Plantronics 2010 Annual Report Download - page 79

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71
The Company also reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash
flows resulting from the use of the asset. Measurement of an impairment loss for long-lived assets that management expects to hold
and use is based on the amount that the carrying value of the asset exceeds its fair value based on the discounted future cash flows. As
a result of the decline in forecasted revenues, operating margin and cash flows related to the AEG segment, the Company also
evaluated the long-lived assets within the reporting unit. The fair value of the long-lived assets, which include intangibles and
property, plant and equipment, was determined for each individual asset and compared to the asset’s relative carrying value. This
resulted in a partial impairment of certain long-lived assets; therefore, in the third quarter of fiscal 2009, the Company recognized a
non-cash intangible asset impairment charge of $18.2 million, of which $9.1 million related to technology, $6.7 million related to
customer relationships and $2.4 million related to the inMotion trade name, and a non-cash impairment charge of $4.1 million related
to property, plant and equipment which is included in discontinued operations on the Consolidated statement of operations. The
Company recognized a deferred tax benefit of $8.5 million associated with these impairment charges.
In the fourth quarter of fiscal 2009, the Company performed the annual impairment test of the Altec Lansing trademark and trade
name, which indicated that there was no further impairment. The assumptions used in the annual impairment review performed
during the fourth quarter of fiscal 2009 were consistent with the assumptions used in the interim impairment review in the third
quarter of fiscal 2009 as no significant changes were identified.
During the second quarter of fiscal 2010, the Company considered the effect of certain alternatives being evaluated by management
for the AEG segment during the quarter on its intangible assets. During the second quarter management entered into a non-binding
letter of intent to sell Altec Lansing, the Company’s AEG segment. The Company concluded that this triggered an interim impairment
review as it was now “more likely than not” that the segment would be sold; however, as the Company’s Board of Directors had not
yet approved the sale of the segment, the assets did not qualify for “held for sale” accounting under the Property, Plant and Equipment
Topic of the FASB ASC. The Company tests its indefinite lived assets for impairment by comparing the fair value of the intangible
asset with its carrying value. If the fair value is less than its carrying value, an impairment charge is recognized for the difference.
The Company used the proposed purchase price of the AEG segment net assets per the non-binding letter of intent signed during the
quarter as the fair value of the segment’s net assets. This resulted in a full impairment of the Altec Lansing trademark and trade name;
therefore, the Company recognized a non-cash impairment charge of $18.6 million in the second quarter of fiscal 2010 and recognized
a deferred tax benefit of $7.1 million associated with this impairment charge, which is included in discontinued operations for the
fiscal year ended March 31, 2010.
As a result of the proposed purchase price of the net assets of the AEG segment, the Company also evaluated the long-lived assets
within the reporting unit. The fair value of the long-lived assets, which include intangibles and property, plant and equipment, was
determined for each individual asset and compared to the asset’s relative carrying value. This resulted in a full impairment of the
AEG intangibles and a partial impairment of its property, plant and equipment; therefore, in the second quarter of fiscal 2010, the
Company recognized a non-cash intangible asset impairment charge of $6.6 million, of which $2.0 million related to customer
relationships, $0.4 million related to technology and $0.4 million related to the inMotion trade name, and a non-cash impairment
charge of $3.8 million related to property, plant and equipment. The Company recognized a deferred tax benefit of $2.5 million
associated with these impairment charges. The impairment charge and tax benefit is recorded in discontinued operations for the fiscal
year ended March 31, 2010.
The intangible assets that were impaired during the second quarter of fiscal 2009 were measured at their fair value using unobservable
inputs and, therefore, are Level 3 fair value measures.
In the fourth quarter of fiscal 2010, the Company performed the annual impairment test of the remaining intangibles which indicated
that there was no impairment.
The estimated future amortization expense for each fiscal year subsequent to fiscal 2010 is as follows:
Fiscal Year Ending March 31, (in thousands)
2011 $ 1,194
2012 821
2013 630
2014 454
2015 350
Total estimated amortization expense $ 3,449