This excerpt taken from the MRVL 10-K filed Apr 14, 2005.
Note 5 Goodwill and Purchased Intangible Assets:
The Company performs an annual impairment review during the fourth quarter of each year or more frequently if indicators of impairment exist. The Company performed its annual assessment of goodwill in fiscal 2005, 2004 and 2003 and concluded that there were no impairments.
The carrying amount of the goodwill and intangible assets are as follows (in thousands):
The changes in the carrying amount of goodwill for fiscal 2005 are as follows (in thousands):
In January 2003, the Company decided to no longer use the Galileo trade name in selling and marketing activities going forward. As a result, the Company wrote-off the remaining $22.4 million net book value of the trade name in the fourth quarter of fiscal 2003.
The increase in goodwill during fiscal 2005 was due to the former RADLAN shareholders being entitled to certain shares to be issued based on the Company's achievement of revenues from certain products during fiscal 2005 (see Note 2). The reduction in existing goodwill in fiscal 2005 of $0.9 million was due to the reversal of previously accrued merger costs of $0.4 million and the recognition of the benefits of pre-acquisition state income tax net operating losses of a former MSIL U.S. subsidiary.
Identified intangible assets consist of purchased technology, trade name, and customer contracts and related relationships. Purchased technology and customer contracts and related relationships are amortized on a straight-line basis over their estimated useful lives of five years. Trade name is amortized on a straight-line basis over its estimated useful life of two years. The aggregate amortization expense of identified intangible assets was $79.0 million, $80.4 million and $83.4 million for fiscal 2005, 2004 and 2003, respectively. The estimated total annual amortization expenses of acquired intangible assets is $77.5 million for fiscal 2006, $1.2 million for both fiscal 2007 and 2008 and $0.5 million for fiscal 2009.
In the first quarter of fiscal 2005, the Company entered into a technology license and non-assert agreement with a licensor pursuant to which the parties agreed to not take action against each other relative to the use of certain technologies. Under this arrangement, the Company agreed to make a one-time payment of $13.5 million, which is included in amortization and write-off of acquired intangible assets and other. In the second quarter of fiscal 2005, the Company entered into a technology license and non-assert agreement with another company pursuant to which the parties agreed to not take action against each other relative to the use of certain technologies. Under this arrangement, the Company agreed to make a one-time payment of $25.0 million, of which $10.0 million related to past use of certain technologies and is included in amortization and write-off of acquired intangible assets and other, while the remainder of the amount has been capitalized as licensed technology in other noncurrent assets and will be amortized to cost of goods sold over its estimated useful life of five years.