Contingent consideration payment

[Table of Contents](#ic085909a172f44ef92ae922b1099b569_7)system. The Company estimated the fair value of this liability to be $81.8 million at the date of acquisition. The contingent payments are based on a multiple of annual incremental revenue growth over a three-year period ending annually in December of each of 2021, 2022, and 2023. There is no maximum earnout. Pursuant to ASC 805, Business Combinations (ASC 805), the Company recorded its estimate of the fair value of the contingent consideration liability utilizing the Monte Carlo simulation based on future revenue projections of Acessa, revenue growth rates of comparable companies, implied volatility and applying a risk adjusted discount rate. Each quarter the Company is required to remeasure the fair value of the liability as assumptions change and such adjustments are recorded in operating expenses. This fair value measurement was based on significant inputs not observable in the market and thus represented a Level 3 measurement as defined in ASC 820, Fair Value Measurements. This fair value measurement is directly impacted by the Company's estimate of future incremental revenue growth of the business. Accordingly, if actual revenue growth is higher or lower than the estimates within the fair value measurement, the Company would record additional charges or benefits, respectively. For the three and six month periods ended March 27, 2021, the Company remeasured the contingent consideration liability and decreased the contingent consideration liability by $14.7 million and $10.1 million, respectively, to record the liability at fair value as of March 27, 2021. The reduction in fair value was primarily due to a decrease in forecasted revenues over the measurement period. As of September 25, 2021, the contingent consideration liability was $75.1 million. During the three months ended December 25, 2021, the first measurement period was completed, and the Company recorded a gain of $4.1 million to decrease the contingent consideration liability to fair value based on actual revenue results in the first earn-out period. During the second quarter of fiscal 2022, the Company made a payment of $12.2 million for the first earn-out period. There was no change in the fair value of the liability in the second quarter of fiscal 2022. As of March 26, 2022, the contingent consideration liability was $58.8 million.   
(6) Restructuring  
During the first quarter of fiscal 2022, the Company finalized its decision to close its Danbury, Connecticut facility where it manufactures its Breast Health capital equipment products. The manufacturing of the Breast Health capital equipment products and all other support services will be moved to the Company's Newark, Delaware facility. In addition, research and development, sales and services support and administrative functions will be moved to the Newark and Marlborough, Massachusetts facilities. The transition is expected to be completed by the third quarter of fiscal 2025. The majority of employees located in Danbury have been given the option to relocate to the new locations. As a result of this plan, the Company expects a number of employees to not relocate resulting in their termination. The employees were notified of the closure during the first quarter of fiscal 2022, but were not communicated their termination or severance and related benefits. As such, no severance and benefits charges were recorded in the first or second quarters of fiscal 2022 pursuant to ASC 420, Exit or Disposal Cost Obligations (ASC 420). The Company estimates that total severance and benefits charges, including retention, will be approximately $10.0 million, which will be recorded ratably over the service period to obtain such benefits once the communication date is met.   
(7) Borrowings and Credit Arrangements  
The Company’s borrowings consisted of the following:   


|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | March 26,2022 |  | September 25,2021 |
| Current debt obligations, net of debt discount and deferred issuance costs: |  |  |  |
| Term Loan | $ | 7.5  |  |  | $ | —  |  |
|  |  |  |  |
| Securitization Program | 248.5  |  |  | 248.5  |  |
| Other | 0.2  |  |  | 64.5  |  |
| Total current debt obligations | $ | 256.2  |  |  | $ | 313.0  |  |
| Long-term debt obligations, net of debt discount and issuance costs: |  |  |  |
| Term Loan | 1,482.1  |  |  | 1,382.3  |  |
|  |  |  |  |
| 2028 Senior Notes | 395.7  |  |  | 395.4  |  |
| 2029 Senior Notes | 935.6  |  |  | 934.5  |  |
|  |  |  |  |
| Total long-term debt obligations | $ | 2,813.4  |  |  | $ | 2,712.2  |  |
| Total debt obligations | $ | 3,069.6  |  |  | $ | 3,025.2  |  |

  
  
  
18
