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Acquisitions (Notes) | 12 Months Ended
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Dec. 31, 2022
Business Combinations [Abstract] |
Acquisitions | Acquisitions 2022 Acquisition Hardent, Inc. On May 20, 2022, (the “Closing Date”), the Company completed its acquisition of Hardent, a leading electronic design company, by acquiring all of its outstanding shares. The Company acquired Hardent for a total consideration of approximately $16.1 million, which consisted of $14.7 million in initial cash consideration paid at the Closing Date, $1.2 million was deposited into an escrow account to fund indemnification obligations to be released within 18 months after the Closing Date, and $0.2 million was deposited into an escrow account to fund other contractual provisions related to certain working capital adjustments. The addition of the technology and expertise from Hardent augments the Company’s CXL memory interconnect initiative. As part of the acquisition, the Company agreed to pay certain Hardent employees approximately $1.2 million in cash over three years following the Closing Date (the “Retention Bonus”), to be paid in three equal installments on each of the dates that are 12 months, 24 months and 36 months following the Closing Date. The Retention Bonus payouts are subject to the condition of continued employment. Therefore, the Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period. As of December 31, 2022, the Company had incurred approximately $1.2 million in external acquisition costs in connection with the transaction, which were expensed as incurred. The purchase price allocation and related accounting for this acquisition is preliminary. The preliminary fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations and valuations and the Company’s estimates and assumptions for the acquisition are subject to change if the Company obtains additional information during the measurement period. The fair value of the intangible assets acquired was determined by management primarily by using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the existing technologies less charges representing the contribution of other assets to those cash flows. The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the Closing Date. The Company performed a valuation of the net assets acquired as of the Closing Date. The total consideration from the acquisition was allocated as of the Closing Date, and reflects adjustments made during the measurement period, as described in Note 6, “Intangible Assets and Goodwill,” to finalize the purchase price accounting, as follows:
(In thousands) |  | Total
Cash and cash equivalents |  | $ | 209 |
Accounts receivable |  | 1,088 |
Unbilled receivables |  | 239 |
Prepaid expenses and other current assets |  | 16 |
Identified intangible assets |  | 5,000 |
Goodwill |  | 12,069 |
Accounts payable |  | (55) |
Deferred revenue |  | (578) |
Income taxes payable |  | (466) |
Deferred tax liability |  | (1,325) |
Other current liabilities |  | (56) |
Total |  | $ | 16,141 |
The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of the acquired business. This goodwill is not expected to be deductible for tax purposes. The identified intangible assets assumed in the acquisition of Hardent were recognized as follows based upon their estimated fair values as of the acquisition date:
| Total |  | Estimated Weighted-Average Useful Life
| (in thousands) |  | (in years)
Existing technology | $ | 4,800 |  |  | 5 years
Customer contracts and contractual relationships | 200 |  |  | 2 years
Total | $ | 5,000 |  |  |
Unaudited Pro Forma Combined Consolidated Financial Information The following pro forma financial information presents the combined results of operations for the Company and Hardent as if the acquisition had occurred on January 1, 2021. The pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisition actually taken place on January 1, 2021, and should not be taken as indicative of future consolidated operating results. Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisition:
|  | Years Ended December 31,
(In thousands) |  | 2022 |  | 2021
|  | (unaudited)
Total revenue |  | $ | 457,852 |  |  | $ | 336,258 |
Net income (loss) |  | $ | (13,251) |  |  | $ | 19,452 |
