Intangible Assets and Goodwill

9 Months Ended

Jul. 01, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets consisted of the following:


Description	As of July 1, 2023				As of September 24, 2022
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Acquired intangible assets:
Developed technology	$	4,438.1	$	3,626.2	$	4,565.6	$	3,458.2
In-process research and development	26.5		—		33.0		—
Customer relationships	595.9		549.3		601.9		535.6
Trade names	255.1		211.9		265.2		203.3



Total acquired intangible assets	$	5,315.6	$	4,387.4	$	5,465.7	$	4,197.1

Internal-use software	29.2		22.2		26.0		19.9
Capitalized software embedded in products	27.1		22.2		26.5		20.6
Total intangible assets	$	5,371.9	$	4,431.8	$	5,518.2	$	4,237.6

The estimated remaining amortization expense of the Company’s acquired intangible assets as of July 1, 2023 for each of the five succeeding fiscal years was as follows:


Remainder of Fiscal 2023	$	52.0
Fiscal 2024	$	201.9
Fiscal 2025	$	188.4
Fiscal 2026	$	157.8
Fiscal 2027	$	70.8

Impairment

During the third quarter of fiscal 2023, in connection with its company-wide annual budgeting and strategic planning process as well as evaluating the current operating performance of its Mobidiag business, including product design and manufacturing requirements, the Company reassessed its short-term and long-term commercial plans for this business. The Company made certain operational and strategic decisions to invest and focus more on the long-term success of this business, which resulted in the Company significantly reducing its forecasted revenues and operating results.

As a result, the Company determined indicators of impairment existed and performed an undiscounted cash flow analysis pursuant to ASC 360, Property, Plant, and Equipment - Overall, to determine if the cash flows expected to be generated by the Mobidiag business over the estimated remaining useful life of its primary asset were sufficient to recover the carrying value of the asset group. Based on this analysis the undiscounted cash flows were not sufficient to recover the carrying value of the long-lived assets. As a result, the Company was required to perform Step 3 of the impairment test and determine the fair value of the asset group. To estimate the fair value of the asset group, the Company utilized the income approach, which is based on a discounted cash flow (DCF) analysis and calculates the fair value by estimating the after-tax cash flows attributable to the asset group 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, growth rates, and the amount and timing of expected future cash flows. The forecasted cash flows are based on the Company's most recent strategic plan and for periods beyond the strategic plan, 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 that a market participant would use to manage the business. The discount rate used is intended to reflect the risks inherent in future cash flow projections and was based on an estimate of the weighted average cost of capital (WACC) of market participants relative to the asset group. The Company used a discount rate of 17.0%. As a result of this analysis, the fair value of the Mobidiag asset group was below its carrying value. Prior to calculating and allocating the impairment charge, the Company assessed the only in-process research and development intangible asset in this asset group for impairment. The Company determined the fair value of this indefinite-lived asset utilizing the DCF model and recorded a $10.5 million impairment charge, reducing the fair value of this asset to

$26.5 million. The reduction in fair value of this asset was primarily due to a reduction in forecasted revenues and a delay in the timing of completing the project to focus on other projects.

To record the asset group to fair value, the Company recorded an impairment charge of $186.9 million during the third quarter of fiscal 2023. The impairment charge was allocated to the long-lived assets on a pro-rata basis as follows: $153.7 million to developed technology, $10.4 million to customer relationships, $10.7 million to trade names, and $12.1 million to equipment. The Company believes its assumptions used to determine the fair value of the asset group are reasonable. Actual operating results and the related cash flows of the asset group could differ from the estimated operating results and related cash flows. In the event the asset group does not meet its forecasted projections, additional impairment charges could be recorded in the future. The Company also re-evaluated the remaining useful lives of the intangible assets and concluded no changes were necessary.

During the third quarter of fiscal 2023, the Company also identified indicators of impairment associated with its ultrasound imaging assets. As a result, the Company recorded an impairment charge of $26.4 million, of which $20.6 million was allocated to intangible assets, primarily developed technology, and $5.8 million was allocated to equipment.

During the third quarter of fiscal 2022, the Company recorded a $9.2 million impairment charge to write-off two developed technology assets acquired in the Faxitron acquisition.