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Summary of Significant Accounting Policies | 12 Months Ended
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Sep. 25, 2021
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company’s fiscal year ends on the last Saturday in September. Fiscal 2021, 2020 and 2019 ended on September 25, 2021, September 26, 2020 and September 28, 2019, respectively. Fiscal 2021, 2020 and 2019 were 52-week years. Subsequent Events Consideration The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that may require additional disclosure. Subsequent events have been evaluated as required. There were no material recognized or unrecognized subsequent events, except as described below, recorded in the consolidated financial statements as of and for the year ended September 25, 2021. On September 27, 2021, the Company refinanced its term loan and revolving credit facility. For additional information, refer to Note 7. On October 14, 2021, the Company announced that it had entered into an agreement to acquire Bolder Surgical, Inc. ("Bolder Surgical") for a purchase price of approximately $160.0 million. The closing is subject to certain regulatory approvals, but the Company expects to close this acquisition by the end of calendar 2021. Bolder Surgical, located in Louisville, CO, is a developer and manufacturer of energy vessel sealing surgical devices in both laparoscopic and open procedures. Management’s Estimates and Uncertainties The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions by management affect the Company’s revenue recognition for multiple performance obligation arrangements, valuations, purchase price allocations and contingent consideration related to business combinations, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets and goodwill, estimated fair values of intangible assets and goodwill, amortization methods and periods, warranty reserves, certain accrued expenses, restructuring and other related charges, contingent liabilities, tax reserves, deferred tax rates and recoverability of the Company’s net deferred tax assets and related valuation allowances, and stock-based compensation. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including dependence on third-party reimbursements to support the markets of the Company’s products, early stage of development of certain products, rapid technological changes, recoverability of long-lived assets (including intangible assets and goodwill), competition, stability of world financial markets, ability to obtain regulatory approvals, changes in the regulatory environment, limited number of suppliers, customer concentration, integration of acquisitions, substantial indebtedness, government regulations, management of international activities, protection of proprietary rights, patent and other litigation, dependence on contract manufacturers and dependence on key individuals. Cash Equivalents Cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of three months or less at the time of acquisition. Concentrations of Credit Risk Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents, cost-method investments and trade accounts receivable. The Company invests its cash and cash equivalents with high credit quality financial institutions. The Company’s customers are principally located in the U.S., Europe and Asia. The Company performs ongoing credit evaluations of the financial condition of its customers and generally does not require collateral. Although the Company is directly affected by the overall financial condition of the healthcare industry, as well as global economic conditions, management does not believe significant credit risk exists as of September 25, 2021. The Company generally has not experienced any material losses related to receivables from individual customers or groups of customers in the healthcare industry. The Company maintains an allowance for doubtful accounts based on accounts past due and historical collection experience. There were no customers with a balance greater than 10% of accounts receivable as of September 25, 2021. There was one customer with a balance greater than 10% of accounts receivable as of September 26, 2020, at 11.9%. There were no customers that represented greater than 10% of consolidated revenues for fiscal years 2021, 2020 and 2019. Concentration of Suppliers The Company purchases certain components of its products from a single or small number of suppliers. A change in or loss of these suppliers could cause a delay in filling customer orders and a possible loss of sales, which could adversely affect results of operations. Supplemental Cash Flow Statement Information
|  | Years ended |  |
September 25, 2021 |  | September 26, 2020 |  | September 28, 2019 |  |
Cash paid during the period for income taxes |  | $ | 615.1 |  |  | $ | 265.9 |  |  | $ | 180.6 |  |  |
Cash paid during the period for interest |  | $ | 93.2 |  |  | $ | 109.5 |  |  | $ | 132.5 |  |  |
Non-Cash Financing Activities: |  |  |  |  |  |  |  |
Fair value of contingent consideration at acquisition |  | $ | — |  |  | $ | 82.7 |  |  | $ | — |  |  |
Inventories Inventories are valued at the lower of cost or market on a first in, first out basis. Work-in-process and finished goods inventories consist of materials, labor and manufacturing overhead. The valuation of inventory requires management to estimate excess and obsolete inventory. The Company employs a variety of methodologies to determine the net realizable value of its inventory. Provisions for excess and obsolete inventory are primarily based on management’s estimates of forecasted sales, usage levels and expiration dates, as applicable for certain disposable products. A significant change in the timing or level of demand for the Company’s products compared to forecasted amounts may result in recording additional charges for excess and obsolete inventory in the future. The Company records charges for excess and obsolete inventory within cost of product revenues. Inventories consisted of the following:
