Goodwill and Intangible Assets, Net

3 Months Ended

Apr. 05, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The Company tests goodwill and non-amortizing intangible assets at least annually for possible impairment. Accordingly, the Company completes the annual testing of impairment for goodwill and non-amortizing intangible assets on the later of January 1 or the first day of each fiscal year. In addition to its annual test, the Company regularly evaluates whether events or circumstances have occurred that may indicate a potential impairment of goodwill or non-amortizing intangible assets.

The process of testing goodwill for impairment involves the determination of the fair value of the applicable reporting units. The test consists of the comparison of the fair value to the carrying value of the reporting unit to determine if the carrying value exceeds the fair value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of goodwill. The Company performed its annual impairment testing for its

reporting units as of January 1, 2020, its annual impairment testing date for fiscal year 2020. The Company concluded that there was no goodwill impairment. The range of the long-term terminal growth rates for the Company’s reporting units was 3% to 5% for the fiscal year 2020 impairment analysis. The range for the discount rates for the reporting units was 9.0% to 14.5%. Keeping all other variables constant, a 10% change in any one of these input assumptions for the various reporting units would still allow the Company to conclude that there was no impairment of goodwill.

The Company has consistently employed the income approach to estimate the current fair value when testing for impairment of goodwill. A number of significant assumptions and estimates are involved in the application of the income approach to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount rates and working capital changes. Cash flow forecasts are based on approved business unit operating plans for the early years’ cash flows and historical relationships in later years. The income approach is sensitive to changes in long-term terminal growth rates and the discount rates. The long-term terminal growth rates are consistent with the Company’s historical long-term terminal growth rates, as the current economic trends are not expected to affect the long-term terminal growth rates of the Company. The Company corroborates the income approach with a market approach.

Non-amortizing intangibles are also subject to an annual impairment test. The Company has consistently employed the relief from royalty model to estimate the current fair value when testing for impairment of non-amortizing intangible assets. The impairment test consists of a comparison of the fair value of the non-amortizing intangible asset with its carrying amount. If the carrying amount of a non-amortizing intangible asset exceeds its fair value, an impairment loss in an amount equal to that excess is recognized up to the amount of the amortizing intangible asset. In addition, the Company evaluates the remaining useful life of its non-amortizing intangible asset at least annually to determine whether events or circumstances continue to support an indefinite useful life. If events or circumstances indicate that the useful life of the Company's non-amortizing intangible asset is no longer indefinite, the asset will be tested for impairment. This intangible asset will then be amortized prospectively over its estimated remaining useful life and accounted for in the same manner as other intangible assets that are subject to amortization. The Company performed its annual impairment testing as of January 1, 2020 and concluded that there was no impairment of its non-amortizing intangible asset. An assessment of the recoverability of amortizing intangible assets takes place when events have occurred that may give rise to an impairment. No such events occurred during the first three months of fiscal year 2020.

The changes in the carrying amount of goodwill for the three months ended April 5, 2020 were as follows:



	Discovery & Analytical Solutions			Diagnostics			Consolidated
	(In thousands)
Balance at December 29, 2019	$	1,498,820		$	1,612,407		$	3,111,227
Foreign currency translation	(27,914		)	(30,027		)	(57,941		)
Acquisitions, earn-outs and other	(1,592		)	—			(1,592		)
Balance at April 5, 2020	$	1,469,314		$	1,582,380		$	3,051,694

Identifiable intangible asset balances by category were as follows:



	April 5, 2020			December 29, 2019
	(In thousands)
Patents	$	30,821		$	30,831
Less: Accumulated amortization	(27,776		)	(27,423		)
Net patents	3,045			3,408
Trade names and trademarks	85,627			87,997
Less: Accumulated amortization	(41,376		)	(40,295		)
Net trade names and trademarks	44,251			47,702
Licenses	58,259			58,496
Less: Accumulated amortization	(50,417		)	(49,733		)
Net licenses	7,842			8,763
Core technology	663,964			689,089
Less: Accumulated amortization	(327,039		)	(320,926		)
Net core technology	336,925			368,163
Customer relationships	1,136,931			1,161,526
Less: Accumulated amortization	(400,656		)	(378,188		)
Net customer relationships	736,275			783,338
IPR&D	1,366			1,328
Net amortizable intangible assets	1,129,704			1,212,702
Non-amortizing intangible asset:
Trade name	70,584			70,584
Total	$	1,200,288		$	1,283,286

Total amortization expense related to definite-lived intangible assets was $47.3 million and $38.7 million for the three months ended April 5, 2020 and March 31, 2019, respectively. Estimated amortization expense related to amortizable intangible assets for each of the next five years is $136.7 million for the remainder of fiscal year 2020, $167.4 million for fiscal year 2021, $151.4 million for fiscal year 2022, $128.5 million for fiscal year 2023, and $108.1 million for fiscal year 2024