The pro forma net loss for 2022 was adjusted to exclude $1.2 million of acquisition-related costs incurred during the year ended December 31, 2022. Consequently, the pro forma net income for 2021 was adjusted to include these costs. 2021 Acquisitions AnalogX Inc. On July 2, 2021 (the “AnalogX Closing Date”), the Company completed its acquisition of AnalogX, a premier interconnect IP company, by acquiring all of its outstanding shares. The Company acquired AnalogX for total consideration of approximately $47.5 million, including certain adjustments for working capital, which consisted of $40.4 million in initial cash consideration at the AnalogX Closing Date and additional deferred payments totaling approximately $7.4 million, initially recorded at its present value of approximately $7.1 million, (the “Deferred Payments”). The Deferred Payments will be paid in cash over three years following the AnalogX Closing Date, in three installments on each of the dates that are 12 months, 24 months and 36 months following the AnalogX Closing Date. A portion of the purchase price, $5.9 million of the consideration, was deposited into an escrow account to fund indemnification obligations and other contractual provisions, to be released 12 months after the AnalogX Closing Date. The addition of the technology and expertise from AnalogX augments the Company’s SerDes offerings and CXL memory interconnect initiative. As part of the acquisition, the Company agreed to pay certain AnalogX employees $3.5 million in cash over three years following the AnalogX Closing Date (the “AnalogX Retention Bonus”), to be paid in three equal installments on each of the dates that are 12 months, 24 months and 36 months following the AnalogX Closing Date. The AnalogX Retention Bonus payouts are subject to the condition of continued employment. Therefore, the AnalogX Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period. As of December 31, 2021, the Company had incurred approximately $0.8 million in external acquisition costs in connection with the transaction, which were expensed as incurred. The fair value of the intangible assets acquired was determined by management primarily by using the estimated current replacement cost under the cost approach. The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the AnalogX Closing Date. The Company performed a valuation of the net assets acquired as of the AnalogX Closing Date. The total consideration from the business combination was allocated as of the Closing Date, and reflects adjustments made through the measurement period, as described in Note 6, “Intangible Assets and Goodwill,” to finalize the purchase price accounting, as follows:
(In thousands) |  | Total
Cash and cash equivalents |  | $ | 2,763 |
Accounts receivable |  | 280 |
Unbilled receivables |  | 1,566 |
Prepaid expenses and other current assets |  | 1,354 |
Identified intangible assets |  | 6,800 |
IPR&D |  | 3,800 |
Goodwill |  | 39,309 |
Property, plant and equipment, net |  | 118 |
Accounts payable |  | (1,112) |
Deferred revenue |  | (23) |
Income taxes payable |  | (7,127) |
Other current liabilities |  | (215) |
Total |  | $ | 47,513 |
The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of the acquired business. Approximately $26.9 million of the goodwill is expected to be deductible for tax purposes. The identified intangible assets assumed in the acquisition of AnalogX were recognized as follows based upon their estimated fair values as of the acquisition date:
| Total |  | Estimated Weighted-Average Useful Life
| (in thousands) |  | (in years)
Existing technology | $ | 6,300 |  |  | 5 years
Customer contracts and contractual relationships | 500 |  |  | 2 years
IPR&D | 3,800 |  |  | Not applicable
Total | $ | 10,600 |  |  |
IPR&D consists of multiple projects relating to the development of various high-speed SerDes technologies. The projects are expected to be completed within the next three years. The acquired IPR&D will not be amortized until completion of the related products, which is determined by when the underlying project reaches technological feasibility and commences commercial production. Upon completion, the IPR&D projects will be amortized over their useful lives, which are expected to range between three years and five years. PLDA Group On June 16, 2021, the Company announced that it had entered into an agreement to acquire PLDA, a provider of high-speed interconnect solutions. On August 18, 2021 (the “PLDA Closing Date”), the Company completed its acquisition of PLDA by acquiring all of its outstanding shares. Under the terms of the Share Purchase Agreement, the total consideration of approximately $85.6 million is comprised of $67.1 million in closing cash consideration, 0.3 million shares of the Company’s common stock (valued based on the Company’s closing stock price at the PLDA Closing Date, which amounted to approximately $6.9 million) and up to an additional $21.0 million to be paid in shares of common stock, currently valued at $16.9 million (the “fair value of the earn-out liability”), subject to certain revenue targets of the acquired business for the next three years. The fair value of the earn-out