Goodwill and Intangible Assets

9 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

6. Goodwill & Intangible Assets

Goodwill

The following table outlines changes to the carrying amount of goodwill (in thousands):



	Goodwill
Balance at September 30, 2016	$	309,616
Translation adjustments	295
Balance at June 30, 2017	$	309,911

During the fiscal quarter ended December 30, 2016, we reorganized certain aspects of our internal business infrastructure primarily to integrate and align sales support more directly with our business units. In accordance with ASC Topic 350, we reviewed and reassigned our goodwill amongst our reporting units using a relative fair value allocation approach. Before doing so, we performed a “Step Zero” qualitative assessment during the quarter ended September 30, 2016 and determined that there was minimal risk of goodwill impairment in our pre-reorganization reporting units. Immediately after the reorganization, and related to our consolidated balance of goodwill of $307.1 million as of December 30, 2016, we initiated the "Step One" goodwill impairment assessment using a market approach and an income approach to value our reporting units. We completed this assessment as of March 31, 2017 and determined that there was no goodwill impairment.

In addition, we completed our annual goodwill impairment assessment in the fiscal quarter ended June 30, 2017 related to our consolidation goodwill balance of $309.9 million. We determined, after performing a qualitative review, that it is more likely than not that the fair value of our reporting units are substantially in excess of their respective carrying amounts. Accordingly, there was no impairment, and the "Step One" goodwill impairment test was not required. We did not incur any goodwill impairment losses in either the fiscal year-to-date period ended June 30, 2017 or July 1, 2016.

Intangible Assets

Our intangible assets are stated at their original cost less accumulated amortization, and principally consist of acquired technology, patents, trademarks, customer relationships and contracts. Intangible assets subject to amortization consist of the following (in thousands):



	June 30, 2017							September 30, 2016
Intangible Assets, Net	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Acquired patents and technology	$	299,274	$	(122,393	)	$	176,881	$	293,824	$	(101,711	)	$	192,113
Customer relationships	56,828		(37,691		)	19,137		56,821		(34,113		)	22,708
Other intangibles	22,724		(22,248		)	476		22,716		(22,195		)	521
Total	$	378,826	$	(182,332	)	$	196,494	$	373,361	$	(158,019	)	$	215,342

We purchase various patents and developed technologies that enable us to further develop our audio, imaging and potential product offerings.

Patent Portfolio Acquisition. In the first quarter of fiscal 2016, we completed an asset purchase of a patent portfolio that fits within our existing patent licensing programs for consideration of $105.0 million. These assets are categorized within the "Acquired patents and technology" intangible asset class, and will be amortized over their weighted-average useful life of 9.0 years.

With regard to our purchase of intangible assets during the periods presented, the following table summarizes the consideration paid, the weighted-average useful lives over which the acquired assets will be amortized using the greater of either the straight-line basis or a ratio-to-revenue method, and the classification of their amortized expense in our consolidated statements of operations:



Fiscal Period	Total Purchase Consideration (1)	Weighted-Average Useful Life
	(in millions)	(in years)
Fiscal 2016
Q1 - Quarter ended January 1, 2016	$105.3	9.0
Q2 - Quarter ended April 1, 2016	None
Q3 - Quarter ended July 1, 2016	$15.0	18.0
	$120.3	9.1
Fiscal 2017
Q1 - Quarter ended December 30, 2016	None
Q2 - Quarter ended March 31, 2017	$5.3	18.0
Q3 - Quarter ended June 30, 2017	None
	$5.3	18.0

(1) Amortization expense on the intangible assets from patent portfolio acquisitions is included within cost of revenue in our consolidated statements of operations.

Amortization expense for our intangible assets is included in cost of licensing, cost of products, R&D, and S&M expenses in our consolidated statements of operations. Amortization expense was $7.3 million and $8.2 million in the third quarter of fiscal 2017 and 2016, respectively, and $24.0 million and $24.9 million in the fiscal year-to-date

period ended June 30, 2017 and July 1, 2016, respectively. As of June 30, 2017, estimated amortization expense in future fiscal periods was as follows (in thousands):



Fiscal Year	Amortization Expense
Remainder of 2017	$	7,303
2018	25,485
2019	24,811
2020	24,348
2021	24,321
Thereafter	90,226
Total	$	196,494

- 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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