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Business Combinations | 6 Months Ended
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Jul. 04, 2015
Business Combinations [Abstract] |
Business Combinations | Note 3 – Business Combinations On October 27, 2014, the Company completed its acquisition of the Enterprise Business (“Enterprise”) from Motorola Solutions Inc. (“MSI”) for a purchase price of $3.45 billion (the “Acquisition”). This transaction positions the Company as a leading technology innovator, with the accelerating convergence of mobility, data analytics and cloud computing. It will enable the Company to further sharpen its strategic focus on providing mission-critical solutions for its customers. Certain assets and liabilities historically associated with the Enterprise business were retained by MSI, including MSI’s iDEN infrastructure business. The Acquisition was pursuant to the Master Acquisition Agreement dated April 14, 2014, as amended (the “Master Acquisition Agreement”) and was structured as a combination of stock and asset acquisitions and a merger of certain US entities, resulting in 100% ownership of Enterprise. The Company financed the Acquisition through a combination of cash on hand and borrowings of $3.25 billion (the “Indebtedness”), including the sale of 7.25% senior notes due 2022 with an aggregate principal amount of $1.05 billion (the “Senior Notes”) and a credit agreement with various lenders that provided a term loan of $2.2 billion (the “Term Loan”) due 2021. See Note 13 Long-Term Debt. Consideration was paid in the form of cash to MSI in the amount of $3.45 billion, including working capital adjustments. As of July 4, 2015, the allocations of the purchase price for the Acquisition have been prepared on a preliminary basis based on third-party valuations. The Company is in the process of evaluating third-party valuations related to the fair value of its tangible and intangible assets, in addition to determining and recording the tax effects of the transaction to include all assets and liabilities at fair value. Acquired goodwill represents the premium paid over the fair value of the net tangible and intangible assets acquired. The Company paid this premium for a number of reasons, including acquiring an experienced workforce and enhancing technology capabilities as further described above. During the first half of 2015, the Company adjusted certain preliminary values. The fair value adjustments are reflected in the table below and primarily result in an increase of $2.3 million in assets and a decrease of $4.4 million in liabilities and a corresponding decrease to goodwill of $6.7 million. Also, additional consideration of $48.8 million was paid to MSI on February 13, 2015 in relation to the opening cash balance. The impact on the Consolidated Statements of Operations relating to these fair value adjustments is not significant. The following table summarizes the preliminary estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition (in thousands):
Cash and cash equivalents |  | $ | 101,441 |
Accounts receivable, net (1) |  |  | 437,301 |
Inventories, net |  |  | 261,366 |
Deferred income taxes |  |  | 113,986 |
Other current assets |  |  | 21,905 |
Property and equipment |  |  | 126,424 |
Other intangibles, net |  |  | 1,014,421 |
Other long-term assets |  |  | 49,592 |
Deferred revenue |  |  | (172,161 | )
Tax liabilities |  |  | (9,410 | )
Other current liabilities (2) |  |  | (362,535 | )
Long-term deferred revenue |  |  | (102,424 | )
Unrecognized tax benefits |  |  | (9,526 | )
Other long-term liabilities |  |  | (24,884 | )
Long-term deferred income taxes |  |  | (223,055 | )
Total identifiable net assets |  | $ | 1,222,441 |
(1) | Based on the preliminary purchase price allocations, accounts receivable estimated fair value is $437.3 million and gross contractual value is $458.3 million. The difference represents the Company’s best estimate of the contractual cash flows that will not be collected.
(2) | Other current liabilities include accounts payable, customer reserves, and employee compensation and related benefits.
On a preliminary basis pending the receipt of final valuations, the purchase price was allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values resulting in goodwill of $2.329 billion. See Note 7 Goodwill and Other Intangibles. Currently, the amount of goodwill is assigned to the Enterprise segment. The final assignment of goodwill to reporting units has not been completed as of the date these financial statements are issued.

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