Goodwill and Intangible Assets

Goodwill recorded from the MicroProbe Acquisition on October 16, 2012 was $30.7 million as of December 27, 2014 and remained unchanged from the amounts recorded as of December 28, 2013. During the fourth quarter of fiscal 2014, we performed our annual goodwill impairment test by an assessment of qualitative factors and concluded that our goodwill was not impaired as of December 27, 2014. Furthermore, the Company has not recorded any historical goodwill impairments as of December 27, 2014.

At the time of our fiscal 2013 annual goodwill impairment test, we faced increasing operational and financial challenges, including manufacturing overcapacity and weak operating performance which led to a deterioration in market conditions. As a result, we performed the first step of the two-step goodwill impairment test relating to our two reporting units to ascertain if the carrying values of the net assets exceeded fair values. We utilized an equal weighting of both the discounted cash flow method of the income approach and the guideline company method of the market approach to estimate the fair value of our two reporting units. The results of the first step of the impairment test indicated that the goodwill of the FormFactor and MicroProbe reporting units were not impaired, as the estimated fair values in excess of carrying values were approximately $32 million and $41 million, respectively, or 16% and 39%, over the carrying value of the reporting units, respectively. As a result, we did not record any impairment to our goodwill as of December 28, 2013.

The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, we will be required to reassess and update our forecasts and estimates used in future impairment analyses. If the results of these analyses are lower than current estimates, a material impairment charge may result at that time.

The changes in intangible assets for fiscal 2014 and the net book value of intangible assets at December 27, 2014 and December 28, 2013 were as follows (in thousands):



	Intangible Assets, Gross Amount						Accumulated Amortization						Intangible Assets, Net				Weight Average Useful Life
Other Intangible Assets (1)	December 28, 2013		Additions/Disposals		December 27, 2014		December 28, 2013		Expense, net		December 27, 2014		December 28, 2013		December 27, 2014		December 27, 2014
Existing developed technologies	$	51,248	$	—	$	51,248	$	18,955	$	16,090	$	35,045	$	32,293	$	16,203	1.8
Trade name	4,388		—		4,388		530		440		970		3,858		3,418		7.8
Customer relationships	17,000		—		17,000		2,581		2,251		4,832		14,419		12,168		5.8
Total finite-lived intangible assets	72,636		—		72,636		22,066		18,781		40,847		50,570		31,789
In-process research and development	6,900		—		6,900		—		—		—		6,900		6,900
Total intangible assets	$	79,536	$	—	$	79,536	$	22,066	$	18,781	$	40,847	$	57,470	$	38,689

(1) Excludes fully amortized intangible assets

During the year ended December 28, 2013, purchased in-process research and development (IPR&D) projects from the MicroProbe Acquisition with a carrying value of $14.2 million were completed and reclassified as finite-lived intangible assets, and are currently being amortized over their estimated useful lives. There were no such reclassifications during the year ended December 27, 2014.

The IPR&D assets are classified as indefinite lived intangible assets that are not currently subject to amortization but are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The IPR&D assets will be subject to amortization upon completion of their respective research projects and at the start of commercialization. The fair values assigned to IPR&D assets were determined using the income approach based on estimates and judgments regarding risks inherent in the development process, including the likelihood of achieving technological success and market acceptance. If an IPR&D project is abandoned, the acquired technology attributable to the project will be expensed in the Consolidated Statement of Operations.

We recorded $18.8 million, $16.7 million and $6.6 million, in amortization expense related to our intangible assets in fiscal 2014, 2013, and 2012, respectively. Of the total amortization expense for fiscal 2014, 2013, and 2012, $16.1 million, $13.8 million, and $6.0 million were charged to cost of revenues, respectively, and $2.7 million, $2.9 million and $0.6 million were charged to selling, general and administrative expenses, respectively.

Based on the carrying value of the finite-lived intangible assets recorded as of December 27, 2014, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows (in thousands):



Fiscal Year	Amount
2015	$	12,739
2016	8,720
2017	2,551
2018	2,501
2019	2,447
and thereafter	2,831
Total	$	31,789