Goodwill And Intangible Assets

3 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

We have two operating segments: (1) Software Products and (2) Services. We assess goodwill for impairment at the reporting unit level. Our reporting units are determined based on the components of our operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Our reporting units are consistent with our operating segments. As of June 30, 2012 and September 30, 2011, goodwill and acquired intangible assets in the aggregate attributable to our software products reportable segment was $771.4 million and $806.0 million, respectively, and attributable to our services reportable segment was $28.4 million and $29.4 million, respectively. We test goodwill for impairment in the third quarter of our fiscal year, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting segment below its carrying value. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

Our goodwill impairment assessment was based on the new guidance prescribed in ASU 2011-8 as described in Note 1. On July 2, 2011, the estimated fair value of each reporting unit was approximately double its carrying value or higher. Because our fair value was well in excess of our carrying value on that date and there are no other indicators that our goodwill has become impaired since that date, we elected to perform a qualitative assessment to test each reporting unit’s goodwill for impairment. Based on our qualitative assessment, if we determine that the fair value of a reporting unit is more likely than not (i.e., a likelihood of more than 50 percent) to be greater than its carrying amount no additional testing will be performed. If we determine that the fair value of a reporting unit is more likely than not to be less than its carrying amount, the two step impairment test will be performed. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference.

We completed our annual goodwill impairment review as of June 30, 2012 based on a qualitative assessment. Our qualitative assessment included company specific (financial performance and long-range plans), industry, and macroeconomic factors, as well as a sensitivity analysis of key model assumptions. Based on our qualitative assessment, we believe it is more-likely-than-not that the fair values of our reporting units exceed their carrying values and no further impairment testing is required.

Goodwill and acquired intangible assets consisted of the following:



	June 30, 2012						September 30, 2011
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	606,782					$	613,394
Intangible assets with finite lives (amortized) (1):
Purchased software	$	175,882	$	122,389	53,493		$	178,388	$	112,555	$	65,833
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	225,066		87,869		137,197		227,961		75,050		152,911
Trademarks and trade names	10,933		8,747		2,186		11,035		7,967		3,068
Other	3,411		3,328		83		3,506		3,301		205
	$	438,169	$	245,210	$	192,959	$	443,767	$	221,750	$	222,017
Total goodwill and acquired intangible assets					$	799,741					$	835,411

(1) The weighted average useful lives of purchased software, customer lists and relationships, trademarks and trade names and other intangible assets with a remaining net book value are 8 years, 10 years, 6 years, and 4 years, respectively.

Goodwill

The changes in the carrying amounts of goodwill for the nine months ended June 30, 2012 are due to foreign currency translation adjustments related to those asset balances that are recorded in non-U.S. currencies.

Changes in goodwill for the nine months ended June 30, 2012, presented by reportable segment, are as follows:



	Software Products Segment			Services Segment			Total
	(in thousands)
Balance, September 30, 2011	$	588,443		$	24,951		$	613,394
Foreign currency translation adjustments	(6,511		)	(101		)	(6,612		)
Balance, June 30, 2012	$	581,932		$	24,850		$	606,782

Amortization of intangible assets

The aggregate amortization expense for intangible assets with finite lives recorded for the third quarter and first nine months of 2012 and 2011 was classified in our consolidated statements of operations as follows:



	Three months ended				Nine months ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011
	(in thousands)
Amortization of acquired intangible assets	$	5,103	$	4,753	$	15,444	$	12,873
Cost of license revenue	3,933		3,895		11,967		10,597
Total amortization expense	$	9,036	$	8,648	$	27,411	$	23,470

The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of June 30, 2012 is $8.8 million for the remainder of 2012, $35.7 million for 2013, $33.8 million for 2014, $30.4 million for 2015, $22.9 million for 2016, $19.3 million for 2017 and $42.1 million thereafter.

- 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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