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Business Acquisitions | 6 Months Ended
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Jun. 29, 2019
Business Combinations [Abstract] |
Business Acquisitions | Business Acquisitions Profitect On May 31, 2019, the Company acquired 100% of the equity interests of Profitect, Inc. (“Profitect”), a provider of prescriptive analytics primarily for the retail industry. In acquiring Profitect, the Company seeks to enhance its existing software solutions within the retail industry, with possible future applications in other industries, markets and product offerings. The Profitect acquisition was accounted for under the acquisition method of accounting for business combinations. The total purchase consideration was $90 million, which consisted of $86 million in cash paid, net of cash on-hand, and the fair value of the Company’s existing ownership interest in Profitect of $4 million, as remeasured upon acquisition. Additionally, we incurred $2 million of cash acquisition-related costs, which primarily included third-party transaction and advisory fees that were included within Acquisition and integration costs on the Consolidated Statements of Operations. Prior to the acquisition, the Company held a minority ownership interest in Profitect. Upon completion of the step acquisition, the Company remeasured its previously held ownership interest to fair value resulting in a $4 million gain reflected within Other, net in the Consolidated Statements of Operations. The Company utilized estimated fair values as of May 31, 2019 to allocate the total purchase consideration to the net tangible and intangible assets acquired and liabilities assumed. The fair value of the net assets acquired was based on a number of estimates and assumptions as well as customary valuation procedures and techniques, principally the excess earnings methodology. While we believe these estimates provide a reasonable basis to record the net assets acquired, the purchase price allocation is considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. The primary fair value estimates considered preliminary include identifiable intangible assets and income tax-related items. The operating results of Profitect have been included in the Company’s Consolidated Balance Sheet and Statement of Operations beginning May 31, 2019. The Company has not included unaudited pro forma results, as if Profitect had been acquired as of January 1, 2018, as doing so would not yield materially different results. The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions):
Identifiable intangible assets | $ | 42 |
Other assets acquired | 4 |
Deferred tax liabilities | (4 | )
Other liabilities assumed | (10 | )
Net Assets Acquired | $ | 32 |
Goodwill on acquisition | 58 |
Total purchase consideration | $ | 90 |
The $58 million of goodwill, which will be non-deductible for tax purposes, has been allocated to the EVM segment and principally relates to the planned expansion of the Profitect software offerings and technologies into current and new markets, industries, and product offerings. The preliminary purchase price allocation to identifiable intangible assets acquired was:
| Fair Value (in millions) |  | Useful Life (in years)
Current technology | $ | 40 |  |  | 8
Customer relationships | 2 |  |  | 1
Total identifiable intangible assets | $ | 42 |  |  |
Temptime On February 21, 2019, the Company acquired 100% of t he equity interests of Temptime Corporation (“Temptime”), a developer and manufacturer of temperature-monitoring labels and devices. The Company intends for the acquisition of Temptime to expand its product offerings within the healthcare industry, with possible future applications in other industries involving temperature-sensitive products. The Temptime acquisition was accounted for under the acquisition method of accounting for business combinations. The Company paid $180 million in cash, net of cash on-hand, to acquire Temptime. Additionally, we incurred $2 million of cash acquisition-related costs, which primarily included third-party transaction and advisory fees that were included within Acquisition and integration costs on the Consolidated Statements of Operations. The Company utilized estimated fair values as of February 21, 2019 to allocate the total consideration paid to the net tangible and intangible assets acquired and liabilities assumed. The fair value of the net assets acquired was based on a number of estimates and assumptions as well as customary valuation procedures and techniques, including relief from royalty and excess earnings methodologies. While we believe these estimates provide a reasonable basis to record the net assets acquired, the purchase price allocation is considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. The primary fair value estimates considered preliminary include identifiable intangible assets and income tax-related items. The operating results of Temptime were included in the Company’s Consolidated Balance Sheet and Statement of Operations beginning February 21, 2019. The Company has not included unaudited pro forma results, as if Temptime had been acquired as of January 1, 2018, as doing so would not yield materially different results. The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions):
Inventory | $ | 14 |
Property, plant and equipment | 10 |
Identifiable intangible assets | 106 |
Other assets acquired | 13 |
Deferred tax liabilities | (24 | )
Other liabilities assumed | (12 | )
Net Assets Acquired | $ | 107 |
Goodwill on acquisition | 73 |
Total purchase consideration | $ | 180 |
The $73 million of goodwill, which will be non-deductible for tax purposes, has been allocated to the AIT segment and principally relates to the planned expansion of the Temptime product offerings and technologies into current and new markets and industries. The preliminary purchase price allocation to identifiable intangible assets acquired was:
| Fair Value (in millions) |  | Useful Life (in years)
Customer and other relationships | $ | 79 |  |  | 8
Current technology | 25 |  |  | 8
Trade Names | 2 |  |  | 3
Total identifiable intangible assets | $ | 106 |  |  |
Reflected in the preliminary purchase price allocation for Temptime was an increase to Other assets acquired of $2 million and a decrease to Other liabilities assumed of $1 million as a result of measurement period adjustments made during the second quarter of 2019. The purchase price also increased by $1 million during the second quarter of 2019 resulting from the finalization of acquired working capital positions. These adjustments, relating to facts and circumstances existing as of the acquisition date, resulted in a $2 million reduction of Goodwill. Xplore On August 14, 2018, the Company acquired Xplore Technologies Corporation (“Xplore”). The Company recorded measurement period adjustments relating to facts and circumstances existing as of the acquisition date, primarily an increase in deferred tax assets and a corresponding decrease in goodwill of $5 million and $1 million during the first and second quarters of 2019, respectively. The Xplore purchase price allocation has been finalized as of June 29, 2019.

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- 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
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