v3.23.2
Goodwill and Intangible Assets
 6 Months Ended
Jul. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
Goodwill
The carrying amounts of goodwill by applicable operating segment were as follows:
(in thousands)Signal IntegrityAdvanced Protection and Sensing IoT SystemIoT Connected ServicesUnallocatedTotal
Balance at January 29, 2023$274,085 $14,639 $61,582 $— $931,397 $1,281,703 
Measurement period adjustment— — — — 21,659 $21,659 
Reallocation— — 654,831 298,225 (953,056)— 
Cumulative translation adjustment— — (1,757)(4,606)— (6,363)
Impairment— — (210,516)(69,039)— (279,555)
Balance at July 30, 2023$274,085 $14,639 $504,140 $224,580 $— $1,017,444 
On January 12, 2023, in connection with the Sierra Wireless Acquisition, the Company acquired all of the outstanding equity interests in Sierra Wireless and a preliminary goodwill balance of $931.4 million was recorded for the excess of the consideration transferred over the net assets acquired and represented the expected revenue and cost synergies of the combined company and assembled workforce. In the six months ended July 30, 2023, the Company recorded measurement period adjustments that increased goodwill by $21.7 million. See Note 2, Acquisition and Divestiture, for further discussion of the Sierra Wireless Acquisition and impact of the measurement period adjustments. In the fourth quarter of fiscal year 2023, in conjunction with the Sierra Wireless Acquisition, the Company formed two additional operating segments: the IoT System operating segment, which also absorbed portions of the Company's previous Wireless and Sensing operating segment, and the IoT Connected Services operating segment. In the six months ended July 30, 2023, the Company finalized the determination of the reporting units related to the previously-identified operating segments. IoT System-Modules and IoT System-Routers were identified as reporting units, which together with IoT System-Wireless (f.k.a. Wireless and Sensing) reporting unit, aggregate into the IoT System operating segment. IoT Connected Services comprises one reporting unit and, accordingly, is both a reporting unit and an operating segment. During the six months ended July 30, 2023, the Company also completed a preliminary allocation of the goodwill balance resulting from the Sierra Wireless Acquisition to each of these reporting units.
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.
During the second quarter of fiscal year 2024, as a result of reduced earnings forecasts associated with the business acquired from Sierra Wireless and current 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, 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 resulting from business acquisitions, which are amortized over their estimated useful lives:
 July 30, 2023January 29, 2023
(in thousands, except estimated useful life)Estimated
Useful Life		Gross
Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Core technologies
1-8 years
$154,926 $(22,576)$132,350 $175,080 $(21,156)$153,924 
Customer relationships
1-10 years
52,330 (8,856)43,474 53,000 (690)52,310 
Trade name
2-10 years
9,000 (1,715)7,285 9,000 (132)8,868 
Total finite-lived intangible assets$216,256 $(33,147)$183,109 $237,080 $(21,978)$215,102 
Amortization expense of finite-lived intangible assets was as follows:
Three Months EndedSix Months Ended
(in thousands)July 30, 2023July 31, 2022July 30, 2023July 31, 2022
Core technologies$10,573 $1,048 $21,428 $2,096 
Customer relationships4,080 — 8,170 — 
Trade name791 — 1,583 — 
Total amortization expense$15,444 $1,048 $31,181 $2,096 
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 costs and expenses, net" in the Statements of Operations. As of the Acquisition Date, the weighted-average amortization period for the finite-lived intangible assets acquired in the Sierra Wireless Acquisition was 5.3 years, which reflects weighted-average amortization periods of 4.4 years, 7.9 years and 6.2 years for core technologies, customer relationships and trade name, respectively.
Future amortization expense of finite-lived intangible assets is expected as follows:
(in thousands)Core TechnologiesCustomer RelationshipsTrade nameTotal
2024 (remaining six months)$20,024 $7,656 $1,583 $29,263 
202539,510 3,999 1,722 45,231 
202632,402 3,999 500 36,901 
202717,541 3,999 500 22,040 
202813,530 3,999 500 18,029 
Thereafter9,343 19,822 2,480 31,645 
Total expected amortization expense$132,350 $43,474 $7,285 $183,109 
Also presented in “Other intangible assets, net” in the Balance Sheets, are finite-lived intangible assets under construction to be amortized upon placement in service. The following table sets forth the Company's finite-lived intangible assets under construction:
(in thousands)Net Carrying Amount
Value at January 29, 2023$— 
Capitalized development costs292 
Value at July 30, 2023$292