Note 7- Business Combination, Goodwill and Intangible Assets

12 Months Ended

Jan. 28, 2017

Notes to Financial Statements

Business Combination Disclosure [Text Block]

7.

            Business combination, Goodwill and Intangible Assets

Business Combination

In fiscal

2016,

we completed the acquisition of Bretelon, Inc. (“Bretelon”) for a purchase consideration of

$19.4

million. We recorded approximately

$11.1

million in goodwill,

$12.6

million in intangibles and assumed

$4.3

million in net liabilities. In fiscal

2017,

we recorded a

$0.5

million decrease in goodwill as part of the purchase price allocation adjustment

.

Goodwill

As of

January

28,

2017,

we had

$10.6

million in goodwill relating to the Bretelon acquisition. There were

no

goodwill impairments in fiscal

2017

and

2016.

We will continue to evaluate goodwill on an annual basis as of the last day of our fiscal year

and whenever events or changes in circumstances indicate the carrying value

may

not be recoverable.  

Intangible Assets

The table below presents the balances of our intangible assets (in thousands):

	January 28, 2017			January 30, 2016
Acquired intangible assets	$	88,910		$	88,910
Purchased IP		42,500			38,956
Total		131,410			127,866
Accumulated amortization		(100,666	)		(90,816	)
Intangible assets, net	$	30,744		$	37,050

Acquired intangible assets represent intangible assets acquired through business combinations. Purchased intellectual property (“Purchased IP”) represents intangible assets acquired through direct purchases of licensed technology from vendors, which is incorporated into our products.

Purchased IP not yet deployed relates to Purchased IP from

third

parties for our products that are currently in development. We begin amortizing such intellectual property upon the earlier of the beginning of the term of the license agreement, as appropriate, or at the time we begin shipment of the associated products into which such intellectual property is incorporated.

Impairment of intangible assets

We test long-lived assets, including purchased intangible assets, for impairment whenever events or changes in circumstances, such as a change in technology, indicate that the carrying value of these assets

may

not be recoverable.

During fiscal

2017,

we continued to streamline our operations to further align our operating expenses with our business, industry and revenue outlook. In connection with our continued efforts, we performed impairment reviews of our intangible assets by comparing undiscounted expected future cash flows with the carrying values of the underlying assets. The review during fiscal

2017

indicated that certain purchased IP licenses were impaired; as a result, we recorded impairment charges for purchased IP of

$0.8

million which was recorded in operating expenses in the accompanying consolidated statements of operations.

The review during fiscal

2016

and

2015

indicated certain purchased IP licenses incorporated into discontinued products primarily related to the Connected Smart TV Platforms market were impaired; as a result, we recorded impairment charges for purchased IP of

$0.4

million and

$0.7

million, respectively, which was recorded in operating expenses in the accompanying consolidated statements of operations.

Intangible assets, subject to amortization, were as follows (in thousands, except for years): 

	January 28, 2017
	Gross Value		Impairment			Accumulated Amortization and Effect of Currency Translation			Net Value		Weighted Average Remaining Amortization Period (Years)
Acquired intangible assets:
Developed technology	$	85,427	$	(24,614	)	$	(52,854	)	$	7,959		7.4
Customer relationships		54,505		(30,486	)		(20,897	)		3,122		5.8
Trademarks and other		4,078		-			(3,858	)		220		1.9
Purchased IP - amortizing		36,007		(5,516	)		(23,057	)		7,434		2.3
Total amortizing		180,017		(60,616	)		(100,666	)		18,735		5.0
Purchased IP - not yet deployed		16,449		(4,440	)		-			12,009
Total intangibles	$	196,466	$	(65,056	)	$	(100,666	)	$	30,744

	January 30, 2016
	Gross Value		Impairment			Accumulated Amortization and Effect of Currency Translation			Net Value		Weighted Average Remaining Amortization Period (Years)
Acquired intangible assets:
Developed technology	$	85,427	$	(24,614	)	$	(48,824	)	$	11,989		6.5
Customer relationships		54,505		(30,486	)		(19,557	)		4,462		5.7
Trademarks and other		4,078		-			(3,739	)		339		2.9
Purchased IP - amortizing		32,838		(5,516	)		(18,696	)		8,626		2.9
Total amortizing		176,848		(60,616	)		(90,816	)		25,416		5.1
Purchased IP - not yet deployed		15,774		(4,140	)		-			11,634
Total intangibles	$	192,622	$	(64,756	)	$	(90,816	)	$	37,050

The following table presents the amortization of intangible assets in the accompanying consolidated statements of operations (in thousands):

	Fiscal Years Ended
	January 28, 2017		January 30, 2016		January 31, 2015
Cost of revenue	$	7,267	$	7,586	$	7,922
Operating expenses		2,586		1,722		1,418
Total intangible amortization expense	$	9,853	$	9,308	$	9,340

As of

January

28,

2017,

we expect the amortization expense in future periods to be as follows (in thousands):

Fiscal years	Purchased IP- Amortizing		Developed Technology		Customer Relationships		Trademarks and other		Total
2018	$	3,513	$	1,544	$	543	$	120	$	5,720
2019		2,616		1,060		543		100		4,319
2020		1,230		1,060		543		-		2,833
2021		75		970		543		-		1,588
2022		-		700		543		-		1,243
Thereafter		-		2,625		407		-		3,032
Total	$	7,434	$	7,959	$	3,122	$	220	$	18,735