Goodwill and Intangible Assets, Net

3 Months Ended

Apr. 03, 2022

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 3, 2022, its annual impairment testing date for fiscal year 2022. The Company concluded that there was no goodwill impairment, and the fair value exceeded the carrying value by more than 20% for each reporting unit. For the fiscal year 2022 impairment analysis, the range of the long-term terminal growth rates for the Company’s reporting units was 2% to 5% and the range of the discount rates for the reporting units was 7% to 11.5%. 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.

The changes in the carrying amount of goodwill for the three months ended April 3, 2022 were as follows:


	Discovery & Analytical Solutions		Diagnostics		Consolidated
	(In thousands)
Balance at January 2, 2022	$	5,446,234	$	1,970,350	$	7,416,584
Foreign currency translation	(38,132)		(13,795)		(51,927)

Acquisitions, earn-outs and other	(1,085)		3,712		2,627
Balance at April 3, 2022	$	5,407,017	$	1,960,267	$	7,367,284

Identifiable intangible asset balances by category were as follows:


	April 3, 2022		January 2, 2022
	(In thousands)
Patents	$	31,025	$	31,033
Less: Accumulated amortization	(28,742)		(28,693)
Net patents	2,283		2,340
Trade names and trademarks	168,225		170,983
Less: Accumulated amortization	(64,762)		(62,441)
Net trade names and trademarks	103,463		108,542
Licenses	68,001		67,887
Less: Accumulated amortization	(54,897)		(54,315)
Net licenses	13,104		13,572
Core technology	1,841,179		1,834,177
Less: Accumulated amortization	(527,001)		(494,310)
Net core technology	1,314,178		1,339,867
Customer relationships	3,165,411		3,195,704
Less: Accumulated amortization	(726,145)		(673,425)
Net customer relationships	2,439,266		2,522,279
In-process research and development	—		5,920
Net amortizable intangible assets	3,872,294		3,992,520
Non-amortizing intangible asset:
Trade name	70,584		70,584
Total	$	3,942,878	$	4,063,104

Total amortization expense related to definite-lived intangible assets was $102.7 million and $54.2 million for the three months ended April 3, 2022 and April 4, 2021, respectively. Estimated amortization expense related to amortizable intangible assets for each of the next five years is $309.3 million for the remainder of fiscal year 2022, $402.4 million for fiscal year 2023, $390.9 million for fiscal year 2024, $363.7 million for fiscal year 2025, and $350.3 million for fiscal year 2026