Equity Method Investment

3 Months Ended

Apr. 01, 2017

Equity Method Investments and Joint Ventures [Abstract]

In the first and third quarters of fiscal 2015, we purchased a preferred stock ownership interest in a privately-held company that designs human-computer interaction technology for total consideration of $3.0 million. This investment accounted for a 15.8% ownership interest by the end of the third quarter of fiscal 2015 and was accounted for under the cost method as we did not have the ability to exert significant influence over the investee.

In the fourth quarter of fiscal 2015, we increased our ownership interest to 22.7% by making an additional investment of $2.0 million. This increased our gross investment in the investee to $5.0 million. As a result of the change in ownership interest and after considering the changes in the level of our participation in the management of and interaction with the investee, we determined that we have the ability to exert significant influence over the investee. Accordingly, we changed our accounting for the investment from the cost method to the equity method and have hence recognized our proportionate share of the investee’s operating results in the Consolidated Statements of Operations.

In the third quarter of fiscal 2016, we made an additional investment of $1.0 million via a convertible debt instrument, bringing our gross investment in the investee to $6.0 million. We have determined that this additional investment is an in-substance common stock and has been included in our equity method accounting.

Applying the equity method, the proportionate share of the investee's net loss that we have recognized in the Consolidated Statements of Operations for the first quarter of fiscal 2017 and fiscal 2016 was as follows:



	Three Months Ended
(In thousands)	April 1, 2017			April 2, 2016
Equity in net loss of an unconsolidated affiliate, net of tax	$	(339	)	$	(310	)

Through April 1, 2017, we have reduced the value of our investment by approximately $2.3 million, representing our cumulative proportionate share of the privately-held company’s net loss accumulated to that date. The net balance of our investment included in other long-term assets in the Consolidated Balance Sheets is detailed in the following table:



(In thousands)	Total
Balance at December 31, 2016	4,049
Equity in net loss of an unconsolidated affiliate, net of tax	(339		)
Balance at April 1, 2017	$	3,710