Spansion Inc. - 10-K filing on 2014-02-25

Note 8. Intangible Assets and Goodwill

12 Months Ended

Dec. 29, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

8. Intangible Assets and Goodwill

Goodwill represents the allocated enterprise value in connection with fresh start accounting under the accounting guidance and the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired in a business combination. In September 2011, the FASB amended its guidance to simplify testing goodwill for impairment, allowing an entity to first assess the qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If an entity determines as a result of the qualitative assessment that it is more likely than not (> 50% likelihood) that the fair value of a reporting unit is less than its carrying amount, then the quantitative test is required. Otherwise, no further testing is required. The Company elected to adopt this accounting guidance for the year ended December 30, 2012.

The Company has one reporting unit. The fair value of the Company was substantially in excess of its estimated carrying amount as of the quantitative analysis of goodwill impairment performed in fiscal 2011. In fiscal 2012, the Company performed the qualitative assessment of goodwill and concluded that there was no impairment. In fiscal 2013, the Company performed a quantitative assessment of goodwill using the market valuation approach and concluded that there was no impairment to goodwill.

The changes in the carrying amount of goodwill for the year ended December 29, 2013, are as follows:

	December 29, 2013		December 30, 2012
	(in thousands)
Goodwill	$	166,422	$	166,931

The changes in the carrying amount of goodwill since December 30, 2012 resulted from foreign currency translation adjustments.

Intangible assets at December 29, 2013 and December 30, 2012 are as follows:

	December 29, 2013												December 30, 2012
	(in thousands)
	Estimated range of lives (in years)			Gross Amount		Additions		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Developed technology	5	to	10	$	111,376	$	29,100	$	(53,661	)	$	86,815	$	111,376	$	(35,386	)	$	75,990
Customer relationships	5	to	10		91,709		18,800		(36,366	)		74,143		93,264		(25,191	)		68,073
Trade names	0.5	to	7		8,252		1,400		(5,719	)		3,933		8,374		(3,284	)		5,090
Trademarks	7	to	8		-		2,700		(142	)		2,558		-		-			-
IP R&D ⁽¹⁾					-		500		-			500		-		-			-
Total				$	211,337	$	52,500	$	(95,888	)	$	167,949	$	213,014	$	(63,861	)	$	149,153

(1) All the IP R&D projects are expected to be transferred to developed technology by the first quarter of fiscal 2016

The Company recorded intangible assets of $52.5 million as of the acquisition date as a result of the Fujitsu acquisition. Please see Note 3 for further details relating to the intangible assets recorded as part of the acquisition.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

The actual amortization expense and estimated future amortization expenses for the Company’s intangible assets are summarized below:

	Year Ended
	December 29, 2013		December 30, 2012		December 25, 2011
	(in thousands)
Amortization Expense	$	32,026	$	27,605	$	23,541

	Estimated Future Amortization
	(in thousands)
Fiscal 2014	$	34,987
Fiscal 2015		35,704
Fiscal 2016		35,871
Fiscal 2017		24,886
Fiscal 2018 and beyond		36,001
Total	$	167,449