|  | September 25, 2021 |  | September 26, 2020
Raw materials |  | $ | 163.3 |  |  | $ | 152.3 |
Work-in-process |  | 53.0 |  |  | 46.5 |
Finished goods |  | 284.9 |  |  | 196.3 |
|  | $ | 501.2 |  |  | $ | 395.1 |
Property, Plant and Equipment Property, plant and equipment is recorded at cost less allowances for depreciation and impairments. The straight-line method of depreciation is used for all property and equipment. Property, plant and equipment consisted of the following:
| Estimated Useful Life |  | September 25, 2021 |  | September 26, 2020
Equipment | 3–10 years |  | $ | 467.1 |  |  | $ | 460.7 |
Equipment under customer usage agreements | 3–8 years |  | 484.6 |  |  | 456.8 |
Buildings and improvements | 20–35 years |  | 191.2 |  |  | 167.3 |
Leasehold improvements | Shorter of the Original Term of Lease or Estimated Useful Life |  | 49.7 |  |  | 44.3 |
Land |  |  | 41.3 |  |  | 40.7 |
Furniture and fixtures | 5–7 years |  | 16.8 |  |  | 16.1 |
Finance lease right-of-use asset |  |  | 9.9 |  |  | — |
|  |  | 1,260.6 |  |  | 1,185.9 |
Less - accumulated depreciation and amortization |  |  | (695.9) |  |  | (694.4) |
|  |  | $ | 564.7 |  |  | $ | 491.5 |
Equipment under customer usage agreements primarily consists of diagnostic instrumentation and imaging equipment located at customer sites but owned by the Company. Generally, the customer has the right to use the equipment for a period of time provided they meet certain agreed to conditions. The Company recovers the cost of providing the equipment from the sale of disposables, primarily assays, tests and handpieces. The depreciation costs associated with equipment under customer usage agreements are charged to cost of product revenues over the estimated useful life of the equipment. The costs to maintain the equipment in the field are charged to cost of product revenue as incurred. In September 2020 and October 2020, the Company was awarded grants of $7.6 million and $119.3 million, respectively, from the Department of Defense Joint Acquisition Task Force ("DOD") to expand production capacity for the Company's two SARS-CoV-2 assays. These grants are specifically to fund the capital equipment and labor investments needed to increase manufacturing capacity to enable the Company to provide a certain amount of COVID-19 tests per month for the U.S. market. The Company is accounting for the funds received under these grants as a reimbursement of the purchased capital equipment. The Company procures and pays for the capital equipment and necessary resources to build out its facility and construct the manufacturing lines to meet the requirements specified in the grant agreement. Subsequent to paying for the capital equipment, the DOD will reimburse the Company upon it meeting certain requirements However, the DOD retains title to assets purchased under the agreement, and title is transferred to the Company upon meeting certain milestones of the manufacturing efforts. As of September 25, 2021, the Company had $95.2 million of capital equipment related to the DOD grant that was awaiting approval. In fiscal 2021, the Company received $21.2 million from the DOD under these grants which has been recorded as a reduction of the cost basis of the purchased equipment. Payments under these grants are subject to satisfaction of the conditions of the grants. Long-Lived Assets The Company reviews its long-lived assets, which includes property, plant and equipment and identifiable intangible assets (see below for discussion of intangible assets), for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10-35-15, Property, Plant and Equipment—Impairment or Disposal of Long-Lived Assets (ASC 360). Recoverability of these assets is evaluated by comparing the carrying value of the assets to the undiscounted cash flows estimated to be generated by those assets over their remaining economic life. If the undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are considered impaired. The impairment loss is measured by comparing the fair value of the assets to their carrying value. Fair value is determined by either a quoted market price, if any, or a value determined by a discounted cash flow technique. Business Combinations and Acquisition of Intangible Assets The Company accounts for the acquisition of a business in accordance with ASC 805, Business Combinations (ASC 805). Amounts paid to acquire a business are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. Contingent consideration not deemed to be linked to continuing employment is recorded at fair value as measured on the date of acquisition. The value recorded is based on estimates of future financial projections under various potential scenarios using a Monte Carlo simulation. These cash flow projections are discounted with an appropriate risk adjusted rate. Each quarter until such contingent amounts are earned, the fair value of the liability is remeasured at each reporting period and adjusted as a component of operating expenses based on changes to the underlying assumptions. The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment and actual results are likely to differ from the amounts originally recorded. The Company determines the fair value of acquired intangible assets based on detailed valuations that use certain information and assumptions provided by management. The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired to goodwill. The Company uses the income approach to determine the fair value of developed