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Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2011

7. Intangible Assets and Goodwill

The components of the Company's intangible assets as of December 31, 2011 and December 31, 2010 were as follows:

		As of December 31, 2011

	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
		(In thousands)
Patents	3 to 10 years	$	28,643	$	(12,997	)	$	15,646
Customer contracts and contractual relationships	1 to 10 years		33,550		(7,148	)		26,402
Existing technology	3 to 7 years		159,350		(19,685	)		139,665
Intellectual property	4 years		10,384		(10,384	)		—
Non-competition agreement	3 years		400		(158	)		242

Total intangible assets		$	232,327	$	(50,372	)	$	181,955

		As of December 31, 2010

	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
		(In thousands)
Patents	3 to 10 years	$	24,433	$	(9,361	)	$	15,072
Customer contracts and contractual relationships	1 to 10 years		4,050		(3,127	)		923
Existing technology	3 to 7 years		29,950		(4,959	)		24,991
Intellectual property	4 years		10,384		(10,384	)		—
Non-competition agreement	3 years		100		(100	)		—

Total intangible assets		$	68,917	$	(27,931	)	$	40,986

Amortization expense for intangible assets for the years ended December 31, 2011, 2010, and 2009 was $20.2 million, $5.1 million and $3.0 million, respectively.

During 2011, the Company acquired CRI. As part of the acquisition, the Company acquired the following intangible assets with fair values determined as of the acquisition date:

	Total		Estimated Useful Life

	(in thousands)		(in years)
Existing technology	$	129,400		7
Customer relationships		17,300		7
Favorable contracts		12,200		2
Non-competition agreements		300		3

Total	$	159,200

The favorable contracts (included in customer contracts and contractual relationships) are acquired patent licensing agreements where the Company has no performance obligations. Cash received from these acquired favorable contracts will reduce the favorable contract intangible asset. During 2011, the Company received $2.3 million related to the favorable contracts. The estimated useful life is based on expected payment dates related to the favorable contracts. The group of purchased intangible assets has an estimated weighted average useful life of approximately 7 years from the date of acquisition. Refer to Note 18, "Acquisitions" for additional details.

In addition, the Company acquired other patents in 2011 aggregating $4.2 million, of which $1.2 million was paid in cash. During 2010, the Company purchased patents of approximately $24.4 million through business and asset acquisitions.

The estimated future amortization expense of intangible assets as of December 31, 2011 was as follows (amounts in thousands):

Years Ending December 31:	Amount

2012		35,309
2013		32,244
2014		28,103
2015		27,452
2016		26,497
Thereafter		32,350

	$	181,955

Goodwill

The changes in carrying amount of goodwill by reporting unit were as follows (in thousands):

Reporting Units:	December 31, 2010		Addition to Goodwill(1)		December 31, 2011

	(In thousands)
SBG	$	4,454	$	—	$	4,454
CRI		—		96,994		96,994
LDT		13,700		—		13,700

Total	$	18,154	$	96,994	$	115,148

(1): The addition to goodwill resulted from a business combination which was completed in June 2011. See Note 18, "Acquisitions".

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. The Company performs its impairment analysis of goodwill on an annual basis during fourth quarter of the fiscal year unless conditions arise that warrant a more frequent evaluation. Goodwill is allocated to various reporting units, which are generally an operating segment. Following the acquisition of CRI, the Company has four reporting units, and goodwill has been allocated to three of the reporting units: SBG, LDT and CRI.

The Company completed the first step of its annual goodwill impairment analysis related to its SBG, LDT and CRI reporting units as of December 31, 2011 and found no instances of impairment of its recorded goodwill of $115.1 million. The utilization of the income approach to determine fair value requires estimates of future operating results and cash flows discounted using an estimated discount rate. The Company's estimates result from an updated long-term financial forecast developed as part of its annual strategic planning cycle which it conducts every year. The Company's estimates of discounted cash flows may differ from actual cash flows due to, among other things, economic conditions, changes to its business model or changes in operating performance. Additionally, certain estimates used in the income approach involve information from businesses with limited financial history and developing revenue models which increase the risk of differences between the projected and actual performance. If the Company's assumptions regarding forecasted cash flows are not achieved, the Company may be required to record goodwill impairment charges in future periods. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material. The Company believes that the assumptions and rates used in its impairment test are reasonable. However, they are judgmental, and variations in any of the assumptions or rates could result in materially different calculations of impairment amounts.

- 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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