Goodwill and Intangible Assets

12 Months Ended

Dec. 28, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill. Goodwill balances and activity were as follows (in thousands):



	Fiscal years ended
	December 28, 2014			December 29, 2013
Balance, beginning of year	$	318,111		$	201,735
Acquisition	513,398			115,775
Adjustment	(181		)	601
Balance, end of year	$	831,328		$	318,111

During the fiscal year ended December 28, 2014, goodwill increased by $513.2 million, due primarily to the Company’s acquisition of Fusion‑io, Inc. (“Fusion‑io”) during the third quarter of fiscal year 2014. For additional information regarding the Fusion-io acquisition, see Note 17, “Business Acquisitions.”

Goodwill is not amortized, but is reviewed and tested for impairment at least annually, on the first day of the Company’s fourth quarter and whenever events or circumstances occur that indicate that goodwill might be impaired. Impairment of goodwill is tested at the Company’s reporting unit level. The Company has the option to first assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that the goodwill is impaired and determine whether further action is needed (“Step 0”). For the year ended December 28, 2014, the Company performed a Step 1 quantitative assessment of its goodwill and did not identify an impairment of goodwill. As such, the Company did not perform any further goodwill impairment testing.

Intangible Assets. Intangible asset balances were as follows (in thousands):



	December 28, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed product technology	$	568,744	$	(209,478	)	$	359,266
Customer relationships	64,600		(21,009		)	43,591
Trademarks and trade names	62,500		(7,395		)	55,105
Acquisition-related intangible assets	695,844		(237,882		)	457,962
Technology licenses and patents	102,000		(78,611		)	23,389
Total intangible assets subject to amortization	797,844		(316,493		)	481,351
Acquired in-process research and development	61,000		—			61,000
Total intangible assets	$	858,844	$	(316,493	)	$	542,351



	December 29, 2013
	Gross Carrying Amount		Accumulated Amortization			Impairment			Net Carrying Amount
Developed product technology	$	348,385	$	(121,304	)	$	(44,216	)	$	182,865
Customer relationships	20,650		(14,426		)	—			6,224
Trademarks	14,200		(3,634		)	(2,812		)	7,754
Covenants not to compete	3,100		(2,959		)	—			141
Acquisition-related intangible assets	386,335		(142,323		)	(47,028		)	196,984
Technology licenses and patents	133,909		(89,289		)	—			44,620
Total intangible assets subject to amortization	520,244		(231,612		)	(47,028		)	241,604
Acquired in-process research and development	42,500		—			(36,200		)	6,300
Total intangible assets	$	562,744	$	(231,612	)	$	(83,228	)	$	247,904

During the fiscal year ended December 28, 2014, total intangible assets increased due primarily to the acquisition of Fusion-io. Additionally, the Company reclassified $6.3 million of in-process research and development (“IPR&D”) to developed product technology and commenced amortization during the second quarter of fiscal year 2014.

In fiscal year 2013, the Company performed impairment tests on the amortizable intangible and IPR&D assets from the Pliant Technology, Inc. (“Pliant”) acquisition due to the SMART Storage Systems (“SMART Storage”) acquisition. Based upon its impairment analysis, the Company recorded an impairment of certain amortizable intangible assets and IPR&D assets totaling $83.2 million in fiscal year 2013, which was included in Impairment of acquisition-related intangible assets in the Consolidated Statements of Operations.

Acquired IPR&D is accounted for as an indefinite-lived intangible asset. Indefinite-lived intangible assets are reviewed for impairment at least annually until technological feasibility is achieved or development is complete. Upon completion of development, the acquired IPR&D is considered an amortizable finite-lived intangible asset. Amortization expense of technology licenses and patents is recorded to cost of revenue or R&D based upon the use of the technology.

Amortization expense of intangible assets totaled $148.6 million, $84.3 million and $76.5 million in fiscal years 2014, 2013 and 2012, respectively.

The annual expected amortization expense of intangible assets subject to amortization as of December 28, 2014 was as follows (in thousands):



	Acquisition-related Intangible Assets		Technology Licenses and Patents
Fiscal year:
2015	$	152,375	$	20,056
2016	109,971		3,333
2017	90,916		—
2018	66,260		—
2019	38,440		—
Total intangible assets subject to amortization	$	457,962	$	23,389

- 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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