Equity Method Investment

12 Months Ended

Dec. 31, 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 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 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 since recognized our proportionate share of the investee’s operating results in the Consolidated Statements of Operations.

In the third quarter of fiscal 2016, we made an additional investment of $1.0 million via a convertible debt instrument, bringing our gross investment in the investee to $6.0 million. We have determined that this additional investment is an in-substance common stock and has been included in our equity method accounting but that, in its unconverted state, it does not change our ownership interest.

Applying the equity method, the proportionate share of the investee's net loss that we have recognized in the Consolidated Statements of Operations for fiscal years 2016, 2015, and 2014 was as follows:

	Year Ended
(In thousands)	December 31, 2016			January 2, 2016			January 3, 2015
Equity in net loss of an unconsolidated affiliate, net of tax	$	(1,459	)	$	(492	)	$	—

Through December 31, 2016, we have reduced the value of our investment by approximately $2.0 million, representing our cumulative proportionate share of the privately-held company’s net loss accumulated to that date. The net balance of our investment included in other long-term assets in the Consolidated Balance Sheets is detailed in the following table:

(In thousands)	Total
Balance at January 3, 2015	$	—
Investment made during fiscal year	5,000
Equity in net loss of an unconsolidated affiliate, net of tax	(492		)
Balance at January 2, 2016	4,508
Investment made during fiscal year	1,000
Equity in net loss of an unconsolidated affiliate, net of tax	(1,459		)
Balance at December 31, 2016	$	4,049