technology and in-process research and development ("IPR&D") acquired in a business combination. This approach determines fair value by estimating the after-tax cash flows attributable to the respective asset over its useful life and then discounting these after-tax cash flows back to a present value. The Company bases its revenue assumptions on estimates of relevant market sizes, expected market growth rates, expected trends in technology and expected product introductions by competitors. Developed technology represents patented and unpatented technology and know-how. The value of the in-process projects is based on the project's stage of completion, the complexity of the work completed as of the acquisition date, the projected costs to complete, the contribution of core technologies and other acquired assets, the expected introduction date, the estimated cash flows to be generated upon commercial release and the estimated useful life of the technology. The Company believes that the estimated developed technology and IPR&D amounts represent the fair value at the date of acquisition and do not exceed the amount a third-party would pay for the assets. The significant assumptions used to estimate the fair value of intangible assets include discount rates and certain assumptions that form the basis of the forecasted results specifically revenue growth rates. These significant assumptions are forward looking and could be affected by future economic and market conditions. The Company also uses the income approach, as described above, to determine the estimated fair value of certain other identifiable intangible assets including customer relationships, trade names and business licenses. Customer relationships represent established relationships with customers, which provide a ready channel for the sale of additional products and services. Trade names represent acquired company and product names. Intangible Assets and Goodwill Intangible Assets Intangible assets are initially recorded at fair value and stated net of accumulated amortization and impairments. The Company amortizes its intangible assets that have finite lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. Amortization is recorded over the estimated useful lives ranging from 2 to 30 years. The Company evaluates the recoverability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to ASC 820, Fair Value Measurements. Indefinite lived intangible assets, such as IPR&D assets, are required to be tested for impairment annually, or more frequently if indicators of impairment are present. The Company’s annual impairment test date is as of the first day of its fourth quarter. Intangible assets consisted of the following:
|  | September 25, 2021 |  | September 26, 2020
Description |  | Gross Carrying Value |  | Accumulated Amortization |  | Gross Carrying Value |  | Accumulated Amortization
Acquired intangible assets: |  |  |  |  |  |  |  |
Developed technology |  | $ | 4,597.7 |  |  | $ | 3,184.2 |  |  | $ | 4,054.0 |  |  | $ | 2,907.2 |
In-process research and development |  | 71.6 |  |  | — |  |  | — |  |  | — |
Customer relationships |  | 591.7 |  |  | 510.1 |  |  | 549.1 |  |  | 477.8 |
Trade names |  | 268.1 |  |  | 191.8 |  |  | 245.5 |  |  | 181.2 |
Non-competition agreements |  | 1.5 |  |  | 1.5 |  |  | 1.5 |  |  | 1.3 |
Business licenses |  | 2.5 |  |  | 2.5 |  |  | 2.4 |  |  | 2.3 |
Total acquired intangible assets |  | $ | 5,533.1 |  |  | $ | 3,890.1 |  |  | $ | 4,852.5 |  |  | $ | 3,569.8 |
Internal-use software |  | 23.5 |  |  | 17.2 |  |  | 51.8 |  |  | 43.2 |
Capitalized software embedded in products |  | 25.5 |  |  | 15.6 |  |  | 26.8 |  |  | 10.6 |
Total intangible assets |  | $ | 5,582.1 |  |  | $ | 3,922.9 |  |  | $ | 4,931.1 |  |  | $ | 3,623.6 |
Medical Aesthetics Impairment In the first quarter of fiscal 2020, the Company's Medical Aesthetics business met the criteria to be designated as assets held-for-sale. As a result, the Company recorded a $30.2 million charge to record the asset group at fair value less costs to sell. See Note 15 for additional information. During fiscal 2019, the Company identified indicators of impairment for its Medical Aesthetics reporting unit as a result of reductions in forecasts during the year, and in connection with the Company’s efforts to sell the business that began prior to the end of fiscal 2019. In performing the undiscounted cash flow analysis pursuant to ASC 360, the expected undiscounted cash flows of the asset group were determined using a probability-weighted approach taking into consideration the planned disposition, which was deemed to be highly probable as of the balance sheet date. Based on this analysis, the undiscounted cash flows were not sufficient to recover the carrying value of the asset group. As a result, the Company was required to perform Step 3 of the impairment test and determine the fair value of the asset group. The Company executed a definitive agreement on November 20, 2019 to sell the business. Although this agreement was signed subsequent to the balance sheet date, the Company concluded that it provided evidence regarding the estimate of fair value of the asset group at September 28, 2019 and that there were no events that occurred between September 28, 2019 and the date the Company entered into the definitive agreement that would significantly affect the fair value of the asset group. As a result, the Company recorded total impairment charges of $685.4 million in fiscal 2019. The impairment charge was allocated to the long-lived assets as follows: $576.9 million to developed technology, $22.4 million to customer relationships, $48.6 million to trade names, $27.7 million to distribution agreements and $9.8 million to equipment. On November 20, 2019, this