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Goodwill and Intangible Assets | 6 Months Ended
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Jul. 28, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The carrying amounts of goodwill by applicable operating segment were as follows:
(in thousands) | Signal Integrity |  | Analog Mixed Signal and Wireless |  | IoT Systems and Connectivity |  |  |  |  |  |  |  |  |  |  |  | Total
Balance at January 28, 2024 | $ | 267,205 |  |  | $ | 83,101 |  |  | $ | 190,921 |  |  |  |  |  |  |  |  |  |  |  |  | $ | 541,227 |
Cumulative translation adjustment | — |  |  | — |  |  | (123) |  |  |  |  |  |  |  |  |  |  |  |  | (123) |
Balance at July 28, 2024 | $ | 267,205 |  |  | $ | 83,101 |  |  | $ | 190,798 |  |  |  |  |  |  |  |  |  |  |  |  | $ | 541,104 |
In the first quarter of fiscal year 2025, as a result of organizational restructuring, the Company combined the IoT Systems operating segment and the IoT Connected Services operating segment into the newly formed IoT Systems and Connectivity operating segment. There was no change to the reporting units. See Note 15, Segment Information, for further discussion of the Company's operating segments. Goodwill is not amortized, but is tested for impairment at the reporting unit level using either a qualitative or quantitative assessment on an annual basis during the fourth quarter of each fiscal year, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment of goodwill is measured at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair market value of the reporting unit. As of July 28, 2024, there was no indication of impairment of the Company's goodwill balances and no goodwill impairment was recorded in the six months ended July 28, 2024. During the second quarter of fiscal year 2024, as a result of reduced earnings forecasts associated with the business acquired from Sierra Wireless and macroeconomic conditions, including a rising interest rate environment, the Company performed an interim impairment test using a quantitative assessment of the reporting units related to the Sierra Wireless Acquisition (specifically, the IoT Connected Services, IoT System–Modules and IoT System–Routers reporting units). The interim impairment test resulted in $279.6 million of total pre-tax non-cash goodwill impairment charges recorded in the Statements of Operations during the second quarter of fiscal year 2024, consisting of $69.0 million of goodwill impairment for the IoT Connected Services reporting unit, $109.9 million of goodwill impairment for the IoT System–Modules reporting unit and $100.7 million goodwill impairment for the IoT System–Routers reporting unit. The fair values of these reporting units were determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach). Significant inputs to the reporting unit fair value measurements included forecasted cash flows, discount rates, terminal growth rates and earnings multiples, which were determined by management estimates and assumptions. The reporting unit fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. Purchased and Other Intangibles The following table sets forth the Company’s finite-lived intangible assets, which are amortized over their estimated useful lives:
|  |  | July 28, 2024
(in thousands, except estimated useful life) | Estimated Useful Life |  | Gross Carrying Amount |  | Accumulated Amortization |  | Accumulated Impairment |  | Net Carrying Amount
Core technologies | 1-8 years |  | $ | 154,797 |  |  | $ | (39,525) |  |  | $ | (91,792) |  |  | $ | 23,480 |
Customer relationships | 1-10 years |  | 52,117 |  |  | (13,476) |  |  | (34,777) |  |  | 3,864 |
Trade name | 2-10 years |  | 9,000 |  |  | (3,058) |  |  | (4,816) |  |  | 1,126 |
Capitalized development costs | 3 years |  | 295 |  |  | (49) |  |  | — |  |  | 246 |
Total finite-lived intangible assets |  |  | $ | 216,209 |  |  | $ | (56,108) |  |  | $ | (131,385) |  |  | $ | 28,716 |
|  |  | January 28, 2024
(in thousands, except estimated useful life) | Estimated Useful Life |  | Gross Carrying Amount |  | Accumulated Amortization |  | Accumulated Impairment |  | Net Carrying Amount
Core technologies | 1-8 years |  | $ | 154,985 |  |  | $ | (35,130) |  |  | $ | (91,792) |  |  | $ | 28,063 |
Customer relationships | 1-10 years |  | 52,272 |  |  | (13,391) |  |  | (34,777) |  |  | 4,104 |
Trade name | 2-10 years |  | 9,000 |  |  | (2,700) |  |  | (4,816) |  |  | 1,484 |
Total finite-lived intangible assets |  |  | $ | 216,257 |  |  | $ | (51,221) |  |  | $ | (131,385) |  |  | $ | 33,651 |
Amortization expense of finite-lived intangible assets was as follows:
| Three Months Ended |  | Six Months Ended
(in thousands) | July 28, 2024 |  | July 30, 2023 |  | July 28, 2024 |  | July 30, 2023
Core technologies | $ | 2,279 |  |  | $ | 10,573 |  |  | $ | 4,560 |  |  | $ | 21,428 |
Customer relationships | 114 |  |  | 4,080 |  |  | 228 |  |  | 8,170 |
Trade name | 168 |  |  | 791 |  |  | 361 |  |  | 1,583 |
Capitalized development costs | 49 |  |  | — |  |  | 49 |  |  | — |
Total amortization expense | $ | 2,610 |  |  | $ | 15,444 |  |  | $ | 5,198 |  |  | $ | 31,181 |
Amortization expense of finite-lived intangible assets related to core technologies was recorded in "Amortization of acquired technology" within "Total cost of sales" in the Statements of Operations and amortization expense of finite-lived intangible assets related to customer relationships and trade name was recorded in "Intangible amortization" within "Total operating expenses, net" in the Statements of Operations. Amortization expense of finite-lived intangible assets related to capitalized development costs was recorded in "Cost of sales" in the Statements of Operations. Future amortization expense of finite-lived intangible assets is expected as follows:
(in thousands) | Core Technologies |  | Customer Relationships |  | Trade Name |  | Capitalized Development Costs |  | Total
2025 (remaining six months) | $ | 4,542 |  |  | $ | 228 |  |  | $ | 66 |  |  | $ | 49 |  |  | $ | 4,885 |
2026 | 8,598 |  |  | 457 |  |  | 133 |  |  | 98 |  |  | 9,286 |
2027 | 3,707 |  |  | 457 |  |  | 133 |  |  | 99 |  |  | 4,396 |
2028 | 3,550 |  |  | 457 |  |  | 133 |  |  | — |  |  | 4,140 |
2029 | 3,083 |  |  | 382 |  |  | 133 |  |  | — |  |  | 3,598 |
Thereafter | — |  |  | 1,883 |  |  | 528 |  |  | — |  |  | 2,411 |
Total expected amortization expense | $ | 23,480 |  |  | $ | 3,864 |  |  | $ | 1,126 |  |  | $ | 246 |  |  | $ | 28,716 |
Also in "Other intangible assets, net" in the Balance Sheets, are finite-lived intangible assets to be amortized upon placement in service. The following table sets forth the Company’s finite-lived intangible assets not yet placed in service:
(in thousands) |  | Capitalized Development Costs |  | Software Licenses |  | Total
Balance at January 28, 2024 |  | $ | 1,000 |  |  | $ | 915 |  |  | $ | 1,915 |
Additions |  | 468 |  |  | 4,550 |  |  | 5,018 |
Placed in service |  | (295) |  |  | — |  |  | (295) |
Balance at July 28, 2024 |  | $ | 1,173 |  |  | $ | 5,465 |  |  | $ | 6,638 |

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