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Intangible Assets, Net
 12 Months Ended
Dec. 28, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets, Net
9. Intangible Assets, Net
Intangible assets, net, consist of the following:
December 28,
2024		December 30,
2023
(in millions)Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount		Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Intangible assets subject to amortization:
Customer relationships$199.3 $(41.7)$157.6 $209.2 $(31.5)$177.7 
Acquired technologies164.9 (62.0)102.9 174.7 (45.3)129.4 
Capitalized software development costs(1)
54.1 (28.6)25.5 53.9 (15.2)38.7 
Licenses30.3 (6.2)24.1 39.7 (7.4)32.3 
Patents(1)
44.0 (17.5)26.5 39.2 (15.2)24.0 
Trademarks20.1 (9.0)11.1 20.1 (7.4)12.7 
Licenses-related party(1)
7.5 (7.1)0.4 7.5 (6.7)0.8 
Non-compete agreements6.3 (4.1)2.2 6.3 (2.6)3.7 
Other1.6 (1.0)0.6 1.7 (1.1)0.6 
     Total intangible assets subject to amortization, net$528.1 $(177.2)$350.9 $552.3 $(132.4)$419.9 
Intangible assets not subject to amortization:
Trademarks$217.3 $242.4 
Impairment charge(10.0)(10.0)
     Total trademarks207.3 232.4 
     Intangible assets, net$558.2 $652.3 
______________
(1)    During the fourth quarter of 2024, in connection with the Company’s strategic realignment initiative, the Company’s healthcare segment recorded a charge of $26.0 million for a reduction in capitalized software development costs, patents and licenses-related party that are being phased out and/or no longer supported, which was recorded to selling, general and administrative expenses. The Company also terminated the professional services agreements associated with LML and Vantrix.
Finite lived intangible assets have a weighted-average amortization period ranging from twelve years to fourteen years.
Total amortization expense for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, was $61.7 million, $54.4 million and $39.8 million, respectively.
Total unamortized capitalized software development costs for the years ended December 28, 2024 and December 30, 2023, were $1.4 million and $11.9 million, respectively. There was no unamortized capitalized software development costs for the year ended December 31, 2022.
The total costs of patents not yet amortizing for the years ended December 28, 2024 and December 30, 2023, was $13.0 million and $12.1 million, respectively.
The total costs of trademarks not yet amortizing for the years ended December 28, 2024 and December 30, 2023, was $0.8 million and $1.0 million, respectively.
Total renewal costs capitalized for patents and trademarks for the years ended December 28, 2024 and December 30, 2023 were $4.3 million and $1.0 million, respectively. As of December 28, 2024, the weighted-average number of years until the next renewal was two years for patents and six years for trademarks.
Estimated amortization expense for each of the next fiscal years is as follows:
Fiscal year
Amount
(in millions)
2025$51.6 
202650.3 
202738.0 
202837.6 
202937.2 
Thereafter136.2 
Total$350.9 
Indefinite-lived intangible assets are subject to annual impairment testing, unless circumstances dictate more frequent testing, if impairment indicators exist. During the fourth quarter of 2024, the Company performed its annual impairment analysis and, based on this assessment, the Company determined the carrying value of certain indefinite-lived trademarks in the non-healthcare reporting unit were impaired by approximately $10.0 million. For indefinite-lived intangibles, the fair values were estimated using the relief-from-royalty method under the income approach, which involves forecasting avoided royalties, reducing them by taxes, and discounting the resulting net cash flows to a present value using an appropriate discount rate.
Given the indefinite-lived intangibles impairment, the Company next assessed the recoverability of its other long-lived assets in non-healthcare. For unit of account purposes, this included grouping certain assets such as finite-lived intangibles, lessee ROU assets, and property and equipment due to the interdependency of these assets. The valuation analysis included a probability-weighted recoverability test, which is subject to assumptions and uncertainties such as scenario probabilities, including the potential separation of Sound United scenario. Based on this valuation analysis, these long-lived assets were determined to be recoverable.