asset group met the assets held-for-sale criteria and was recorded at fair value less the costs to sell as noted above. Other Activity During the third quarter of fiscal 2021, the Company acquired Mobidiag Oy and recorded $285.0 million of developed technology, $74.0 million of in-process research and development, $20.9 million of customer relationships and $20.0 million of trade names based on its preliminary purchase accounting. During the second quarter of fiscal 2021, the Company acquired Biotheranostics, Inc. and recorded $160.3 million of developed technology and $2.1 million of trade names based on its preliminary purchase accounting. During the second quarter of fiscal 2021, the Company acquired Diagenode SA and recorded $69.8 million of developed technology and $9.2 million of customer relationships based on its preliminary purchase accounting. During the second quarter of fiscal 2021, the Company acquired Somatex Medical Technologies GmbH and recorded $38.0 million of developed technology, $1.2 million of customer relationships and $0.9 million of trade names based on its preliminary purchase accounting. During the fourth quarter of fiscal 2020, the Company acquired Acessa Health, Inc. and recorded $127.0 million of developed technology and $1.2 million of trade names. Amortization expense related to developed technology is classified as cost of product revenues—amortization of intangible assets. Amortization expense related to customer relationships, contracts, trade names, and business licenses is classified as a component of amortization of intangible assets within operating expenses. The estimated amortization expense at September 25, 2021 for each of the five succeeding fiscal years was as follows:
Fiscal 2022 | $ | 326.5 |
Fiscal 2023 | $ | 231.3 |
Fiscal 2024 | $ | 222.3 |
Fiscal 2025 | $ | 208.9 |
Fiscal 2026 | $ | 178.1 |
Goodwill In accordance with ASC 350, Intangibles—Goodwill and Other (ASC 350), the Company tests goodwill for impairment annually at the reporting unit level and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Events that could indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, including a decline in market capitalization, a significant adverse change in legal factors, business climate, operational performance of the business or key personnel, and an adverse action or assessment by a regulator. In performing the impairment test, the Company utilizes the single-step approach prescribed under Accounting Standards Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). This approach requires a comparison of the carrying value of each reporting unit to its estimated fair value and to the extent the carrying value exceeds the fair value a charge is recorded up to the amount of goodwill in the reporting unit. To estimate the fair value of its reporting units, the Company primarily utilizes the income approach. The income approach is based on a DCF analysis and calculates the fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to present value using a risk-adjusted discount rate. Assumptions used in the DCF require significant judgment, including judgment about appropriate discount rates and terminal values, growth rates, and the amount and timing of expected future cash flows. The forecasted cash flows are based on the Company’s most recent budget and strategic plan and for years beyond this period, the Company’s estimates are based on assumed growth rates expected as of the measurement date. The Company believes its assumptions are consistent with the plans and estimates used to manage the underlying businesses. The discount rates used are intended to reflect the risks inherent in future cash flow projections and are based on estimates of the weighted-average cost of capital (“WACC”) of market participants relative to each respective reporting unit. The market approach considers comparable market data based on multiples of revenue or earnings before interest, taxes, depreciation and amortization (“EBITDA”) and is primarily used as a corroborative analysis to the results of the DCF analysis. The Company believes its assumptions used to determine the fair value of its reporting units are reasonable. If different assumptions were used, particularly with respect to forecasted cash flows, terminal values, WACCs, or market multiples, different estimates of fair value may result and there could be the potential that an impairment charge could result. Actual operating results and the related cash flows of the reporting units could differ from the estimated operating results and related cash flows. The Company conducted its fiscal 2021 impairment test for its reporting units on the first day of the fourth quarter, and as noted above used DCF and market approaches to estimate the fair value of its reporting units as of June 27, 2021, and ultimately used the fair value determined by the DCF approach in making its impairment test conclusions. The Company believes it used reasonable estimates and assumptions about future revenue, cost projections, cash flows, market multiples and discount rates as of the measurement date. As a result of completing this analysis, all of the Company's reporting units had fair values exceeding their carrying values. At September 25, 2021, the Company believes that its reporting units, with goodwill aggregating $3.3 billion, were not at risk of failing the goodwill impairment test based on its current forecasts and qualitative assessment. The Company conducted its fiscal 2020 impairment test for its reporting units on the first day of the fourth quarter, and as noted above used DCF and market approaches to estimate the fair value of its reporting units as of June 28, 2020, and ultimately used the fair value determined by the DCF approach in making its impairment test conclusions. The Company believes it used reasonable estimates and assumptions about future revenue, cost projections, cash flows, market multiples and discount rates as of the measurement date. As a result of completing this analysis, all of the Company's reporting units had fair values exceeding their carrying values. For illustrative purposes, had the fair value of each of the reporting units been lower by 10%, all of the reporting units would still have passed the goodwill impairment test. A rollforward of goodwill activity by reportable segment from September 26, 2020 to September 25, 2021 is as follows:
