3Ware 2003 Annual Report Download - page 70

APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Goodwill and other purchased intangibles:
Net goodwill and other acquisition-related intangibles were as follows (dollar amounts in thousands):
March 31,
Life in Years 2002 2003
Goodwill ...................................................... 1–6 $358,014 $72,499
Developed technology ............................................ 5 209,956 15,720
Assembled workforce ............................................ 3 6,304 —
Trademarks .................................................... 5 16,336 —
$590,610 $88,219
Upon adoption of SFAS 142, $6.3 million of assembled workforce was reclassified to goodwill. The total
balances presented above are net of accumulated amortization and impairments of $3.7 billion and $4.3 billion at
March 31, 2002 and 2003, respectively.
During the first quarter of fiscal 2003, upon the implementation of SFAS 142, the Company completed the
initial goodwill impairment review and recorded a non-cash charge of approximately $102.2 million to reduce
the carrying value of goodwill. This charge is reflected as the cumulative effect of an accounting change in the
accompanying consolidated statements of operations. In the fourth quarter of fiscal 2003, the Company
performed its annual impairment test and determined there was additional impairment to goodwill, resulting in a
charge of $186.4 million. This charge is reflected as an operating expense in the consolidated statements of
operations for the year ended March 31, 2003. In calculating these impairment charges the Company was assisted
by an independent valuation firm and primarily relied on the discounted cash flow methodology and market
comparable approach.
In performing the initial fair value analysis as required under SFAS 142, it became evident, as a result of
lower revenue forecasts, that certain other purchased intangible assets were also impaired. As a result, the
Company performed an analysis of these assets as required under SFAS 144 and recorded non-cash charges of
$187.9 million for the impairment of developed technology and $16.3 million as a result of the abandonment of
the MMC Networks trademark. These charges are reflected as operating expenses in the consolidated statement
of operations for the year ended March 31, 2003.
In the year ended March 31, 2002, the Company recorded a goodwill impairment charge of $3.1 billion to
write down the value of goodwill associated with purchase transactions in accordance with the then current
guidance, SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of.” Additionally, in accordance with Emerging Issues Task Force 00-23 which was issued in
September 2000, the amount of goodwill has been adjusted for certain tax benefits related to the exercise of stock
options assumed through our acquisitions. The total adjustments to goodwill related to these tax benefits totaled
$21.4 million, $18.1 million and $3.2 million for the years ended March 31, 2001, 2002 and 2003, respectively.
Other income (expense), net (in thousands):
Fiscal Years Ended March 31,
2001 2002 2003
Gain on strategic equity investments .................................... $— $ 1,225 $ —
Recognized impairments on strategic equity investments .................... — (15,000) (13,250)
Gains (losses) on disposals of property and equipment, net ................... (347) (950) 1,313
Other ............................................................. 460 133 (15)
$ 113 $(14,592) $(11,952)
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