Goodwill and Intangible Assets

6 Months Ended

Jul. 28, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

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