Envista Holdings Corp

Previous wording

For both the three and six months ended June 28, 2024, sales derived from customers outside of the United States were 52.8% compared to the three and six months ended June 30, 2023, of 52.7% and 52.5%, respectively. As a global provider of dental consumables, equipment and services, our operations are affected by worldwide, regional and industry-specific economic and political factors. Given the broad range of dental products, software and services provided and geographies served, we do not use any indices other than general economic trends to predict our overall outlook. Our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.

Current wording

For the three and nine months ended September 27, 2024, sales derived from customers outside of the United States were 51.2% and 52.1%, respectively, compared to the three and nine months ended September 29, 2023 of 51.1% and 52.1%, respectively. As a global provider of dental consumables, equipment and services, our operations are affected by worldwide, regional and industry-specific economic and political factors. Given the broad range of dental products, software and services provided and geographies served, we do not use any indices other than general economic trends to predict our overall outlook. Our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.

Previous wording

Our aligner business, included in the Specialty, Products & Technologies segment, enters into revenue contracts that involve multiple future performance obligations which include optional aligners at no additional charge. Our treatment plans are comprised of the following performance obligations: initial aligner shipment and the shipment of any optional refinement aligners. For such plans, we also consider usage rates, which is the number of times a customer is expected to order additional refinement aligners. This usage rate is the basis for estimating the amount of transaction price to allocate to future performance obligations.

Current wording

Our aligner business, included in the Specialty, Products & Technologies segment, enters into revenue contracts that involve multiple future performance obligations which include optional aligners at no additional charge. Our treatment plans are comprised of the following performance obligations: initial aligner shipment and the subsequent shipments of any optional refinement aligners. For such plans, we also consider usage rates, which is the number of times a customer is expected to order additional refinement aligners. This usage rate is the basis for estimating the amount of transaction price to allocate to future performance obligations.

Previous wording

We continually review and update the usage rate and other related assumptions. As part of this review throughout 2024, we updated our assumptions based on our evaluation of current inputs and historical usage data. This evaluation resulted in an increase in the aggregate amount of transaction price allocated to future performance obligations for new treatment plans entered into during the year, which impacted the timing of revenue recognition. Future changes to usage rates and related assumptions may impact the pattern of revenue recognition for future treatment plans. The process of estimating the number of times a clear aligner customer is expected to order additional aligners after the initial aligner shipment requires judgment and evaluation of inputs, including historical usage data in order to predict future usage patterns.

Current wording

We continually review and update the usage rate and other related assumptions. As part of this review throughout 2024, we updated our assumptions based on our evaluation of current inputs and historical usage data. This evaluation resulted in certain changes, including an increase in the aggregate amount of transaction price allocated to future performance obligations for new treatment plans entered into during the year, which impacted the timing of revenue recognition. Future changes to usage rates and related assumptions may impact the pattern of revenue recognition for future treatment plans. The process of estimating the number of times a clear aligner customer is expected to order additional aligners after the initial aligner shipment requires judgment and evaluation of inputs, including historical usage data in order to predict future usage patterns.

Previous wording

On a period-over-period basis, currency exchange rates negatively impacted reported sales by 1.2% for both the three and six months ended June 28, 2024, compared to the comparable periods of 2023, primarily due to the strength of the U.S. dollar against most major currencies. Any future strengthening of the U.S. dollar against major currencies would negatively impact our sales and results of operations for the remainder of the year, and any weakening of the U.S. dollar against major currencies would positively impact our sales and results of operations for the remainder of the year.

Current wording

On a period-over-period basis, currency exchange rates positively impacted reported sales by 0.5% for the three months ended September 27, 2024, compared to the comparable period of 2023, primarily due to the weakened U.S. dollar against major currencies. Additionally, on a period-over-period basis, currency exchange rates negatively impacted reported sales by 0.6% for the nine months ended September 27, 2024, compared to the comparable period of 2023, primarily due to the strength of the U.S. dollar against major currencies. Any future strengthening of the U.S. dollar against major currencies would negatively impact our sales and results of operations for the remainder of the year, and any weakening of the U.S. dollar against major currencies would positively impact our sales and results of operations for the remainder of the year.

