Goodwill and Intangible Assets

9 Months Ended

Jun. 29, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

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 29, 2013 and September 30, 2012, goodwill and acquired intangible assets in the aggregate attributable to our software products reportable segment were $970.7 million and $768.1 million, respectively, and attributable to our services reportable segment were $42.9 million and $28.1 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.

We completed our annual goodwill impairment review as of June 29, 2013 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 and consideration of the fair value of each reporting unit, which was approximately double its carrying value or higher, at the last valuation date. 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 29, 2013						September 30, 2012
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	746,584					$	610,347
Intangible assets with finite lives (amortized) (1):
Purchased software	$	226,821	$	141,062	85,759		$	177,166	$	127,250	$	49,916
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	289,780		112,122		177,658		227,097		93,215		133,882
Trademarks and trade names	13,257		9,687		3,570		11,013		8,967		2,046
Other	3,456		3,446		10		3,437		3,396		41
	$	556,191	$	289,194	$	266,997	$	441,590	$	255,705	$	185,885
Total goodwill and acquired intangible assets					$	1,013,581					$	796,232

(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, 7 years, and 3 years, respectively.

Goodwill

The changes in the carrying amounts of goodwill for the nine months ended June 29, 2013 are due to our acquisition of Servigistics described in Note 6 and 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 29, 2013, presented by reportable segment, are as follows:



	Software Products Segment			Services Segment		Total
	(in thousands)
Balance, September 30, 2012	$	585,469		$	24,878	$	610,347
Acquisition	127,033			12,800		139,833
Foreign currency translation adjustments	(3,617		)	21		(3,596		)
Balance, June 29, 2013	$	708,885		$	37,699	$	746,584

Amortization of Intangible Assets

The aggregate amortization expense for intangible assets with finite lives was classified in our consolidated statements of operations as follows:



	Three months ended				Nine months ended
	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
	(in thousands)
Amortization of acquired intangible assets	$	6,532	$	5,103	$	19,795	$	15,444
Cost of license revenue	4,598		3,933		13,865		11,967
Total amortization expense	$	11,130	$	9,036	$	33,660	$	27,411

The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of June 29, 2013 is $11.1 million for the remainder of 2013, $45.8 million for 2014, $44.0 million for 2015, $37.6 million for 2016, $33.8 million for 2017, $30.1 million for 2018 and $64.6 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.

+ References+ Details