| Diagnostics |  | Breast Health |  | GYN Surgical |  | Skeletal Health |  | Total
Balance at September 26, 2020 | $ | 821.6 |  |  | $ | 764.8 |  |  | $ | 1,063.4 |  |  | $ | 8.1 |  |  | $ | 2,657.9 |
Mobidiag acquisition | 432.6 |  |  | — |  |  | — |  |  | — |  |  | 432.6 |
Diagenode acquisition | 83.5 |  |  | — |  |  | — |  |  | — |  |  | 83.5 |
Biotheranostics acquisition | 80.9 |  |  | — |  |  | — |  |  | — |  |  | 80.9 |
Somatex acquisition | — |  |  | 32.4 |  |  | — |  |  | — |  |  | 32.4 |
Foreign currency and other adjustments | (7.8) |  |  | (0.1) |  |  | 2.2 |  |  | — |  |  | (5.7) |
Balance at September 25, 2021 | $ | 1,410.8 |  |  | $ | 797.1 |  |  | $ | 1,065.6 |  |  | $ | 8.1 |  |  | $ | 3,281.6 |
Other Assets Other assets consisted of the following:
|  | September 25, 2021 |  | September 26, 2020
Other Assets |  |  |  |
Tax receivable |  | $ | 24.7 |  |  | $ | 325.7 |
Right of use assets |  | 83.6 |  |  | 80.7 |
Life insurance contracts |  | 64.3 |  |  | 49.3 |
Deferred tax assets |  | 21.9 |  |  | 15.5 |
Cost-method equity investments |  | 9.5 |  |  | 11.4 |
Other |  | 41.7 |  |  | 34.0 |
|  | $ | 245.7 |  |  | $ | 516.6 |
The tax receivable in fiscal 2020 primarily related to a discrete tax benefit from the sale of Cynosure in the second quarter of fiscal 2020. This receivable was reclassified to a current asset in fiscal 2021 as the Company filed the carryback claim and expects to receive the refund within the next twelve months, subject to Internal Revenue Service processing times. The right of use assets were recorded in connection with the adoption of ASC 842, Leases, and pertains to operating leases. Life insurance contracts were purchased in connection with the Company’s Nonqualified Deferred Compensation Plan (“DCP”) and are recorded at their cash surrender value (see Note 12 for further discussion). Research and Software Development Costs Costs incurred for the research and development of the Company’s products are expensed as incurred. Nonrefundable advance payments for goods or services to be received in the future by the Company for use in research and development activities are deferred. The deferred costs are expensed as the related goods are delivered or the services are performed. The Company accounts for the development costs of software embedded in the Company’s products in accordance with ASC 985, Software. Costs incurred in the research, design and development of software embedded in products to be sold to customers are charged to expense until technological feasibility of the ultimate product to be sold is established. The Company’s policy is that technological feasibility is achieved when a working model, with the key features and functions of the product, is available for customer testing. Software development costs incurred after the establishment of technological feasibility and until the product is available for general release are capitalized, provided recoverability is reasonably assured. Capitalized software development costs are amortized over their estimated useful life and recorded within cost of revenues - product. Foreign Currency Translation The financial statements of the Company’s foreign subsidiaries are translated in accordance with ASC 830, Foreign Currency Matters. The reporting currency for the Company is the U.S. dollar. The functional currency of the Company’s foreign subsidiaries is determined based on the guidance in ASC 830. The majority of the Company's foreign subsidiaries' functional currency is the applicable local currency, although certain of the Company's foreign subsidiaries' functional currency is the U.S. dollar based on the nature of their operations or functions. Assets and liabilities of subsidiaries whose functional currency is the local currency are translated at the exchange rate in effect at each balance sheet date. Before translation, the Company re-measures foreign currency denominated assets and liabilities, including inter-company accounts receivable and payable, into the functional currency of the respective entity, resulting in unrealized gains or losses recorded in other income (expense), net in the Consolidated Statements of Operations. Revenues and expenses are translated using average exchange rates during the respective period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income (loss), which is a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are included in other income (expense), net in the Consolidated Statements of Operations and were not significant in any of the reporting periods presented. Accumulated Other Comprehensive Income (Loss) Other comprehensive income (loss) includes certain transactions that have generally been reported in the statement of stockholders’ equity. The following tables summarize the components and changes in accumulated balances of other comprehensive loss for the periods presented:
| Year Ended September 25, 2021 |  | Year Ended September 26, 2020
| Foreign Currency Translation |  | Pension Plans |  | Hedged Interest Rate Caps |  | Hedged Interest Rate Swaps |  | Total |  | Foreign Currency Translation |  | Pension Plans |  | Hedged Interest Rate Caps |  | Hedged Interest Rate Swaps |  | Total
