SanDisk 2013 Annual Report Download - page 190

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Intangible Assets. Intangible asset balances were as follows (in thousands):
December 29, 2013
Gross Net
Carrying Accumulated Carrying
Amount Amortization Impairment Amount
Developed product technology .................. $ 348,385 $ (121,304) $ (44,216) $ 182,865
Customer relationships ....................... 20,650 (14,426) — 6,224
Trademarks ............................... 14,200 (3,634) (2,812) 7,754
Covenants not to compete ..................... 3,100 (2,959) — 141
Acquisition-related intangible assets ............. 386,335 (142,323) (47,028) 196,984
Technology licenses and patents ................. 133,909 (89,289) — 44,620
Total intangible assets subject to amortization ...... 520,244 (231,612) (47,028) 241,604
Acquired in-process research and development ....... 42,500 — (36,200) 6,300
Total intangible assets ..................... $ 562,744 $ (231,612) $ (83,228) $ 247,904
December 30, 2012
Gross Net
Carrying Accumulated Carrying
Amount Amortization Impairment Amount
Developed product technology .................. $ 200,960 $ (68,104) $ — $ 132,856
Core technology ............................ 79,800 (79,800) — —
Customer relationships ....................... 13,050 (10,043) — 3,007
Trademarks ............................... 5,700 (1,870) — 3,830
Covenants not to compete ..................... 3,100 (1,618) — 1,482
Acquisition-related intangible assets ............. 302,610 (161,435) — 141,175
Technology licenses and patents ................. 133,909 (65,690) — 68,219
Total intangible assets subject to amortization ...... 436,519 (227,125) — 209,394
Acquired in-process research and development ....... 38,385 — (860) 37,525
Total intangible assets ..................... $ 474,904 $ (227,125) $ (860) $ 246,919
Gross acquisition-related intangible assets and acquired in-process research and development
(‘‘IPR&D’’) increased $168.5 million in fiscal year 2013 due to the acquisition of SMART Storage. During
the fiscal year ended December 29, 2013, the Company reclassified $1.3 million of acquired IPR&D to
developed product technology and commenced amortization.
The Company performs tests for impairment of long-lived assets whenever events or circumstances
suggest that long-lived assets may be impaired. In the third quarter of fiscal year 2013, the Company
performed impairment tests on the amortizable intangible and IPR&D assets from the Pliant
Technology, Inc. (‘‘Pliant’’) acquisition. The Company performed impairment tests on these assets due to
the recent SMART Storage acquisition and the decision to integrate more of the SMART Storage
architecture into its future enterprise product roadmap, and due to additional product delays in the
development timeline related to an IPR&D project from this acquisition. In conducting an impairment
review of the Pliant amortizable intangible assets, the Company first compared the undiscounted cash
flows to the carrying value of these amortizable intangible assets. Since the undiscounted cash flows were
less than the carrying value, the Company then compared the estimated fair value based upon forecasted
discounted cash flows to the carrying value and determined there was an impairment of $47.0 million. In
addition, the Company performed an impairment analysis for the IPR&D by comparing the estimated fair
value based upon forecasted discounted cash flows related to the Pliant IPR&D to the carrying value and
determined there was a full impairment of $36.2 million. The Company recorded an impairment of the
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