Equity Method Investment

3 Months Ended

Apr. 02, 2016

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investment

Equity Method Investment

In the first and third quarters of fiscal 2015, we purchased a preferred stock ownership interest in a privately-held company that designs human-computer interaction technology for a total consideration of $3.0 million. This investment accounted for a 15.8% ownership interest by the end of the third quarter of fiscal 2015 and was accounted for under the cost method as we did not have the ability to exert significant influence over the investee.

In the fourth quarter of fiscal 2015, we increased our ownership interest to 22.7% by making an additional investment of $2.0 million. This increased our gross investment in the investee to $5.0 million. As a result of the change in ownership interest and after considering the changes in the level of our participation in the management of and interaction with the investee, we determined that we have the ability to exert significant influence over the investee. Accordingly, we changed our accounting for the investment from the cost method to the equity method and have hence recognized our proportionate share of the investee’s operating results in the Consolidated Statements of Operations.

Applying the equity method, we recognized a charge of $0.3 million in the Consolidated Statements of Operations for the three months ended April 2, 2016, which is our proportionate share of the investee’s net loss for the first quarter of 2016. Through April 2, 2016, we have reduced the value of our investment by approximately $0.8 million, representing our proportionate share of the privately-held company’s net loss accumulated to that date. The net balance of our investment amounting to $4.2 million has been included in Other long-term assets in the Consolidated Balance Sheets as of April 2, 2016.