Previous wording

Russia’s invasion of Ukraine and the global response to this invasion, including sanctions imposed by the U.S. and other countries, could have an adverse impact on our business, including our ability to market and sell products in the affected regions, potentially heightening our risk of cyber security attacks, impacting our ability to enforce our intellectual property rights in Russia, creating disruptions in the global supply chain, and potentially having an adverse impact on the global economy, financial markets, energy markets, currency rates and otherwise. While we are experiencing volatility in sales from this region, Russia’s invasion of Ukraine did not have a material impact on our overall financial position or results of operations as of and for the three and six months ended June 28, 2024 and June 30, 2023.

Current wording

Russia’s invasion of Ukraine and the global response to this invasion, including sanctions imposed by the U.S. and other countries, could have an adverse impact on our business, including our ability to market and sell products in the affected regions, potentially heightening our risk of cyber security attacks, impacting our ability to enforce our intellectual property rights in Russia, creating disruptions in the global supply chain, and potentially having an adverse impact on the global economy, financial markets, energy markets, currency rates and otherwise. While we are experiencing volatility in sales from this region, Russia’s invasion of Ukraine did not have a material impact on our overall financial position or results of operations as of and for the three and nine months ended September 27, 2024 and September 29, 2023.

Previous wording

In response to the attacks in Israel and the subsequent hostilities, we continue to monitor the social, political, and economic environment in Israel and in the region for any impact to our operations. Revenue generated from Israel is approximately $12 million annually. We also maintain a production facility in Israel related to our Alpha-Bio Tech Implant brand. While we have experienced some volatility in the region, the Israel-Hamas War and related hostilities have not had a material impact on our business.

Current wording

In response to the attacks in Israel and the subsequent and expanding hostilities, we continue to monitor the social, political, and economic environment in Israel and in the region for any impact to our operations. We maintain a production facility in Israel related to our Alpha-Bio Tech Implant brand. While we have experienced some volatility in the region, the Israel-Hamas War and related hostilities have not had a material impact on our business.

Previous wording

All comparisons, variances, increases or decreases discussed below are for the three and six months ended June 28, 2024, compared to the three and six months ended June 30, 2023.

Current wording

All comparisons, variances, increases or decreases discussed below are for the three and nine months ended September 27, 2024, compared to the three and nine months ended September 29, 2023.

Previous wording

Sales and core sales growth for the three months ended June 28, 2024 decreased 4.4% and 3.2%, respectively, as compared to the corresponding period in 2023. A decrease in sales volume negatively impacted sales by 4.5% on a period-over-period basis, partially offset by an increase in sales price of 1.3%. Sales volume for the three months ended June 28, 2024 was impacted by an increase in the revenue deferral from our clear aligner treatment plans resulting from higher usage rates, while overall sales decreased primarily due to lower demand in North America and China.

Current wording

Sales and core sales growth for the three months ended September 27, 2024 decreased 4.8% and 5.3%, respectively, as compared to the corresponding period in 2023. A decrease in sales volume driven by channel inventory realignment, and changes to revenue deferral related to our clear aligner treatment plans negatively impacted sales by 6.8% on a period-over-period basis, partially offset by an increase in sales price of 1.5%. Sales volume for the three months ended September 27, 2024 was negatively impacted by an overall sales decrease driven by lower demand in North America, Europe and China.

Previous wording

Sales and core sales growth for the six months ended June 28, 2024 decreased 2.6% and 1.4%, respectively, as compared to the corresponding period in 2023. A decrease in sales volume negatively impacted sales by 2.0% on a period-over-period basis, partially offset by an increase in sales price of 0.6%. Sales volume for the six months ended June 28, 2024 was impacted by an increase in the revenue deferral from our clear aligner treatment plans resulting from higher usage rates, while overall sales decreased due to lower demand in North America, partially offset by an increase in China.

