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Acquisitions
 9 Months Ended
Sep. 27, 2014
Acquisitions [Abstract]  
Acquisitions

4 Acquisitions

 

The Company accounts for business acquisitions under the accounting standards for business combinations and the results of each acquisition have been included in the Company's consolidated results from the respective acquisition dates.

 

In July 2014, the Company acquired the net assets of Medimass Research, Development and Service Kft. ("Medimass"), a developer of mass spectrometry-related technologies with the potential to be used for a variety of applications, for approximately $23 million in cash. In addition, the Company potentially has to pay additional contingent consideration, which had an estimated fair value of $3 million as of the closing date. The net assets acquired consist primarily of the Rapid Evaporative Ionization Mass Spectrometry ("REIMS") technology, including patent applications, software, databases and REIMS expertise. REIMS is an ionization technique that can be used as a source for direct analysis of samples by mass spectrometry. The purchase price of the acquisition was allocated to tangible and intangible assets and assumed liabilities based on their estimated fair values. The Company has allocated $18 million of the purchase prices to intangible assets comprised of $13 million of technology and $5 million of in-process research and development (IPR&D). The technology will be amortized over 15 years and the amortization of IPR&D will commence once commercialized. The remaining purchase price of $8 million has been accounted for as goodwill, which is deductible for tax purposes. The contingent consideration payments are calculated based on a royalty due if certain milestones are achieved using the REIMS technology. The fair value of the contingent consideration recognized was estimated using a probability-weighted discounted cash flow model, using Level 3 inputs.

 

In January 2014, the Company acquired all of the outstanding stock of ULSP B.V. (“ULSP”), a manufacturer of instrumentation components that enable ultra low temperature generation, for approximately $4 million in cash. ULSP's core business is the manufacturing and servicing of high quality low temperature coolers for thermal analysis and rheology applications. ULSP was acquired to bring the manufacturing of these devices in-house and to expand the Company's product offering. The purchase price of the acquisition was allocated to tangible and intangible assets and assumed liabilities based on their estimated fair values. The Company has allocated $1 million of the purchase price to an intangible asset comprised of technology, which will be amortized over ten years. The remaining purchase price of $3 million has been accounted for as goodwill. The goodwill is not deductible for tax purposes.

 

The principal factor that resulted in recognition of goodwill in these acquisitions is that the purchase price was based, in part, on cash flow projections assuming the integration of any acquired technology, distribution channels and products with the Company's products, which is of considerably greater value than utilizing each of the acquired companies' technology, customer access or products on a stand-alone basis. The goodwill also includes value assigned to assembled workforce, which cannot be recognized as an intangible asset.

 

In each acquisition, the sellers provided the Company with customary representations, warranties and indemnification, which would be settled in the future if and when a breach of the contractual representation or warranty condition occurs. The impact of these acquisitions, either individually or in the aggregate, on the Company's revenues and net income since the acquisition dates for the nine months ended September 27, 2014 was immaterial.

The fair values of the assets and liabilities acquired were determined using various income-approach valuation techniques, which use Level 3 inputs. The following table presents the fair values as of the acquisition dates, as determined by the Company, of 100% of the assets and liabilities owned and recorded in connection with the acquisitions of Medimass and ULSP (in thousands):

Accounts receivable and other assets $ 550
Intangible assets   18,457
Goodwill   11,631
 Total assets acquired   30,638
Accrued expenses and other liabilities   294
Accrued contingent consideration   3,336
 Net assets acquired   27,008
Less: accrued contingent consideration   3,336
 Cash consideration paid $ 23,672