Goodwill and Intangible Assets

12 Months Ended

Dec. 27, 2019

Goodwill and Intangible Assets Disclosure [Abstract]



13.	Goodwill and Intangible Assets

2018 Goodwill Impairment Analysis

During fiscal 2018, the Company's annual goodwill impairment analysis resulted in the recognition of a full goodwill impairment of $3,672.8 million related to the Specialty Brands reporting unit. The Company performed its annual goodwill impairment analysis for the Specialty Brands reporting unit as of the first day of the fourth quarter. The Company's 2018 annual assessment first considered its internally developed future cash flows, which reflect the Company's overall strategy, future growth and value proposition. At the time of this analysis there continued to be a disparity between the Company's anticipated future performance and present uncertainty reflected in its market capitalization, driven by a sustained decrease in its share price. The Company determined that its share price had been adversely affected primarily by uncertainties regarding patient withdrawal issues impacting net sales of Acthar^® Gel ("Acthar Gel"), ongoing INOmax^® ("INOmax") patent litigation and the perceived value of its various pipeline products. Given the passage of time since first experiencing a substantial decline in its share price during the three months ended December 29, 2017 and the fact that the aforementioned uncertainties were not expected to be resolved in the near-term, the Company determined that its goodwill was fully impaired.

For purposes of the 2018 goodwill impairment assessment for the Specialty Brands reporting unit, the Company made various assumptions regarding estimated future cash flows, discount rate and other factors in determining the respective fair value of the reporting unit using the income approach. The projections of future cash flows were discounted based on a weighted average cost of capital of 12.5% that was determined from relevant market comparisons, adjusted upward for specific reporting unit risks. A terminal value growth rate was applied to the terminal year cash flows, representing the Company's estimate of stable cash flows. The fair value of the Specialty Brands reporting unit represents the sum of the discounted cash flows from the discrete period and the terminal year cash flows.

Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets were comprised of the following at the end of each period:



	December 27, 2019				December 28, 2018
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable:
Completed technology	$	10,456.9	$	3,822.8	$	10,467.9	$	2,980.6
License agreements	120.1		74.1		120.1		70.1
Trademarks	77.7		20.1		81.9		18.1
Customer relationships	—		—		27.5		14.1
Total	$	10,654.7	$	3,917.0	$	10,697.4	$	3,082.9
Non-Amortizable:
Trademarks	$	35.0			$	35.0
In-process research and development	245.3				633.3
Total	$	280.3			$	668.3

The Company recorded impairment charges totaling $388.0 million, $220.3 million and $63.7 million during fiscal 2019, 2018 and 2017, respectively. The valuation method used to approximate fair value in each of these periods was based on the estimated discounted cash flows for the respective asset. During the three months ended December 27, 2019, the Company recognized a full impairment on its IPR&D asset related to VTS-270 of $274.5 million, primarily driven by continued regulatory challenges. The

Company will continue to engage in dialogue with the FDA and assess future opportunities for this development program. Also during the three months ended June 28, 2019, the Company recognized a full impairment on its IPR&D asset related to stannsoporfin of $113.5 million as the Company is no longer pursuing this development program. The fiscal 2018 and 2017 impairment charges primarily relate to the MNK-1411 and Raplixa intangible assets, respectively, and were a result of lower than previously anticipated pricing assumptions and commercial opportunities, respectively.

Ofirmev^®

Since the Company's acquisition of Ofirmev in March 2014, the related completed technology intangible asset had been amortized using the straight-line method over a useful life of eight years. As the product nears loss of exclusivity, the Company is better positioned to reliably determine the pattern in which the remaining economic benefits of the intangible asset are consumed. As a result, during the three months ended March 29, 2019, the Company concluded that the sum of the years digits method, an accelerated method of amortization, would more accurately reflect the consumption of the economic benefits over the remaining useful life of the asset. This change in amortization method resulted in additional amortization expense of $107.3 million during fiscal 2019, which impacted basic earnings per share for the respective periods by $1.28 per share.

Finite-lived intangible asset amortization expense within continuing operations is as follows:



	Fiscal Year
	2019		2018		2017
Amortization expense	$	853.4	$	740.2	$	694.5

The estimated aggregate amortization expense on intangible assets owned by the Company is expected to be as follows:



Fiscal 2020	$	754.2
Fiscal 2021	657.6
Fiscal 2022	585.1
Fiscal 2023	581.1
Fiscal 2024	581.1