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Goodwill and Intangible Assets | 6 Months Ended
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Mar. 30, 2025
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes the changes in the carrying value of goodwill by reportable segment (in thousands):
|  | GSG |  | CIG |  | Total
Balance at September 29, 2024 |  | $ | 750,817 |  |  | $ | 1,295,752 |  |  | $ | 2,046,569 |
Acquisition activity |  | — |  |  | 10,114 |  |  | 10,114 |
Goodwill impairment |  | (92,416) |  |  | — |  |  | (92,416) |
Translation adjustments |  | (2,271) |  |  | (48,862) |  |  | (51,133) |
Balance at March 30, 2025 |  | $ | 656,130 |  |  | $ | 1,257,004 |  |  | $ | 1,913,134 |
Translation adjustments resulted from our goodwill amounts in foreign subsidiaries with functional currencies that are different than our reporting currency. Th e goodwill amoun ts presented in the table above are net of reductions from historical impairment adjustments. The gross amounts for GSG were $766.2 million and $768.5 million at March 30, 2025 and September 29, 2024, respectively, excluding accumulated impairment of $110.1 million and $17.7 million, respectively, at each date. The gross amounts of goodwill for CIG were $1,378.5 million and $1,417.3 million at March 30, 2025 and September 29, 2024, respectively, excluding accumulated impairment of $121.5 million at each period end. We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our most recent annual review at July 1, 2024 (i.e. the first day of our fourth quarter in fiscal 2024) indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including goodwill. At July 1, 2024, we had no reporting units that had estimated fair values that exceeded their carrying val ues by less than 72%. We also regularly evaluate whether events and circumstances have occurred that may indicate a potential change in the recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, such as a deterioration in general economic conditions; an increase in the competitive environment; a change in management, key personnel, strategy or customers; negative or declining cash flows; or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods. During the second quarter of fiscal 2025, events and circumstances occurred that indicated a potential change in the recoverability of the goodwill in our Global Development Services reporting unit ("GDS"). GDS provides consulting and engineering services for international development agencies supporting humanitarian programs worldwide. Although several agencies are supported by this work (primarily for the U.S., Australia and United Kingdom governments), over eighty percent of the activity is for the United States Agency for International Development ("USAID"). On January 20, 2025, President Trump signed Executive Order 14169, titled "Reevaluating and Realigning United States Foreign Aid", which initiated a 90-day pause on all U.S. foreign development assistance programs to assess their alignment with U.S. foreign policy objectives with few exemptions. Following a six-week review, on February 27, 2025, U.S. Secretary of State Rubio announced the cancellation of 83% of USAID programs, totaling approximately 5,200 contracts. Subsequently, we were notified that virtually all of our contracts with USAID were terminated for convenience. As a result of these events and circumstances, we performed an interim impairment review of the goodwill in GDS at our fiscal period end for February 2025. We considered two methods to determine the fair value of the GDS reporting unit: (i) the Income Approach and (ii) the Market Approach. While each of these approaches is initially considered in the valuation of the business enterprise, the nature and characteristic of the reporting unit indicates which approach is most applicable. The Income Approach utilizes the discounted cash flow method, which focuses on the expected cash flow of the reporting unit. In applying this approach, the cash flow available for distribution is calculated for a finite period of years. Cash flow available for distribution is defined, for purposes of this analysis, as the amount of cash that could be distributed as a dividend without impairing the future profitability or operations of the reporting unit. The cash flow available for distribution and the terminal value (the value of the reporting unit at the end of the estimation period) are then discounted to present value to derive an indication of the value of the business enterprise. The Market Approach is comprised of the guideline public company method and guideline transactions method. The guideline company method focuses on comparing the reporting unit to select reasonably similar (or “guideline”) publicly traded companies. Under this method, valuation multiples are (i) derived from the operating data of selected guideline companies; (ii) evaluated and adjusted based on the strengths and weaknesses of the reporting units relative to the selected guideline companies; and (iii) applied to the operating data of the reporting unit to arrive at an indication of value. In the similar transactions method, consideration is given to prices paid in recent transactions that have occurred in the reporting unit’s industry or in related industries. For the interim impairment analysis of GDS, we utilized the Income Approach as it has the most direct correlation to the specific economics of the reporting unit. The estimated fair value of equity of GDS was made using Level 3 inputs including the estimated discount rate that reflects the level of risk associated with receiving future cash flows and the forecasted long-term growth rates of GDS's revenue and operating income. Based on our analysis, an impairment of $92.4 million was calculated as the deficit between the fair value of equity of the GDS reporting unit as compared to its carrying value, including goodwill of $130.5 million at our fiscal period end for February 2025. As a result, we recorded a non-cash goodwill impairment charge of $92.4 million included in operating income in the second quarter of fiscal 2025. The remaining $38.1 million of goodwill in GDS is primarily supported by our work for the United Kingdom and Australia foreign aid government agencies. A future reduction in these governments’ foreign aid budgets could result in additional impairment to the GDS reporting unit. Long-term assets other than goodwill in GDS are not material. The following table presents the gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets ($ in thousands):
| As of
| March 30, 2025 |  | September 29, 2024
| Weighted- Average Remaining Life (in Years) |  | Gross Amount |  | Accumulated Amortization |  | Net Amount |  | Gross Amount |  | Accumulated Amortization |  | Net Amount
Client relations | 7.9 |  | $ | 193,216 |  |  | $ | (66,387) |  |  | $ | 126,829 |  |  | $ | 198,726 |  |  | $ | (57,975) |  |  | $ | 140,751 |
Backlog | 0.1 |  | 72,881 |  |  | (72,639) |  |  | 242 |  |  | 75,194 |  |  | (71,101) |  |  | 4,093 |
Trade names | 0.9 |  | 39,398 |  |  | (29,685) |  |  | 9,713 |  |  | 40,926 |  |  | (25,185) |  |  | 15,741 |
Total |  |  | $ | 305,495 |  |  | $ | (168,711) |  |  | $ | 136,784 |  |  | $ | 314,846 |  |  | $ | (154,261) |  |  | $ | 160,585 |
Amortization expense for the identifiable intangible assets for the second quarter and first half of fiscal 2025 was $8.6 million and $19.3 million, compared to $12.1 million and $24.6 million, respectively, for the prior-year periods. Estimated amortization expense for the remainder of fiscal 2025 and succeeding years is as follows (in thousands):
| Amount
2025 (remaining) | $ | 15,810 |
2026 | 23,879 |
2027 | 17,151 |
2028 | 16,642 |
2029 | 15,759 |
Beyond | 47,543 |
Total | $ | 136,784 |

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