Company: PENG
Filing Date: 2025-07-08
Form Type: 10-Q
Source: 0001628280-25-034541
Chunk: 148

Company: Penguin Solutions, Inc.
Filing Date: 2025-07-08
Form: 10-Q
Item: Part II, Item 8
Chunk 148
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150,585 $161,958 In the first nine months of 2025 and 2024, we capitalized $1.3 million and $1.4 million, respectively, for intangible assets with weighted-average useful lives of 18.7 years and 18.4 years, respectively. Amortization expense for intangible assets was $8.6 million and $27.6 million in the third quarter and first nine months of 2025, respectively, and $9.9 million and $30.1 million in the third quarter and first nine months of 2024, respectively. Amortization expense is expected to be $8.0 million for the remainder of 2025, $30.3 million for 2026, $29.7 million for 2027, $10.0 million for 2028, $6.1 million for 2029 and $11.1 million for 2030 and thereafter.During the second quarter of 2023, we initiated a plan within our Advanced Computing segment pursuant to which we are winding down manufacturing and discontinuing the sale of products offered through our Penguin Edge business by approximately the end of calendar 2025. The Penguin Edge technology is becoming obsolete and is only sold to a small number of customers who we expect to phase out the technology. In each quarter of 2025, to assess the fair value of the Penguin Edge business and reporting unit for the purpose of goodwill impairment, we utilized a discounted cash flow model using assumptions for what a market participant would value the business based on expected future cash flows through the expected completion of the wind down. We used this valuation approach because there were no comparable transactions in the marketplace of a similar business being sold while in the process of winding down. Further, since the Penguin Edge business has no expansion or product initiatives, those expected future cash flows incorporated expected revenues, the costs associated with fulfilling customer contracts, and the costs associated with winding down the Penguin Edge business. In determining the fair value of the Penguin Edge business, it was our expectation that the business would continue to be profitable and generate positive free cash flow through the wind down of the business. We calculated the expected remaining cash flows based on existing contracts, future expected orders based on historical order volumes, and future expected orders identified through customer engagements for last-time buy planning, which were expected to fully consume all inventory on hand. Net estimated discounted cash flows were calculated by taking the total proceeds expected from sales, minus cash outflows for costs