Current wording

Sales and core sales growth for the nine months ended September 27, 2024 decreased 3.3% and 2.7%, respectively, as compared to the corresponding period in 2023. A decrease in sales volume driven by channel inventory realignment, and changes to revenue deferral related to our aligner treatment plans negatively impacted sales by 3.6% on a period-over-period basis, partially offset by an increase in sales price of 0.9%. Sales volume for the nine months ended September 27, 2024 was negatively impacted by an overall sales decrease driven by lower demand in North America and Europe, partially offset by an increase in Russia and China.

Previous wording

The decrease in gross profit margin percentage during the three and six months ended June 28, 2024, as compared to the comparable periods in 2023, was primarily due to the impairment of certain long-lived assets, unfavorable product mix, and lower period-over-period savings associated with productivity improvements, partially offset by an increase in sales price.

Current wording

The increase in cost of sales and decrease in gross profit margin during the nine months ended September 27, 2024 as compared to the comparable period in 2023, was primarily driven by unfavorable product mix, higher costs due to unfavorable foreign currency exchange rates, the impairment of certain long-lived assets and lower period-over-period savings associated with productivity improvements. The decrease in gross profit margin percentage was further impacted by lower volume driven by channel inventory realignment, and changes to revenue deferral related to our clear aligner treatment plans, partially offset by a 0.9% increase in sales price.

Previous wording

The increase in SG&A expenses as a percentage of sales for the three months ended June 28, 2024 as compared to the comparable period of 2023, was primarily due to higher sales and marketing costs, increased compensation and higher bad debt and legal settlement costs.

Current wording

The increase in SG&A expenses as a percentage of sales for the three months ended September 27, 2024 as compared to the comparable period of 2023, was primarily due to higher sales and marketing investments and increased compensation.

Previous wording

The increase in SG&A expenses as a percentage of sales for the six months ended June 28, 2024 as compared to the comparable period of 2023, was primarily due to higher sales and marketing costs, increased compensation, increased bad debt and higher legal settlement costs, partially offset by a decrease in amortization of intangible assets.

Current wording

The increase in SG&A expenses as a percentage of sales for the nine months ended September 27, 2024 as compared to the comparable period of 2023, was primarily due to higher sales and marketing investments, increased compensation, increased bad debt and higher legal settlement costs, partially offset by a decrease in amortization of intangible assets.

Previous wording

R&D expenses as a percentage of sales for the three and six months ended June 28, 2024, was consistent with the comparable periods in 2023.

Current wording

R&D expenses as a percentage of sales for the three and nine months ended September 27, 2024, was consistent with the comparable periods in 2023.

Previous wording

Goodwill and intangible asset impairment for the three and six months ended June 28, 2024 of $1,153.8 million consisted of a $960.5 million goodwill charge and a $193.3 million intangible asset charge. Approximately $707.8 million of the goodwill impairment charge related to our Specialty Products & Technologies segment and $252.7 million related to our Equipment & Consumables segment. The reduction in value is due to adverse macroeconomic factors as a result of weakened global demand, a sustained suppressed stock price, higher cost of capital, and increased raw material, supply chain and service costs, which are contributing to reduced revenue forecasts, lower operating margins, and reduced expectations of future cash flows. The intangible asset impairment charges consist of $101.1 million related to certain indefinite-lived trade names within the Specialty Products & Technologies segment and $92.2 million consisting of certain finite-lived patents and technology and customer relationships within the Equipment & Consumables segment and are primarily due to a reduction in projected cash flows discussed above.

