Note 6 - Goodwill and Intangible Assets

6 Months Ended

Sep. 27, 2015

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. In the second quarter of fiscal year 2016, due to the significant decrease of our company’s stock value, we conducted impairment analysis by comparing the fair value of our single reporting unit with its carrying value. As of the test date and as of fiscal quarter-end, and before consideration of a control premium, the fair value, which was estimated as our market capitalization, exceeded the carrying value of our net assets. As a result, no goodwill impairment was recorded for the second quarter of fiscal year 2016.

The carrying amount of goodwill for the six months ended September 27, 2015 remained the same as last fiscal year end.

Intangible Assets

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

	September 27, 2015							March 29, 2015
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Impairment Charge			Net Carrying Amount
Amortized intangible assets:
Existing technology	$	113,785	$	(52,543	)	$	61,242	$	120,041	$	(47,259	)	$	(9,134	)	$	63,648
Customer relationships		14,295		(5,441	)		8,854		15,165		(4,520	)		(870	)		9,775
Distributor relationships		7,254		(2,402	)		4,852		7,254		(1,973	)		—			5,281
Patents/core technology		3,459		(3,459	)		—		3,459		(3,446	)		—			13
Trade names		1,330		(402	)		928		1,330		(274	)		—			1,056
Total intangible assets subject to amortization		140,123		(64,247	)		75,876		147,249		(57,472	)		(10,004	)		79,773
In-process research and development		3,451		—			3,451		9,148		—			(2,819	)		6,329
Total	$	143,574	$	(64,247	)	$	79,327	$	156,397	$	(57,472	)	$	(12,823	)	$	86,102

Long-lived assets are amortized on a straight-line basis over their respective estimated useful lives. Existing technology is amortized over four to nine years. Customer relationships are amortized over five to seven years. Distributor relationships are amortized over seven years. Patents/core technology is amortized over six years. Trade names are amortized over three to six years. In-process research & development (“IPR&D”) is reclassified as existing technology upon completion or written off upon abandonment. During the first quarter of fiscal year 2016, $2.9 million of IPR&D was reclassified as existing technology upon completion and started amortization. During the third quarter of fiscal year 2015, $1.2 million of IPR&D was reclassified as existing technology upon completion and started amortization. As a result of a decline in forecasted revenue and not meeting critical specifications, we abandoned two IPR&D projects and recorded a $2.8 million charge in the impairment of intangibles line on the consolidated statement of operations in fiscal year 2015. We expect the remaining IPR&D projects to be completed and to start amortization within the next 12 months. 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 September 27, 2015 there were no indicators or events that required us to perform an intangible assets impairment review. During the second quarter of fiscal year 2015, due to the decline in forecasted revenue related to certain intangible assets that were acquired in prior business combinations, we recorded $12.3 million in impairment charges.

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

	Three Months Ended				Six Months Ended
	September 27, 2015		September 28, 2014		September 27, 2015		September 28, 2014
Amortization expense	$	3,405	$	3,724	$	6,775	$	6,001

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

Amortization Expense (by fiscal year)
2016 (6 months remaining)	$	6,738
2017		13,423
2018		13,387
2019		13,073
2020		12,283
2021 and thereafter		16,972
Total future amortization	$	75,876