Company: PENG
Filing Date: 2025-07-08
Form Type: 10-Q
Source: 0001628280-25-034541
Chunk: 149

Company: Penguin Solutions, Inc.
Filing Date: 2025-07-08
Form: 10-Q
Item: Part II, Item 8
Chunk 149
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 associated with fulfilling customer contracts, operating expenses, collection of receivables recognized as of May 30, 2025, and costs associated with the wind 

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down of the Penguin Edge business. We assumed no capital expenditures because we are no longer investing in the business.We applied a discount rate of 16.25%, which we believe reflects the return a market participant would require when purchasing the Penguin Edge business given the risk profile of the remaining operations and the limited future cash flows from winding down. However, given the short period of time associated with the remaining cash flows for the business, changes to the discount rate would not have produced a materially different fair value estimate. Since the Penguin Edge business is no longer investing in growth initiatives and operating costs are significantly lower than for an ongoing business, we observed a positive present value of future expected cash flows, which we then compared to the carrying value of the business. Based on our analysis, the fair value of the Penguin Edge business was determined to be lower than its carrying value, resulting in an impairment charge of $5.3 million in the third quarter of 2025, and an aggregate total of $11.4 million in the first nine months of 2025. The goodwill impairments were recorded to align the carrying value of the Penguin Edge reporting unit with the fair value of the Penguin Edge reporting unit as of the end of the respective reporting periods. The goodwill impairment loss recognized reduced the Penguin Edge reporting unit’s carrying value to its fair value as of the end of the reporting period. As the Penguin Edge business continues to wind down, cash flows from the business will be received by us, decreasing the remaining cash flows from customer contracts and resulting in further declines in the fair value of the business and additional impairments of goodwill. We expect to fully impair the $4.7 million of remaining goodwill of the Penguin Edge reporting unit as of May 30, 2025, by the end of calendar 2025.

Accounts Payable and Accrued ExpensesAs ofMay 30,2025August 30,2024Accounts payable (1)$272,090 $182,037 Salaries, wages and benefits28,398 22,819 Income and other taxes6,761 11,863 Other3,323 2,371 $310,572 $219,090 (1)Included accounts payable for property and equipment of $0.8 million and $0.4 million as of May 30, 2025 and August