Current wording

Goodwill and intangible asset impairment for the nine months ended September 27, 2024 of $1,153.8 million consisted of a $960.5 million goodwill charge and a $193.3 million intangible asset charge. Approximately $707.8 million of the goodwill impairment charge related to our Specialty Products & Technologies segment and $252.7 million related to our Equipment & Consumables segment. The reduction in value was due to adverse macroeconomic factors as a result of weakened global demand, a sustained suppressed stock price, higher cost of capital, and increased raw material, supply chain and service costs, which contributed to reduced revenue forecasts, lower operating margins, and reduced expectations of future cash flows.

Previous wording

There were no goodwill and intangible asset impairment charges recorded for the three or six month periods ended June 30, 2023.

Current wording

There were no goodwill and intangible asset impairment charges recorded for the three months ended September 27, 2024 nor for the three or nine month periods ended September 29, 2023.

Previous wording

Other expense, net for the three and six months ended June 28, 2024 primarily consists of a $1.1 million net loss on equity investments, while other income, net for the three and six months ended June 30, 2023 primarily consists of a $6.9 million gain on an equity investment.

Current wording

Other income, net for the three months ended September 27, 2024 primarily consists of net gains on investments, while Other expense, net for the three months ended September 29, 2023 primarily consists of $29.0 million of inducement and other expenses associated with the Notes Exchanges and a loss on investments of $3.3 million.

Previous wording

Interest costs were $11.7 million and $17.4 million for the three months ended June 28, 2024 and June 30, 2023, respectively, and $24.6 million and $34.1 million for the six months ended June 28, 2024 and June 30, 2023, respectively. The decrease in interest expense was primarily due to higher returns on cash and cash equivalents, partially offset by higher variable rate term borrowings and interest rates.

Current wording

Interest costs were $11.9 million and $15.4 million for the three months ended September 27, 2024 and September 29, 2023, respectively, and $36.5 million and $49.5 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. The decrease in interest expense was primarily due to higher returns on cash and cash equivalents, partially offset by higher variable rate term borrowings and interest rates.

Previous wording

Operating profit margin was 1.4% for the three months ended June 28, 2024, as compared to an operating profit margin of 13.4% for the comparable period of 2023. Operating profit margin was 6.1% for the six months ended June 28, 2024, as compared to an operating profit margin of 15.3% for the comparable period of 2023. The decrease in operating profit margin for both the three and six month periods was primarily due to an increase in revenue deferral from our clear aligner treatment plans resulting from higher usage rates, impairment of certain long-lived assets, higher bad debt costs, unfavorable product mix, lower period-over-period savings associated with productivity improvements and higher costs related to our long-term growth initiatives.

Current wording

Operating profit margin was 5.2% for the nine months ended September 27, 2024, as compared to an operating profit margin of 15.3% for the comparable period of 2023. The decrease in operating profit margin was primarily due to lower sales, including the impact from changes to the revenue deferral related to our clear aligner treatment plans, the impairment of certain long-lived assets, higher bad debt costs, unfavorable product mix, lower period-over-period savings associated with productivity improvements, higher costs due to unfavorable foreign exchange rates and our investment in our long-term growth initiatives.

Previous wording

Sales and core sales growth for the three months ended June 28, 2024 decreased 11.2%, and 10.1%, respectively, compared to the comparable period in 2023. A decrease in sales volume negatively impacted sales by 13.2% on a period-over-period basis, partially offset by an increase in sales price of 3.1%. Sales and core sales growth for the six months ended June 28, 2024 decreased 6.4%, and 5.5%, respectively, compared to the comparable period in 2023. A decrease in sales volume negatively impacted sales by 7.1% on a period-over-period basis, partially offset by an increase in sales price of 1.6%. The decrease in sales for both the three and six months ended June 28, 2024 is primarily due to lower demand from North America, Europe and China.