Beginning Balance | $ | (22.9) |  |  | $ | (1.8) |  |  | $ | (0.9) |  |  | $ | (24.1) |  |  | $ | (49.7) |  |  | $ | (41.4) |  |  | $ | (1.7) |  |  | $ | (2.7) |  |  | $ | 3.5 |  |  | $ | (42.3) |
Other comprehensive income (loss) before reclassifications | (20.2) |  |  | 0.5 |  |  | 0.4 |  |  | 9.4 |  |  | (9.9) |  |  | 18.5 |  |  | (0.1) |  |  | (0.5) |  |  | (27.6) |  |  | (9.7) |
Charges (gains) reclassified to statement of operations | — |  |  | — |  |  | 0.5 |  |  | — |  |  | 0.5 |  |  | — |  |  | — |  |  | 2.3 |  |  | — |  |  | 2.3 |
Ending Balance | $ | (43.1) |  |  | $ | (1.3) |  |  | $ | — |  |  | $ | (14.7) |  |  | $ | (59.1) |  |  | $ | (22.9) |  |  | $ | (1.8) |  |  | $ | (0.9) |  |  | $ | (24.1) |  |  | $ | (49.7) |
Derivatives Interest Rate Cap - Cash Flow Hedge The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposure to some of its interest rate risk through the use of interest rate caps, which are derivative financial instruments. The Company does not use derivatives for speculative purposes. For a derivative that is designated as a cash flow hedge, changes in the fair value of the derivative are recognized in accumulated other comprehensive income ("AOCI") to the extent the derivative is effective at offsetting the changes in the cash flows being hedged until the hedged item affects earnings. To the extent there is any hedge ineffectiveness, changes in fair value relating to the ineffective portion are immediately recognized in earnings in other income (expense), net in the Consolidated Statements of Operations. During fiscal 2018, the Company entered into separate interest rate cap agreements with multiple counter-parties to mitigate the interest rate volatility associated with the variable interest rate on its amounts borrowed under the term loan feature of its credit facilities (see Note 7). Interest rate cap agreements provide the right to receive cash if the reference interest rate rises above a contractual rate. The aggregate premium paid for these interest rate cap agreements was $3.7 million, which was the initial fair value of the instruments recorded in the Company's financial statements. During fiscal 2019, the Company entered into additional separate interest rate cap agreements with multiple counter-parties to extend the expiration date of its hedges by an additional year. The aggregate premium paid for these interest cap agreements was $1.5 million, which was the initial fair value of the instruments recorded in the Company’s financial statements. The critical terms of the interest rate caps were designed to mirror the terms of the Company’s LIBOR-based borrowings under its Credit Agreement, that has been amended multiple times, and therefore are highly effective at offsetting the cash flows being hedged. The Company designated these derivatives as cash flow hedges of the variability of the LIBOR-based interest payments on $1.0 billion of principal, which ended on December 27, 2019 (the first quarter of fiscal 2020) for the contracts entered into in fiscal 2018, and on December 23, 2020 (the first quarter of fiscal 2021) for the interest rate cap agreements entered into in fiscal 2019. During fiscal 2021, 2020 and 2019, interest expense of $0.5 million, $2.3 million and $3.1 million, respectively, was reclassified from AOCI to the Company's Consolidated Statements of Operations related to the interest rate cap agreements. The last interest rate cap agreement matured as of December 26, 2020. Interest Rate Swap - Cash Flow Hedge In fiscal 2019, in order to hedge a portion of its variable rate debt beyond the contracted period under interest cap agreements, the Company entered into an interest rate swap contract with an effective date of December 23, 2020 and a termination date of December 17, 2023. The notional amount of this swap is $1.0 billion. The interest rate swap effectively fixes the LIBOR component of the variable interest rate on $1.0 billion of the notional amount under the 2018 Credit Agreement at 1.23%. The critical terms of the interest rate swap are designed to mirror the terms of the Company’s LIBOR-based borrowings under its credit agreement and therefore are highly effective at offsetting the cash flows being hedged. The Company designated this derivative as a cash flow hedge of the variability of the LIBOR-based interest payments on $1.0 billion of principal. Therefore, changes in the fair value of the swap are recorded in AOCI and net of taxes were a gain of $9.4 million, a loss of $27.6 million and a gain of $3.5 million for fiscal years 2021, 2020, and 2019, respectively. The fair value of this derivative was in a liability position of $18.7 million as of September 25, 2021. Forward Foreign Currency Contracts and Foreign Currency Option Contracts The Company enters into forward foreign currency exchange contracts and foreign currency option contracts to mitigate certain operational exposures from the impact of changes in foreign currency exchange rates. Such exposures result from the portion of the Company's cash and operations that are denominated in currencies other than the U.S. dollar, primarily the Euro, the UK Pound, the Australian dollar, the Canadian dollar, the Chinese Yuan and the Japanese Yen. These foreign currency exchange contracts are entered into to support transactions made in the ordinary course of business and are not speculative in nature. The contracts are generally for periods of one year or less. The Company did not elect hedge accounting for these contracts; however, the Company may seek to apply hedge accounting in future scenarios. The change in the fair value of these contracts is recognized directly in earnings as a component of other income, net.