For the non-healthcare reporting unit, the Company performed a quantitative assessment of goodwill impairment for its annual impairment analysis during the fourth quarter of 2024. The Company used a combination of both an income and a market approach to determine the fair value of the reporting unit. The income approach utilized the estimated discounted cash flows for the reporting unit, while the market approach utilized comparable company information. Estimates and assumptions used in the income approach to calculate projected future discounted cash flows included revenue growth rates, operating margins and a discount rate for the reporting unit. Given the potential separation of Sound United, the market approach considered comparable public companies in a similar line of business to Sound United, and multiples were applied based on the relative performance and risk profile of the non-healthcare reporting unit. Discount rates were determined using a weighted average cost of capital for risk factors specific to the reporting unit and other market and industry data. The assumptions used are inherently subject to uncertainty and the Company noted that slight changes in these assumptions and probabilities could have a significant impact on the concluded value and analysis. For the non-healthcare reporting unit, goodwill was fully impaired such that the impairment expense was approximately $294.0 million.
Determining the fair value of a reporting unit is judgmental and involves the use of significant estimates and assumptions, which include the discount rate and forecasted revenue growth rates and operating margins, to calculate projected future discounted cash flows. The non-healthcare forecasted revenue growth rates and operating margins assume recovery from the current business downturn while also employing strategies to expand in key market segments.
These fair value measurements require significant judgements using Level 3 inputs, such as discounted projected cash flows, which are not observable from the market, directly or indirectly. If future actual results adversely deviate from the forecast, assumptions or probabilities in the analysis, there will be a materially different assessment. As such, the Company will continue to monitor events occurring or circumstances changing which may necessitate further impairment assessments for intangibles and other long-lived assets.
For healthcare goodwill, the Company performed a qualitative assessment during the fourth quarter 2024 for its annual impairment analysis. Based on this assessment, the Company concluded that it was more likely than not that the fair value of the healthcare reporting unit was greater than its carrying value. Accordingly, no further testing was required on this reporting unit.
In the third quarter of 2023, declines in the Company’s stock price and certain worsening macro-economic market conditions, including continued slowing in demand for consumer audio products, contributed to a significant decline in the Company’s market capitalization, which led the Company to conclude a trigger event had occurred. As a result, the Company performed a quantitative impairment assessment, which resulted in recording a $7.0 million impairment charge for indefinite-lived trademarks in the non-healthcare reporting unit. In conjunction with this third quarter interim impairment quantitative assessment, the Company concluded that both the healthcare reporting unit’s and non-healthcare reporting unit’s respective estimated fair values exceeded their carrying values. Furthermore, recoverability tests performed for other long-lived assets with finite lives indicated no recoverability issues.
During the fourth quarter of 2023, the Company performed its annual impairment analysis by first electing to complete a qualitative assessment of its indefinite-lived intangible assets. Based on this assessment, the Company determined it was not more likely than not that the fair value of the indefinite lived intangibles within the non-healthcare reporting unit exceeded their carrying values. Accordingly, the Company proceeded to perform a quantitative impairment assessment, which resulted in recording a $3.0 million impairment charge for indefinite-lived trademarks. For purposes of the impairment test, the fair value of indefinite-lived assets were determined using the same methodology as described in Note 18, “Business Combinations.” The estimates and assumptions applied represent a Level 3 measurement because they are supported by limited or no market activity and reflect the Company’s assumptions in measuring fair value.
During the fourth quarter of 2023, the Company performed its annual goodwill impairment analysis by first electing to complete a qualitative assessment for its healthcare and non-healthcare reporting units. Based on this assessment, the Company concluded that it was more likely than not that the fair value of the healthcare reporting unit was greater than its carrying value. Accordingly, no further testing was required for the healthcare reporting unit. However, the Company concluded that it was not more likely than not that the fair value of the non-healthcare reporting unit was greater than its carrying value. Therefore, the Company proceeded to perform a quantitative assessment for its non-healthcare reporting unit. When a quantitative assessment is required for the impairment test for goodwill, the Company uses a combination of both an income and a market approach to determine the fair value of the reporting unit. The income approach utilized the estimated discounted cash flows for the reporting unit, while the market approach utilized comparable company information. Estimates and assumptions used in the income approach to calculate projected future discounted cash flows included revenue growth rates, operating margins and a discount rate for the reporting unit. Discount rates were determined using a weighted average cost of capital for risk factors specific to the reporting unit and other market and industry data. The assumptions used are inherently subject to uncertainty and the Company noted that slight changes in these assumptions could have a significant impact on the concluded value.
The estimates and assumptions applied represent a Level 3 measurement because they are supported by limited or no market activity and reflect the Company’s assumptions in measuring fair value.