Current wording

Sales and core sales growth for the nine months ended September 27, 2024 decreased 6.1%, and 5.5%, respectively, compared to the comparable period in 2023. A decrease in sales volume driven by channel inventory realignment negatively impacted sales by 8.0% on a period-over-period basis, partially offset by an increase in sales price of 2.5%. The decrease in sales for the nine months ended September 27, 2024 is primarily due to lower demand from North America, Europe and China, partially offset by Russia.

Previous wording

Operating profit margin was 14.3% for the six months ended June 28, 2024, as compared to an operating profit margin of 17.5% for the comparable period in 2023. The decrease in operating profit margin was primarily due to a decrease in sales volume and unfavorable product mix, partially offset by favorable sales price and a decrease in amortization of intangible assets.

Current wording

Operating profit margin was 17.6% for the three months ended September 27, 2024, as compared to an operating profit margin of 18.9% for the comparable period of 2023. Operating profit margin was 15.4% for the nine months ended September 27, 2024, as compared to an operating profit margin of 18.0% for the comparable period in 2023. The decrease in operating profit margin for both the three and nine months ended September 27, 2024 was primarily due to a decrease in sales volume driven by channel inventory realignment, unfavorable product mix, higher costs due to unfavorable foreign exchange rates, partially offset by favorable sales price and a decrease in amortization of intangibles.

Previous wording

Net cash provided by operating activities was $133.4 million during the six months ended June 28, 2024, as compared to net cash provided by operating activities of $78.2 million for the comparable period of 2023. The increase in cash provided by operating activities during the six months ended June 28, 2024 is primarily due to timing of vendor payments combined with an increase in cash collections, partially offset by lower net income as compared to 2023.

Current wording

Net cash provided by operating activities was $204.1 million during the nine months ended September 27, 2024, as compared to net cash provided by operating activities of $173.7 million for the comparable period of 2023. The increase in cash provided by operating activities during the nine months ended September 27, 2024 is primarily due to timing of vendor payments combined with an increase in cash collections, partially offset by lower net income as compared to 2023.

Previous wording

Net cash used in investing activities was $16.6 million for the six months ended June 28, 2024, as compared to net cash used in investing activities of $24.8 million for the comparable period in 2023, and was primarily due to the lower payments for purchases of property, plant and equipment offset by the absence of proceeds for the sale of an equity investment in the prior year.

Current wording

Net cash used in investing activities was $47.2 million for the nine months ended September 27, 2024, as compared to net cash used in investing activities of $49.8 million for the comparable period in 2023, and was primarily due to the net purchases of investments held in a rabbi trust combined with the absence of proceeds for the sale of an equity investment in the prior year, offset by lower net payments for purchases of property, plant and equipment.

Previous wording

Net cash used by finance activities was $2.3 million for the six months ended June 28, 2024 compared to net cash provided by financing activities of $1.1 million for the comparable period of 2023, primarily due to lower cash proceeds from stock option exercises.

Current wording

Net cash used by finance activities was $102.8 million for the nine months ended September 27, 2024 compared to net cash provided by financing activities of $115.6 million for the comparable period of 2023, primarily due to the net borrowings during 2023 as compared to a repayment of $100.0 million of the 2028 Term Loan during 2024.

Previous wording

As of June 28, 2024, we held $1,036.2 million of cash and cash equivalents that were held on deposit with financial institutions. Of this amount, $338.2 million was held within the United States and $698.0 million was held outside of the United States. We will continue to have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund our restructuring activities as required and support other business needs. We generally intend to use available cash, internally generated funds and our revolving credit facility to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions, we may need to enter into new credit facilities or access the capital markets. We may also access the capital markets from time to time to take advantage of favorable interest rate environments or other market conditions. However, there is no guarantee that we will be able to obtain alternative sources of financing on commercially reasonable terms or at all. See “Item 1A. Risk Factors—Risks Related to Our Business” in our 2023 10-K.

