Goodwill and Intangible Assets

12 Months Ended

Jun. 24, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets [Text Block]

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company monitors the recoverability of goodwill recorded in connection with acquisitions, by reporting unit, annually, or more often if events or changes in circumstances indicate that the carrying amount may not be recoverable.

Fiscal Year 2017

In fiscal year 2017, the Company elected to perform a qualitative analysis to assess impairment of goodwill rather than to perform the quantitative goodwill impairment test. The key qualitative factors considered in the assessment included the change in the industry and competitive environment, market capitalization, and overall financial performance. Based on the results of this qualitative analysis, the Company determined that it was more likely than not that the fair value of each reporting unit exceeded its carrying value, and therefore, the Company concluded that goodwill was not impaired in fiscal year 2017.

Fiscal Year 2016

The Company performed the annual goodwill impairment analysis during the fourth quarter of fiscal year 2016 and concluded that goodwill was not impaired, as the fair value of each reporting unit exceeded its carrying value. No indicators or instances of impairment were identified during fiscal year 2016.

During the fiscal year ended June 25, 2016, $20.4 million of goodwill from the Micros and Security reporting unit was included in the sale of the Company's energy metering business.

No other indicators or instances of impairment were identified during the fiscal year ended June 25, 2016.

Activity and goodwill balances for the fiscal years ended June 24, 2017 and June 25, 2016 were as follows:



	Goodwill
	(in thousands)
Balance at June 27, 2015	$	511,647
Adjustments	—
Divestitures	(20,999		)
Balance at June 25, 2016	490,648
Adjustments	367
Balance at June 24, 2017	$	491,015

Intangible Assets

The useful lives of amortizing intangible assets are as follows:



Asset		Life
Intellectual property		1-10 years
Customer relationships		3-10 years
Trade name		1-4 years
Patents		5 years

Intangible assets consisted of the following:



	June 24, 2017						June 25, 2016
	Original Cost		Accumulated Amortization		Net		Original Cost		Accumulated Amortization		Net
	(in thousands)
Intellectual property	$	451,885	$	377,806	$	74,079	$	420,285	$	331,321	$	88,964
Customer relationships	115,634		99,812		15,822		115,634		92,744		22,890
Trade name	8,500		8,086		414		8,500		6,486		2,014
Patent	2,500		1,948		552		2,500		1,428		1,072
Total amortizable purchased intangible assets	578,519		487,652		90,867		546,919		431,979		114,940
IPR&D	—		—		—		31,600		—		31,600
Total purchased intangible assets	$	578,519	$	487,652	$	90,867	$	578,519	$	431,979	$	146,540

During the fiscal year ended June 24, 2017, $31.6 million of IPR&D was completed and reclassified to amortizable Intellectual Property. During the fiscal year ended June 25, 2016, $20.3 million of purchased intangible assets, net, was included in the sale of the energy metering business line. For details, please refer Note 9: “Impairment of long-lived assets”.

During fiscal years 2016 and 2015, the Company recorded impairment of intangible assets of $27.6 million and $8.9 million, respectively, related to write-offs of acquired IPR&D resulting from the Company’s decision to abandon previously acquired technologies. Intangible asset reviews are performed when indicators exist that could indicate the carrying value may not be recoverable based on comparisons to undiscounted expected future cash flows. If this comparison indicates that there is impairment, the impaired asset is written down to fair value, which is typically calculated using: (i) quoted market prices or (ii) discounted expected future cash flows utilizing a discount rate.

The following table presents the amortization expense of intangible assets and its presentation in the Consolidated Statements of Income:



	For the Year Ended
	June 24, 2017		June 25, 2016		June 27, 2015
	(in thousands)
Cost of goods sold	$	46,484	$	55,031	$	74,366
Intangible asset amortization	9,189		12,205		16,077
Total intangible asset amortization expenses	$	55,673	$	67,236	$	90,443

The following table represents the estimated future amortization expense of intangible assets as of June 24, 2017:



Fiscal Year	Amount
	(in thousands)
2018	$	48,146
2019	19,861
2020	9,942
2021	8,154
2022	2,563
Thereafter	2,201
Total intangible assets	$	90,867

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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