3.	Microwave Communications Equipment Segment Impairment and Restructuring

Impairment of Goodwill and Other Assets

We are required to assess goodwill impairment using the methodology prescribed by Accounting Standards Codification No. 350, Intangible–Goodwill and Other (“ASC 350”), which requires that we evaluate goodwill for impairment annually. We conduct our annual impairment test as of October 1st of each year and as of October 1, 2014 we previously determined there was no impairment as the estimated fair values of our semiconductor equipment and microwave communications reporting units exceeded their carrying values by approximately 35% and 17%, respectively. In addition to the annual goodwill impairment test, an interim test for impairment is required to be completed when an event occurs or circumstances change between annual tests that would more likely than not reduce the fair value of the reporting unit below its carrying value.

ASC 350 requires a two-step impairment test to identify and measure any goodwill impairment loss. The first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying (book) value, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired and the second step of the test is not necessary. The second step of the impairment test is used to measure the amount of the impairment loss and compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

Subsequent to the preparation of our annual impairment test, as a result of changes to the estimated market value of our microwave communications equipment reporting unit that occurred during the fourth quarter, we determined it was necessary to evaluate the recoverability of the carrying value of this segment as of December 27, 2014. For this analysis we utilized the market approach as the primary valuation method. The market approach is one of the three methodologies (along with the income approach and asset approach) that are used to estimate enterprise and equity value. The market approach employs analysis using comparable transactions in determining the value of the entity. Both public and private companies, if publicly available information exists, are considered in the market approach. Two information points commonly available – company valuation and transaction value – are used for their respective methodologies. The three main methods utilized under the market approach are: The Guideline Public Company Method, The Guideline Transactions Method and The Backsolve Method.

Utilizing the results of the market approach analysis, we determined that the carrying value of our microwave communications equipment reporting unit exceeded its current fair market value and, as a result, we recorded a non-cash, pre-tax impairment charge of $5.0 million as of December 27, 2014. The asset impairments we recorded were comprised of $3.1 million of goodwill and $1.9 million of other assets.

Geographic Consolidation

In 2014 BMS substantially completed a geographic consolidation restructuring plan to relocate the manufacturing, engineering and administrative function of its German operation to its headquarters facility in Poway, California. In 2014 BMS recorded charges to operations totaling $0.5 million for severance and one-time termination benefits. These charges are included in cost of sales $0.1 million, research and development $0.2 million and selling, general and administrative expense $0.2 million. We anticipate that the remaining amounts accrued at December 27, 2014 will be settled in the first quarter of fiscal 2015.

The following table reconciles amounts accrued and paid under the consolidation plan (in thousands):


	Severance and Other Payroll
Balance, December 28, 2013	$	—
Costs accrued		524
Amounts paid or charged		(249	)
Impact of currency exchange		(44	)

Balance, December 27, 2014	$	231