Current wording

As of September 27, 2024, we held $991.3 million of cash and cash equivalents that were held on deposit with financial institutions. Of this amount, $212.6 million was held within the United States and $778.7 million was held outside of the United States. We will continue to have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund our restructuring activities as required and support other business needs. We generally intend to use available cash, internally generated funds and our revolving credit facility to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions, we may need to enter into new credit facilities or access the capital markets. We may also access the capital markets from time to time to take advantage of favorable interest rate environments or other market conditions. However, there is no guarantee that we will be able to obtain alternative sources of financing on commercially reasonable terms or at all. See “Item 1A. Risk Factors—Risks Related to Our Business” in our 2023 10-K.

Previous wording

As of June 28, 2024, we believe that we have sufficient sources of liquidity to satisfy our cash needs over the next 12 months and beyond, including our cash needs in the United States.

Current wording

As of September 27, 2024, we believe we have sufficient sources of liquidity to satisfy our cash needs over the next 12 months and beyond, including our cash needs in the United States.

Previous wording

There were no material changes to our contractual obligations during the three and six months ended June 28, 2024.

Current wording

There were no material changes to our contractual obligations during the three and nine months ended September 27, 2024.

Previous wording

In preparing our financial statements for the quarter ended June 28, 2024, we identified indicators of a "more likely than not" impairment related to various reporting units within our Specialty Products & Technologies and Equipment & Consumables segments. For goodwill, we used the income approach in performing our goodwill impairment test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value amount. Our reporting units are the financial components of operating segments which constitute businesses for which discrete financial information is available and regularly reviewed by segment management. The income approach uses a discounted cash flow model with inputs developed using both internal and market-based data. Our significant assumptions in the discounted cash flow models vary amongst, and are specific to, each reporting unit which include, but are not limited to, discount rates, revenue growth rates, and operating margin assumptions. The discounted cash flow model requires judgments and assumptions about projected sales growth, future operating margins, discount rates and terminal values. There are inherent uncertainties related to these assumptions and our judgment in applying them to the analysis of goodwill impairment.

Current wording

During the second quarter ended June 28, 2024, we identified indicators of a "more likely than not" impairment related to various reporting units within our Specialty Products & Technologies and Equipment & Consumables segments. For goodwill, we used the income approach in performing our goodwill impairment test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value amount. Our reporting units are the financial components of operating segments which constitute businesses for which discrete financial information is available and regularly reviewed by segment management. The income approach uses a discounted cash flow model with inputs developed using both internal and market-based data. Our significant assumptions in the discounted cash flow models vary amongst, and are specific to, each reporting unit which include, but are not limited to, discount rates, revenue growth rates, and operating margin assumptions. The discounted cash flow model requires judgments and assumptions about projected sales growth, future operating margins, discount rates and terminal values. There are inherent uncertainties related to these assumptions and our judgment in applying them to the analysis of goodwill impairment.

Previous wording

Our goodwill impairment analysis for the three and six months ended June 28, 2024 indicated that the fair value of five of our eight reporting units did not exceed their carrying values and consequently resulted in a $960.5 million impairment charge. The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the three reporting units not impaired, ranged from approximately 38% to approximately 88%, and zero for the five reporting units with impairments. In order to evaluate the sensitivity of the fair value calculations used in the goodwill impairment test, we applied a hypothetical 10% decrease to the fair values of each reporting unit and compared those hypothetical values to the reporting unit carrying values. Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the three reporting units not impaired, ranged from approximately 24% to approximately 69%. For the five impaired reporting units, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $289 million.

Current wording

Our goodwill impairment analysis at June 28, 2024 indicated that the fair value of five of our eight reporting units did not exceed their carrying values and consequently resulted in a $960.5 million impairment charge. The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the three reporting units not impaired, ranged from approximately 38% to approximately 88%, and zero for the five reporting units with impairments. In order to evaluate the sensitivity of the fair value calculations used in the goodwill impairment test, we applied a hypothetical 10% decrease to the fair values of each reporting unit and compared those hypothetical values to the reporting unit carrying values. Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the three reporting units not impaired, ranged from approximately 24% to approximately 69%. For the five impaired reporting units, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $289 million.

