaluate the remaining useful life of our long-lived assets that are being amortized each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the long-lived asset is amortized prospectively over the remaining useful life.

Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets (or asset group) may not be fully recoverable. Whenever events or changes in circumstances suggest that the carrying amount of long-lived assets may not be recoverable, we estimate the future cash flows expected to be generated by the assets (or asset group) from its use or eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Significant management judgment is required in the grouping of long-lived assets and forecasts of future operating results that are used in the discounted cash flow method of valuation. If our actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges.

As of June 29, 2014, there were no indicators that required us to perform an intangible assets impairment review. Due to the decline in forecasted revenue related to certain acquired intangible assets, we recorded $1.6 million impairment charges in the fourth quarter of fiscal 2014.

The aggregate amortization expenses for our intangible assets for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Amortization expense	$	2,277	$	1,544

The total future amortization expenses for our purchased intangible assets are summarized below (in thousands):

Amortization Expense (by fiscal year)
2015 (9 months remaining)	$	11,901
2016		15,339
2017		14,406
2018		14,193
2019		12,993
2020 and thereafter		29,889
Total future amortization	$	98,721