Goodwill and Intangible Assets, Net

12 Months Ended

Jun. 29, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

The activities in goodwill during the twelve months ended June 29, 2014 and June 30, 2013 are as follows:



	Connectivity Segment		Visibility Segment		Total
	(In thousands)
Goodwill, as of July 1, 2012	$	177,290	$	—	$	177,290
Goodwill from acquisition	—		71,229		71,229
Goodwill, as of June 30, 2013	177,290		71,229		248,519
Goodwill from acquisition	—		—		—
Goodwill, as of June 29, 2014	$	177,290	$	71,229	$	248,519

The goodwill addition to the Visibility segment for the twelve months ended June 30, 2013 resulted from the Endace acquisition that is described in Note 2.

The Company tests goodwill for impairment annually during the fourth fiscal quarter and at other times if events have occurred or circumstances exist that indicate the carrying value of goodwill may no longer be recoverable. Goodwill impairment testing is performed at the reporting unit level, Connectivity and Visibility.

Fair value of the reporting units is determined using the market approach, the income approach, or a combination thereof. Under the market approach, fair value is based on peer multiples and applying an appropriate control premium. The control premium used in the market approach or a combined approach is determined by considering control premiums offered as part of acquisitions that have occurred in the reporting units’ comparable market segments. Under the income approach, fair value is dependent on a discounted cash-flow analysis. The material assumptions used in performing the discounted cash-flow analysis include the Company's operating forecasts, which are based on historical data, various internal estimates, and a variety of external sources, and are developed as part of the Company's regular long-range planning process, as well as revenue growth rates, terminal value and risk-commensurate discount rates. The discount rates are based on estimates of a market weighted-average cost-of-capital for the reporting unit, as well as a specific assessment of the risk inherent in the respective reporting units, and were estimated to be 19% for the Connectivity reporting unit and 21% for the Visibility reporting unit. The Company based its fair value estimates on assumptions it believes to be reasonable, but are inherently uncertain.

The Company’s recent impairment test indicated that the Connectivity reporting unit’s fair value exceeded its carrying value by approximately 6%, or $31.3 million and the Visibility reporting unit's fair value exceeded its carrying value by approximately 7%, or $8.0 million. Accordingly, the two-step impairment test was not conducted for either reporting unit. As part of the annual test, the Company compared the aggregate fair value of the reporting units to the fair value of the Company as a whole based on the Company’s market capitalization. Although our annual test resulted in no impairment, given the recent volatility of our market capitalization, the inherent uncertainty in forecasts, and the fact that the fair value of each reporting unit did not exceed it carrying value by a substantial margin, it is possible that our goodwill could become impaired in the near term.

Intangible assets, net, are as follows:



	June 29, 2014							June 30, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	(In thousands)
Amortizable intangible assets:
Core technology and patents	$	77,345	$	(76,172	)	$	1,173	$	77,345	$	(71,132	)	$	6,213
Developed technology	254,900		(152,850		)	102,050		241,100		(127,934		)	113,166
Customer relationships	4,900		(3,089		)	1,811		4,900		(2,197		)	2,703
Tradenames	8,439		(5,524		)	2,915		8,439		(5,179		)	3,260
Other	287		(229		)	58		837		(681		)	156
Total amortizable intangible assets	345,871		(237,864		)	108,007		332,621		(207,123		)	125,498
In-process research and development	—		—			—		13,800		—			13,800
Total intangible assets, net	$	345,871	$	(237,864	)	$	108,007	$	346,421	$	(207,123	)	$	139,298

Aggregated amortization expense for intangible assets for fiscal years 2014, 2013 and 2012, was approximately $31.3 million, $27.7 million and $30.6 million, respectively. Approximately $24.9 million, $21.8 million and $24.0 million of such amortization expense related to core technology and developed technology for fiscal years 2014, 2013 and 2012, respectively, and has been included in cost of sales within the consolidated statements of operations.

The following table presents the estimated aggregated future amortization expense of intangible assets as of the end of fiscal 2014 (in thousands):




2015	$	27,746
2016	26,603
2017	10,076
2018	6,678
2019	6,678
Thereafter	30,226
	$	108,007

- 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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