Goodwill and Intangible Assets
 6 Months Ended
Dec. 26, 2015
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. The Company performed the annual goodwill impairment analysis during the fourth quarter of fiscal year 2015 and concluded that goodwill was not impaired, as the fair value of each reporting unit exceeded its carrying value.
During the quarter ended December 27, 2014, goodwill for the Sensing Solutions reporting unit was determined to be impaired and the Company recorded a charge of $84.1 million. The Sensing Solutions reporting unit develops integrated circuits which are primarily sold in the consumer and automotive end customer markets. The impairment was the result of the Company’s decision within the quarter ended December 27, 2014 to exit certain market offerings that have competitive dynamics which are no longer consistent with the Company’s business objectives.

The Company determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment analysis for the Sensing Solutions reporting unit. The reporting unit’s carrying value exceeded its estimated fair value and, accordingly, a second phase of the goodwill impairment test (“Step 2”) was performed. Under Step 2, the fair value of all Sensing Solution’s assets and liabilities were estimated, including tangible assets and intangible assets (including existing and in-process technology) for the purpose of deriving an estimate of the implied fair value of goodwill. The implied fair value of the goodwill was then compared to the carrying value of the goodwill to determine the amount of the impairment.

The Company estimated the fair value of the Sensing Solutions reporting unit using a weighting of fair values derived equally from the income and market approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit.

Prior to completing the goodwill impairment test, the Company tested the recoverability of the Sensing Solutions long-lived assets (other than goodwill) and concluded that existing Property, plant and equipment, net was impaired by $45.2 million and IPR&D was impaired by $8.9 million.
No indicators or instances of impairment were identified in the six months ended December 26, 2015.

During the three months ended December 26, 2015, $21.0 million of goodwill was reclassified as held for sale. For details, please refer to Note 3: "Balance sheet components" and Note 14: “Impairment of long-lived assets”.

Intangible Assets

The useful lives of amortizable intangible assets are as follows:

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


Intangible assets consisted of the following:

 
December 26,
2015
 
June 27,
2015
 
Original
Cost 
 
Accumulated
Amortization 
 
Net
 
Original
Cost 
 
Accumulated
Amortization 
 
Net
 
(in thousands)
Intellectual property
$
347,262

 
$
234,639

 
$
112,623

 
$
435,962

 
$
276,175

 
$
159,787

Customer relationships
96,830

 
69,925

 
26,905

 
120,230

 
82,774

 
37,456

Trade name
8,500

 
5,686

 
2,814

 
8,500

 
4,886

 
3,614

Patents
2,500

 
1,167

 
1,333

 
2,500

 
907

 
1,593

Total amortizable purchased intangible assets
455,092

 
311,417

 
143,675

 
567,192

 
364,742

 
202,450

IPR&D
59,202

 
—

 
59,202

 
59,202

 
—

 
59,202

Total purchased intangible assets
$
514,294

 
$
311,417

 
$
202,877

 
$
626,394

 
$
364,742

 
$
261,652



During the three months ended December 26, 2015, $20.3 million of purchased intangible assets, net, was reclassified as held for sale. For details, please refer to Note 3: "Balance sheet components" and Note 14: “Impairment of long-lived assets”.

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

 
Three Months Ended
 
Six Months Ended
 
December 26,
2015
 
December 27,
2014
 
December 26,
2015
 
December 27,
2014
 
(in thousands)
Cost of goods sold
$
14,734

 
$
18,750

 
$
31,372

 
$
37,500

Intangible asset amortization
3,538

 
4,155

 
7,129

 
8,482

Total intangible asset amortization expenses
$
18,272

 
$
22,905

 
$
38,501

 
$
45,982



The following table represents the estimated future amortization expense of intangible assets as of December 26, 2015:

Fiscal Year
 
Amount
 
 
(in thousands)
Remaining six months of 2016
 
$
28,734

2017
 
49,091

2018
 
41,563

2019
 
13,278

2020
 
3,358

2021
 
2,888

Thereafter
 
4,763

Total intangible assets
 
$
143,675