| Years Ended
| September 25, 2021 |  | September 26, 2020 |  | September 28, 2019
Amount of realized (loss) gain recognized in income |  |  |  |  |
Forward foreign currency contracts | $ | (3.6) |  |  | $ | 0.7 |  |  | $ | 11.0 |
Foreign currency option contracts | (6.1) |  |  | (1.9) |  |  | — |
| $ | (9.7) |  |  | $ | (1.2) |  |  | $ | 11.0 |
Amount of unrealized (loss) gain recognized in income |  |  |  |  |
Forward foreign currency contracts | $ | 0.5 |  |  | $ | (0.2) |  |  | $ | (2.2) |
Foreign currency option contracts | (4.0) |  |  | 4.0 |  |  | 0.1 |
| $ | (3.5) |  |  | $ | 3.8 |  |  | $ | (2.1) |
Amount of gain (loss) recognized in income |  |  |  |  |
Total | $ | (13.2) |  |  | $ | 2.6 |  |  | $ | 8.9 |
As of September 25, 2021, the Company had outstanding forward foreign currency contracts that were not designated for hedge accounting and are used to hedge fluctuations in the U.S dollar of certain of the Company's cash balances denominated in the Euro and UK pound, as well as forecasted transactions denominated in the Euro, UK pound, Australian Dollar, Canadian Dollar, Chinese Yuan and Japanese Yen with an aggregate notional amount of $861.5 million. Financial Instrument Presentation The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the balance sheet as of September 25, 2021:
| Balance Sheet Location |  | September 25, 2021 |  | September 26, 2020
Assets: |  |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Forward foreign currency contracts | Prepaid expenses and other current assets |  | $ | 1.7 |  |  | $ | 1.1 |
Foreign currency option contracts | Prepaid expenses and other current assets |  | — |  |  | 10.1 |
|  |  | $ | 1.7 |  |  | $ | 11.2 |
Liabilities: |  |  |  |  |
Derivative instruments designated as a cash flow hedge: |  |  |  |  |
Interest rate swap contract | Accrued expenses |  | $ | 11.1 |  |  | $ | 8.2 |
Interest rate swap contract | Other long-term liabilities |  | 7.6 |  |  | 23.0 |
Total |  |  | $ | 18.7 |  |  | $ | 31.2 |
Derivatives not designated as hedging instruments: |  |  |  |  |
Forward foreign currency contracts | Accrued expenses |  | $ | 0.6 |  |  | $ | — |
The following table presents the unrealized gain (loss) recognized in AOCI related to the interest rate caps and interest rate swap for the following reporting periods:
| Years Ended
| September 25, 2021 |  | September 26, 2020 |  | September 28, 2019
Amount of gain (loss) recognized in other comprehensive income (loss), net of taxes: |  |  |  |  |
Interest rate swap | $ | 9.4 |  |  | $ | (27.6) |  |  | $ | 3.5 |
Interest rate cap agreements | 0.4 |  |  | (0.5) |  |  | (8.0) |
Total | $ | 9.8 |  |  | $ | (28.1) |  |  | $ | (4.5) |
Trade Receivables and Allowance for Credit Losses Effective September 27, 2020, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The expected credit losses are developed using an estimated loss rate method that considers historical collection experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The estimated loss rates are applied to trade receivables with similar risk characteristics such as the length of time the balance has been outstanding and the location of the customer. In certain instances, the Company may identify individual trade receivable assets that do not share risk characteristics with other trade receivables, in which case the Company records its expected credit losses on an individual asset basis. For example, potential adverse changes to customer liquidity from new macroeconomic events, such as the COVID-19 pandemic, must be taken into consideration. To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability concerns as a result of the COVID-19 pandemic. In connection with assessing credit losses for individual trade receivable assets, the Company considers significant factors relevant to collectability including those specific to the customer such as bankruptcy, length of time an account is outstanding, and the liquidity and financial position of the customer. If a trade receivable asset is evaluated on an individual basis, the Company excludes those assets from the portfolios of trade receivables evaluated on a collective basis. The following is a rollforward of the allowance for credit losses for fiscal 2021, 2020 and 2019:
|  | Balance at Beginning of Period |  | Charged to Costs and Expenses |  | Divested |  | Write- offs and Payments |  | Balance at End of Period
Period Ended: |  |  |  |  |  |  |  |  |  |
September 25, 2021 |  | $ | 31.6 |  |  | $ | 15.0 |  |  | $ | — |  |  | $ | (6.1) |  |  | $ | 40.5 |
September 26, 2020 |  | $ | 17.8 |  |  | $ | 26.8 |  |  | $ | (5.8) |  |  | $ | (7.2) |  |  | $ | 31.6 |
September 28, 2019 |  | $ | 16.2 |  |  | $ | 4.4 |  |  | $ | — |  |  | $ | (2.8) |  |  | $ | 17.8 |
Cost of Service and Other Revenues Cost of service and other revenues primarily represents payroll and related costs associated with the Company’s professional services, employees, consultants, infrastructure costs and overhead allocations, including depreciation, rent and materials consumed in providing the service. Stock-Based Compensation The Company accounts for share-based payments in accordance with ASC 718, Stock Compensation (ASC 718). As such, all share-based payments to employees, including grants of stock options, restricted stock units, performance stock units and market stock units and shares issued under the Company’s employee stock purchase plan, are recognized in the Consolidated Statements of Operations based on their fair values on the date of grant. In addition, all excess tax benefits and deficiencies are recognized as a component of the provision for income taxes on a discrete basis in the period in which the equity awards vest and/or are settled. Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted net income per share is computed by dividing net income by the weighted average number of common shares and the dilutive effect of potential future issuances of common stock from outstanding stock options and restricted stock units for the period outstanding determined by applying the treasury stock method. In accordance with ASC 718, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of in-the-money stock options and restricted stock units. This results in the assumed buyback of additional shares, thereby reducing the dilutive impact of equity awards. A reconciliation of basic and diluted share amounts for fiscal 2021, 2020, and 2019 was as follows:
|  | September 25, 2021 |  | September 26, 2020 |  | September 28, 2019
Basic weighted average common shares outstanding |  | 257,046 |  |  | 262,727 |  |  | 269,413 |
Weighted average common stock equivalents from assumed exercise of stock options and restricted stock units |  | 2,660 |  |  | 1,886 |  |  | — |
Diluted weighted average common shares outstanding |  | 259,706 |  |  | 264,613 |  |  | 269,413 |
Weighted-average anti-dilutive shares related to: |  |  |  |  |  |
Outstanding stock options and restricted stock units |  | 528 |  |  | 1,158 |  |  | 4,098 |
In those reporting periods in which the Company has reported net income, anti-dilutive shares generally are comprised of those stock options that either have an exercise price above the average stock price for the period or the stock options’ combined exercise price and average unrecognized stock compensation expense upon exercise is greater than the average stock price. In those reporting periods in which the Company has a net loss, anti-dilutive shares are comprised of the impact of those number of shares that would have been dilutive had the Company had net income plus the number of common stock equivalents that would be anti-dilutive had the company had net income. Product Warranties The Company generally offers a one-year warranty for its products. The Company provides for the estimated cost of product warranties at the time product revenue is recognized. Factors that affect the Company’s warranty reserves include the number of units sold, historical and anticipated rates of warranty repairs and the cost per repair. The Company periodically assesses the adequacy of the warranty reserve and adjusts the amount as necessary. Product warranty activity for fiscal 2021 and 2020 was as follows:
|  | Balance at Beginning of Period |  |  |  | Provisions |  | Acquired |  | Divested |  | Settlements/ Adjustments |  | Balance at End of Period
Period ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |
September 25, 2021 |  | $ | 9.9 |  |  |  |  | $ | 7.7 |  |  | $ | 0.3 |  |  | $ | — |  |  | $ | (9.1) |  |  | $ | 8.8 |
September 26, 2020 |  | $ | 13.9 |  |  |  |  | $ | 11.7 |  |  | $ | 0.5 |  |  | $ | (6.1) |  |  | $ | (10.1) |  |  | $ | 9.9 |
Advertising Costs Advertising costs are charged to operations as incurred. The Company does not have any direct-response advertising. Advertising costs, which include trade shows and conventions, were approximately $9.8 million, $15.6 million and $29.5 million for fiscal 2021, 2020 and 2019, respectively, and were included in selling and marketing expense in the Consolidated Statements of Operations. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) and subsequently a number of improvements. The guidance requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. The Company adopted the standard in the first quarter of fiscal 2021. The adoption of ASU 2016-13 did not have a material effect on the Company's consolidated financial statements. In November 2019, the FASB issued ASU No. 2019-08, Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). This ASU identifies, evaluates, and improves areas of GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided. The amendments in this Update expanded the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The Company adopted the standard in the first quarter of fiscal 2021. The adoption of ASU 2019-08 did not have a material effect on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The FASB issued this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and is applicable to the Company in fiscal 2022. The Company is currently evaluating the impact of the adoption of ASU 2019-12 on its consolidated financial position and results of operations. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The FASB issued this Update to clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the guidance in Topic 815. This update could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with Topic 825, Financial Instruments. For entities that have adopted the amendments in Update 2020-01, the updated guidance is effective for annual periods beginning after December 15, 2020, and is applicable to the Company in fiscal 2022. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2020-01 on its consolidated financial position and results of operations. In January 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848). The FASB issued this Update as optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. This update will provide optional expedients and exceptions for applying GAAP to only contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. For entities that have adopted the amendments in Update 2020-04, the updated guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of the adoption of ASU 2020-04 on its consolidated financial position and results of operations. In May 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842), Lessors - Certain Leases with Variable Lease Payments. This ASU addresses an issue related to a lessor's accounting for certain leases with variable lease payments. The amendments in this Update affect lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as a sales-type lease or a direct financing lease. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, and is applicable to the Company in fiscal 2023. The Company is currently evaluating the impact of the adoption of ASU 2021-05 on its consolidated financial position and results of operations.

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