XML 22 R9.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Acquisitions | 6 Months Ended
--- | ---
Jan. 31, 2022
Business Combinations [Abstract] |
Acquisitions | Acquisitions UHP Networks Inc. On March 2, 2021, we completed our acquisition of UHP Networks Inc. ("UHP"), a leading provider of innovative and disruptive satellite ground station technology solutions, pursuant to a stock purchase agreement initially entered into in November 2019 and amended in June 2020 and on March 1, 2021, respectively. With end-markets for high-speed satellite-based networks anticipated to significantly grow, our acquisition allows us to enhance our Commercial Solutions segment's offerings with low cost time division multiple access ("TDMA") satellite modems. The acquisition has a preliminary purchase price for accounting purposes of $37,470,000. Pursuant to the stock purchase agreement, during fiscal 2021, the initial upfront payment of approximately $23,979,000 was paid mostly in shares of our common stock, with $87,000 in cash. In August 2021, $3,991,000 of the $4,991,000 hold back amount previously placed into escrow at closing was paid to the seller in shares of our common stock, as the conditions pursuant to the stock purchase agreement were met. The stock purchase agreement also provides for a contingent earn-out payment of up to $9,000,000, also payable at our option in cash and or shares of our common stock, if specified sales milestones are reached during a defined period ending September 30, 2022. The preliminary estimated fair value of such contingent earn-out consideration at the acquisition date was $8,500,000. Of the $23,979,000 paid at closing, $4,560,000 was placed into escrow to be released ratably over three years upon settlement of potential indemnification obligations of the seller. We issued 1,026,567 shares of our common stock at closing, based on a volume weighted average stock price of approximately $28.14 per share, in satisfaction of initial payment and escrow arrangements under the terms of the stock purchase agreement. The terms of the stock purchase agreement provide an ability for us to substitute cash in lieu of the common stock that was initially placed into escrow. We are accounting for the acquisition under the acquisition method of accounting in accordance with FASB ASC 805, "Business Combinations" ("ASC 805"). The purchase price was allocated to the assets acquired and liabilities assumed, based on their preliminary fair value as of March 2, 2021 pursuant to the business combination accounting rules. Acquisition plan expenses were not included as a component of consideration transferred and were expensed in the period incurred. Our condensed consolidated statements of operations for the three and six months ended January 31, 2022 include a nominal amount of revenue contribution from the acquisition. Pro forma financial information is not disclosed, as the acquisition is not material. The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed in connection with the acquisition:
| Purchase Price Allocation (1) |  |  |  |  |
Initial upfront payment | $ | 23,979,000 |  |  |  |  |  |
Hold-back amount | 4,991,000 |  |  |  |  |  |
Contingent earn-out consideration | 8,500,000 |  |  |  |  |  |
Preliminary purchase price at fair value | $ | 37,470,000 |  |  |  |  |  |
Preliminary allocation of aggregate purchase price: |  |  |  |  |  |
Cash and cash equivalents | $ | 1,391,000 |  |  |  |  |  |
Current assets | 1,367,000 |  |  |  |  |  |
Property, plant and equipment | 10,000 |  |  |  |  |  |
Deferred tax assets | 310,000 |  |  |  |  |  |
Contract liabilities | (648,000) |  |  |  |  |  |
Accrued warranty obligations | (750,000) |  |  |  |  |  |
Other current liabilities | (1,175,000) |  |  |  |  |  |
Non-current liabilities | (160,000) |  |  |  |  |  |
Net tangible assets at preliminary fair value | $ | 345,000 |  |  |  |  |  |
Identifiable intangibles, deferred taxes and goodwill: |  |  |  |  |  | Estimated Useful Lives
Technology | $ | 15,300,000 |  |  |  |  |  | 15 years
Customer relationships | 15,500,000 |  |  |  |  |  | 15 years
Trade name | 800,000 |  |  |  |  |  | 20 years
Deferred tax liabilities | (8,374,000) |  |  |  |  |  |
Goodwill | 13,899,000 |  |  |  |  |  | Indefinite
Preliminary allocation of aggregate purchase price | $ | 37,470,000 |  |  |  |  |  |
(1) As reported in the Company's Quarterly Report on Form 10-Q for the three months ended October 31, 2021. The acquired identifiable intangible assets are being amortized on a straight-line basis, which we believe approximates the pattern in which the assets are utilized over their estimated useful lives. The preliminary fair value of customer relationships was estimated primarily based on the value of the discounted cash flows that the related intangible asset could be expected to generate in the future. The preliminary fair value of technology and trade name was estimated based on the discounted capitalization of royalty expense saved because we now own the assets. The preliminary estimated fair value of contingent earn-out consideration represents the present value of the estimated amount payable, based on a probability-weighted amount of net sales, as defined, during the earn-out period, which reflects significant management estimates and assumptions using unobservable Level 3 inputs, including: (i) possible outcomes for targeted net sales during the earn-out period; (ii) timing of each possible outcome; (iii) probability of each possible outcome; and (vi) discount rate reflecting the credit risk of the Company. Among the factors contributing to the recognition of goodwill, as a component of the purchase price allocation, were synergies in products and technologies and the addition of a skilled, assembled workforce. This goodwill has been assigned to our Commercial Solutions segment based on specific identification and is generally not deductible for income tax purposes. The allocation of the preliminary purchase price shown in the above table was based upon a preliminary valuation and estimates and assumptions that are subject to change within the purchase price allocation period, generally one year from the acquisition date. The primary areas of the purchase price allocation not yet finalized include the purchase price (due to customary adjustments for potential indemnification obligations of the seller under the stock purchase agreement), a final assessment of assets acquired and liabilities assumed, accrued warranty obligations, income taxes and residual goodwill. Acquisition Plan Expenses During the three and six months ended January 31, 2021, we incurred acquisition plan expenses of $3,357,000 and $94,540,000, respectively. Of the amount recorded for the six months ended January 31, 2021, $88,343,000 related to the previously announced litigation and merger termination with Gilat Satellite Networks, Ltd. ("Gilat"), including $70,000,000 paid in cash to Gilat. The remaining costs primarily related to the April 2021 settlement of litigation associated with the 2019 acquisition of GD NG-911 as well as our acquisition of UHP, which closed in March 2021. Additionally, during the six months ended January 31, 2021, we recorded $1,178,000 of incremental interest expense related to a now terminated financing commitment letter.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration