XML 33 R22.htm IDEA: XBRL DOCUMENT v3.20.2
Intangible Assets and Goodwill
 3 Months Ended
Mar. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill Intangible Assets
Intangible assets consisted of the following:
 
DescriptionAs of June 27, 2020As of September 28, 2019
Gross
Carrying
Value		Accumulated
Amortization		Gross
Carrying
Value		Accumulated
Amortization
Acquired intangible assets:
Developed technology$3,925.4  $2,842.8  $3,927.7  $2,654.8  
Customer relationships547.0  468.9  525.5  447.5  
Trade names244.1  178.6  245.4  171.1  
Distribution agreement—  —  2.5  —  
Non-competition agreements1.5  1.2  1.4  0.9  
Business licenses2.3  2.2  2.3  2.2  
Total acquired intangible assets$4,720.3  $3,493.7  $4,704.8  $3,276.5  
Internal-use software51.7  42.7  53.9  43.4  
Capitalized software embedded in products26.7  9.8  27.9  6.9  
Total intangible assets$4,798.7  $3,546.2  $4,786.6  $3,326.8  

        In the first quarter of fiscal 2020, the Company's Medical Aesthetics business met the criteria to be designated as assets held-for-sale. As a result, the Company recorded a $30.2 million charge to record the asset group at fair value less costs to sell. In addition, developed technology, customer lists, trade names, and distribution agreement related to Medical Aesthetics of $24.1 million, $0.9 million, $2.0 million, and $1.2 million, respectively, were reclassified accordingly in the Company's Consolidated Balance Sheet to assets held-for-sale as of December 28, 2019 and subsequently disposed of in the second quarter of fiscal 2020.
        In the second quarter of fiscal 2020, the Company reviewed its long-lived assets for indicators of impairment as a result of lowering its expectations for revenue and operating income in the short term from the impact of COVID-19 on its business as discussed in Note 1. The Company updated its long-term forecasts and performed an undiscounted cash flow
analysis which indicated that the estimated future cash flows were sufficient to recover the carrying values of its asset groups. In addition, the Company had significant cushion from its most recent goodwill impairment test in each of its reporting units and believes, based on its procedures, current facts and expectations, that it is more likely than not that the fair value of each of its reporting units is above their respective carrying values. The Company's conclusion did not change in the third quarter of fiscal 2020. Given the current uncertainty of the duration and scope of the COVID-19 pandemic, the related economic impact, and the potential longer term impact on the Company's business, financial condition and results of operations, in the future the Company may be required to perform an interim impairment test, in addition to its annual test, and record an impairment charge.
Medical Aesthetics Impairment - Fiscal 2019

During the second quarter of fiscal 2019, in connection with commencing its company-wide annual budgeting and strategic planning process as well as evaluating the current operating performance of its Medical Aesthetics reporting unit (comprised solely of the Cynosure business), the Company reduced its short term and long term revenue and operating income forecasts. The updated forecast reflected reduced volume and market penetration projections primarily in the Body Contouring business due to increased competition in the non-invasive fat reduction category, and lower Women's Health product sales primarily from reduced sales volume of the MonaLisa Touch device, which the Company believed was primarily driven by the FDA's public letter in the fourth quarter of fiscal 2018 challenging various medical aesthetics companies marketing of devices for so called "vaginal rejuvenation" procedures relative to their FDA approvals. As a result of the revised forecasts in the second quarter of fiscal 2019, the Company determined indicators of impairment existed and performed an undiscounted cash flow analysis pursuant to ASC 360, Property, Plant, and Equipment - Overall, to determine if the cash flows expected to be generated by this asset group over the estimated remaining useful life of the primary assets were sufficient to recover the carrying value of the asset group, which was determined to be at the reporting unit level. Based on this analysis, which included evaluating various cash flow scenarios, the undiscounted cash flows were not sufficient to recover the carrying value of the asset group. As a result, the Company was required to perform Step 3 of the impairment test and determine the fair value of the asset group. To estimate the fair value, the Company utilized the income approach, which is based on a discounted cash flow (DCF) analysis and calculates the fair value by estimating the after-tax cash flows attributable to the asset group and then discounting the after-tax cash flows to present value using a risk-adjusted discount rate. Assumptions used in the DCF require significant judgment, including the appropriate discount rates and terminal values, growth rates, and the amount and timing of expected future cash flows. The forecasted cash flows were based on the Company's most recent strategic plan as of the measurement date and for periods beyond the strategic plan, the Company's estimates were based on assumed growth rates expected as of the measurement date. The Company believed its assumptions were consistent with the plans and estimates that a market participant would use to manage the business. The discount rate used is intended to reflect the risks inherent in future cash flow projections and was based on an estimate of the weighted average cost of capital (WACC) of market participants relative to the asset group. The Company used a discount rate of 11.0%. As a result of this analysis, the fair value of the Medical Aesthetics asset group was below its carrying value, and the Company recorded an impairment charge of $443.8 million during the second quarter of fiscal 2019. The impairment charge was allocated to the long-lived assets as follows: $373.3 million to developed technology, $14.4 million to customer relationships, $31.5 million to trade names, $17.8 million to distribution agreements and $6.8 million to equipment. The Company believed its assumptions used to determine the fair value of the asset group were reasonable. The Company completed the sale of the Medical Aesthetics business in the second quarter of fiscal 2020. Please refer to Note 6 for additional details.
The estimated remaining amortization expense of the Company's acquired intangible assets as of June 27, 2020 for each of the five succeeding fiscal years is as follows:
Remainder of Fiscal 2020$72.8  
Fiscal 2021$270.2  
Fiscal 2022$259.9  
Fiscal 2023$162.5  
Fiscal 2024$151.4