Goodwill and Intangible Assets

12 Months Ended

Jun. 25, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The Company’s reporting units for goodwill impairment testing are:


•	Lighting Products


•	LED Products


•	Wolfspeed

As of the first day of the fourth quarter of fiscal 2017, the Company performed a step one quantitative goodwill impairment assessment on each reporting unit. For the step one impairment test, the Company derived each reporting unit's fair value through a combination of the market approach (a guideline transaction method) and the income approach (a discounted cash flow analysis). The Company utilized a discount rate from the capital asset pricing model for the discounted cash flow analysis. Once the reporting unit fair values were calculated, the Company reconciled the reporting units' relative fair values to the Company's market capitalization as of the testing date.

The Company then compared the carrying value of each reporting unit, inclusive of its assigned goodwill, to its fair value. The Company determined that the fair value of each reporting unit exceeded its carrying value, and as a result, step two of the goodwill impairment test was not necessary.

Goodwill by reporting unit as of June 25, 2017 was as follows (in thousands):



LED Products		Lighting Products		Wolfspeed		Consolidated Total
	$180,278		$337,781		$100,769		$618,828

Goodwill by reporting unit as of June 26, 2016 was as follows (in thousands):



LED Products		Lighting Products		Wolfspeed		Consolidated Total
	$180,278		$337,781		$100,769		$618,828

Intangible Assets

The following table presents the components of intangible assets, net (in thousands):



	June 25, 2017							June 26, 2016
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets with finite lives:
Customer relationships		$141,420		($84,673	)		$56,747		$141,420		($78,438	)		$62,982
Developed technology	181,728		(132,747		)	48,981		181,728		(111,884		)	69,844
Non-compete agreements	10,475		(10,398		)	77		10,475		(9,994		)	481
Trade names, finite-lived	520		(520		)	—		520		(520		)	—
Patent and licensing rights	151,985		(63,155		)	88,830		145,780		(55,957		)	89,823
Total intangible assets with finite lives	486,128		(291,493		)	194,635		479,923		(256,793		)	223,130
Trade names, indefinite-lived	79,680					79,680		79,680					79,680
Total intangible assets		$565,808		($291,493	)		$274,315		$559,603		($256,793	)		$302,810

Total amortization of finite-lived intangible assets was $39.8 million, $40.4 million and $37.1 million for the years ended June 25, 2017, June 26, 2016 and June 28, 2015, respectively. Beginning in the third quarter of fiscal 2016, the Company started amortizing IPR&D assets acquired in the APEI acquisition that were completed during the respective period.

As of the first day of the fourth quarter of fiscal 2017, the Company performed a step one quantitative impairment assessment on each of the Company’s indefinite-lived trade names. The Company determined that the fair value of each indefinite-lived trade name was greater than its carrying value and therefore a step two quantitative impairment assessment was not required.

The Company invested $12.4 million, $14.4 million and $19.5 million for the years ended June 25, 2017, June 26, 2016 and June 28, 2015, respectively, for patent and licensing rights. For the fiscal years ended June 25, 2017, June 26, 2016 and June 28, 2015, the Company recognized $1.2 million, $6.7 million and $3.4 million, respectively, in impairment charges related to its patent portfolio.

Total future amortization expense of finite-lived intangible assets is estimated to be as follows (in thousands):



Fiscal Year Ending
June 24, 2018		$38,858
June 30, 2019	37,320
June 28, 2020	24,463
June 27, 2021	19,192
June 26, 2022	17,816
Thereafter	56,986
Total future amortization expense		$194,635

- 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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