liability will be remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period. The Company has classified its liability for the contingent earn-out consideration related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs. A portion of the purchase price, $10.0 million of the consideration, was deposited into an escrow account to fund indemnification obligations and other contractual provisions, to be released 24 months after the PLDA Closing Date. The addition of the technology and expertise from PLDA augments the Company’s digital controller IP and CXL memory interconnect initiative. As part of the acquisition, the Company agreed to pay certain PLDA employees $3.0 million in cash over three years following the PLDA Closing Date (the “PLDA Retention Bonus”), to be paid in three equal installments on each of the dates that are 12 months, 24 months and 36 months following the PLDA Closing Date. The PLDA Retention Bonus payouts are subject to the condition of continued employment. Therefore, the PLDA Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period. As of December 31, 2021, the Company had incurred approximately $1.4 million in external acquisition costs in connection with the transaction, which were expensed as incurred. The fair value of the intangible assets acquired was determined by management primarily by using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the existing technologies less charges representing the contribution of other assets to those cash flows. The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the PLDA Closing Date. The Company performed a valuation of the net assets acquired as of the PLDA Closing Date. The total consideration from the business combination was allocated as of the Closing Date as follows:
(In thousands) |  | Total
Cash and cash equivalents |  | $ | 5,820 |
Accounts receivable |  | 2,233 |
Inventories |  | 125 |
Prepaid expenses and other current assets |  | 836 |
Identified intangible assets |  | 21,400 |
IPR&D |  | 7,400 |
Goodwill |  | 57,543 |
Property, plant and equipment, net |  | 679 |
Operating lease right-of-use asset |  | 864 |
Other assets |  | 339 |
Accounts payable |  | (1,046) |
Accrued salaries and benefits |  | (814) |
Deferred revenue |  | (514) |
Income taxes payable |  | (118) |
Operating lease liability |  | (852) |
Deferred tax liability |  | (8,180) |
Other current liabilities |  | (74) |
Total |  | $ | 85,641 |
The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of the acquired business. This goodwill is not expected to be deductible for tax purposes. The identified intangible assets assumed in the acquisition of PLDA were recognized as follows based upon their estimated fair values as of the acquisition date:
| Total |  | Estimated Weighted-Average Useful Life
| (in thousands) |  | (in years)
Existing technology | $ | 20,400 |  |  | 3 to 5 years
Customer contracts and contractual relationships | 1,000 |  |  | 2 years
IPR&D | 7,400 |  |  | Not applicable
Total | $ | 28,800 |  |  |
IPR&D consists of multiple projects relating to the development of PLDA’s PCIe Gen 6 and CXL 3.0 technologies. The projects are expected to be completed within the next 24 months. The acquired IPR&D will not be amortized until completion of the related products which are determined by when the underlying project reaches technological feasibility and commences commercial production. Upon completion, the IPR&D projects will be amortized over their respective useful life, which are expected to range between three years and five years. Unaudited Pro Forma Combined Consolidated Financial Information The following pro forma financial information presents the combined results of operations for the Company and AnalogX and PLDA as if the acquisitions had occurred on January 1, 2020. The pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisitions actually taken place on January 1, 2020, and should not be taken as indicative of future consolidated operating results. Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisitions:
|  |  | For the Years Ended December 31, |  |
(In thousands) |  |  |  |  | 2021 |  | 2020 |  |  |  |
|  |  |  |  | (unaudited) |  |  |  |
Total revenue |  |  |  |  | $ | 338,961 |  |  | $ | 267,006 |  |  |  |  |
Net income (loss) |  |  |  |  | $ | 16,533 |  |  | $ | (33,871) |  |  |  |  |
The pro forma net income for 2021 was adjusted to exclude $2.2 million of acquisition-related costs incurred in 2021. Consequently, the pro forma net loss for 2020 was adjusted to include these costs.

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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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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