Previous wording

For indefinite-lived intangible assets, we used the relief from royalty method to estimate the fair value. Our significant assumptions vary amongst, and are specific to, each underlying indefinite-lived intangible asset which includes, but is not limited to, discount rates, revenue growth rates assumptions (including perpetual growth rates) and royalty rates. As a result of our indefinite-lived intangible asset impairment test during the three and six months ended June 28, 2024, we recorded an impairment charge of $101.1 million related to certain indefinite-lived trade names within the Specialty Products & Technologies segment. The reduction in value is primarily due to a reduction in projected cash flows as discussed above.

Current wording

For indefinite-lived intangible assets, we used the relief from royalty method to estimate the fair value. Our significant assumptions vary amongst, and are specific to, each underlying indefinite-lived intangible asset which includes, but is not limited to, discount rates, revenue growth rates assumptions (including perpetual growth rates) and royalty rates. As a result of our indefinite-lived intangible asset impairment test at June 28, 2024, we recorded an impairment charge of $101.1 million related to certain indefinite-lived trade names within the Specialty Products & Technologies segment. The reduction in value was primarily due to a reduction in projected cash flows as discussed above.

Previous wording

Our impairment analysis for indefinite-lived intangible assets for the three and six months ended June 28, 2024, indicated that the fair value of two of our three trade names did not exceed their carrying value and consequently resulted in a $101.1 million impairment charge. The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the asset) for the remaining intangible asset was approximately 41%. In order to evaluate the sensitivity of the fair value calculations used in the indefinite-lived intangible asset impairment test, we applied a hypothetical 10% decrease to the fair value and compared that hypothetical value to the underlying asset carrying value. Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the intangible asset) for the intangible asset was approximately 27%. For the two trade names impaired, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $20 million.

Current wording

Our impairment analysis for indefinite-lived intangible assets at June 28, 2024 indicated that the fair value of two of our three trade names did not exceed their carrying value and consequently resulted in a $101.1 million impairment charge. The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the asset) for the remaining intangible asset was approximately 41%. In order to evaluate the sensitivity of the fair value calculations used in the indefinite-lived intangible asset impairment test, we applied a hypothetical 10% decrease to the fair value and compared that hypothetical value to the underlying asset carrying value. Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the intangible asset) for the intangible asset was approximately 27%. For the two trade names impaired, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $20 million.

Previous wording

Furthermore, we review the carrying amounts of other finite-lived intangible assets whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit, and adverse legal or regulatory developments. If it is determined that such indicators are present and the review indicates that the assets will not be fully recoverable based on undiscounted estimated cash flows, their carrying values are reduced to estimated fair market value. Estimated fair market value is determined primarily using projected cash flows discounted at a rate commensurate with the risk involved. For the purposes of identifying and measuring impairment, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For the three and six months ended June 28, 2024, we recorded an impairment of $92.2 million related to developed technology and customer relationships within our Equipment & Consumables segment. We did not record any impairment loss for finite-lived intangible assets for the three and six months ended June 30, 2023.

Current wording

Furthermore, we review the carrying amounts of other finite-lived intangible assets whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable. Impairment indicators include, among other factors, cash flow deficits, historic or anticipated declines in revenue or operating profit, and adverse legal or regulatory developments. If it is determined that such indicators are present and the review indicates that the assets will not be fully recoverable based on undiscounted estimated cash flows, their carrying values are reduced to estimated fair market value. Estimated fair market value is determined primarily using projected cash flows discounted at a rate commensurate with the risk involved. For the purposes of identifying and measuring impairment, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. We recorded an impairment of $92.2 million related to developed technology and customer relationships within our Equipment & Consumables segment as of and for the three and six months ended June 28, 2024. We did not record any impairment loss for finite-lived intangible assets for the three months ended September 27, 2024.