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Business Acquisitions | 9 Months Ended
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Sep. 26, 2015
Business Combinations [Abstract] |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Celsis On July 24, 2015, the Company acquired Celsis Group Limited (Celsis), a leading provider of rapid testing systems for non-sterile bacterial contamination for the biopharmaceutical and consumer products industries. The purpose of this acquisition was to enhance the Company’s portfolio of rapid microbial detection products and services with the addition of a rapid bioburden testing product. The purchase price for Celsis was $214.0 million, including assumed debt and certain liabilities of $10.3 million. The purchase price includes payment for estimated working capital, which is subject to a final adjustment based upon actual working capital of the acquired business. The acquisition was funded by cash on hand and borrowings on the Company’s revolving credit facility. The business is included in Microbial Solutions (formerly Endotoxin & Microbial Detection, or EMD) and reported in the Company’s Manufacturing Support (Manufacturing) reportable segment. The preliminary purchase price allocation of $211.7 million, net of $2.3 million of cash acquired, was as follows:
| July 24, 2015
| (in thousands)
Accounts receivable (contractual amount of $5,410) | $ | 5,288 |
Inventory | 10,103 |
Other current assets (excluding cash) | 13,449 |
Property, plant and equipment | 5,086 |
Other long term assets | 614 |
Definite-lived intangible assets | 118,140 |
Goodwill | 104,785 |
Short-term debt | (9,766 | )
Other current liabilities | (7,382 | )
Long term liabilities | (28,593 | )
Total purchase price allocation | $ | 211,724 |
The purchase price allocations were prepared on a preliminary basis and are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The breakout of definite-lived intangible assets acquired was as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 71,000 |  |  | 16
Developed technology | 39,140 |  |  | 14
Trademark and trade names | 5,200 |  |  | 14
Non-compete | 2,800 |  |  | 5
Total definite-lived intangible assets | $ | 118,140 |  |  |
The goodwill resulting from the transaction is primarily attributed to the potential growth of the Company’s Manufacturing business from clients introduced through Celsis, the assembled workforce of the acquired business and expected cost synergies. The goodwill attributable to Celsis is not deductible for tax purposes. The Company incurred transaction and integration costs in connection with the acquisition of $3.9 million and $7.4 million during the three and nine months ended September 26, 2015, respectively, which were included in selling, general and administrative expenses. Celsis revenue and operating loss for both the three and nine months ended September 26, 2015 were $4.9 million and $3.1 million, respectively, since Celsis was acquired on July 24, 2015. The following selected pro forma consolidated results of operations are presented as if the Celsis acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition after giving effect to certain adjustments, including additional depreciation and amortization of property, plant and equipment, inventory fair value adjustments and intangible assets of $2.4 million and $11.3 million for the nine months ended September 26, 2015 and September 27, 2014, respectively, and other nonrecurring costs.
| Three Months Ended |  | Nine Months Ended
| September 26, 2015 |  | September 27, 2014 |  | September 26, 2015 |  | September 27, 2014
| (in thousands)
Revenue | $ | 350,819 |  |  | $ | 335,987 |  |  | $ | 1,026,643 |  |  | $ | 993,384 |
Net income attributable to common shareholders | $ | 40,826 |  |  | $ | 31,893 |  |  | $ | 125,863 |  |  | $ | 84,545 |
Earnings per common share |  |  |  |  |  |  |
Basic | $ | 0.88 |  |  | $ | 0.69 |  |  | $ | 2.70 |  |  | $ | 1.81 |
Diluted | $ | 0.86 |  |  | $ | 0.68 |  |  | $ | 2.65 |  |  | $ | 1.78 |
These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future. No effect has been given for synergies, if any, that may have been realized through the acquisition. Sunrise On May 5, 2015, the Company acquired Sunrise Farms, Inc. (Sunrise), a producer of specific-pathogen-free fertile chicken eggs and chickens used in the manufacture of live viruses. The purpose of this business acquisition was to expand the capabilities of the Company’s existing Avian Vaccine Services business. The purchase price of the acquisition was $9.6 million and was funded by cash on hand and borrowings on the Company's revolving credit facility. The business is reported in the Company's Manufacturing reportable segment. The Company recorded a bargain purchase gain of $9.9 million, which represents the excess of the estimated fair value of the net assets acquired over the preliminary purchase price. The bargain purchase gain was recorded in other income (expense), net, in the Company’s consolidated statement of income and was not recognized for tax purposes. The Company believes there were several factors that contributed to this transaction resulting in a bargain purchase gain, including the highly specialized nature of Sunrise’s business falling outside of the seller’s core activities and a limited pool of potential buyers. Before recognizing the gain from the bargain purchase, the Company reassessed its initial identification and valuation of assets acquired and liabilities assumed to validate that all assets and liabilities that the Company was able to identify at the acquisition date were properly recognized. The preliminary purchase price allocation of $9.6 million, net of less than $0.1 million of cash acquired, was as follows:
| May 5, 2015
| (in thousands)
Accounts receivable, net | $ | 981 |
Inventory | 1,518 |
Other current assets (excluding cash) | 373 |
Property, plant and equipment | 13,866 |
Definite-lived intangible assets | 3,400 |
Current liabilities | (397 | )
Long-term liabilities | (250 | )
Fair value of net assets acquired | 19,491 |
Bargain purchase gain | (9,933 | )
Total purchase price allocation | $ | 9,558 |
The purchase price allocations were prepared on a preliminary basis and are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. During the three months ended September 26, 2015, the Company recorded measurement period adjustments related to the Sunrise acquisition that resulted in an immaterial change to the purchase price allocation and bargain purchase gain. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The identifiable definite-lived intangible assets acquired represent the client relationships intangible, which is being amortized over the estimated useful life of approximately 15 years. The Company incurred transaction and integration costs in connection with the acquisition of $0.1 million and $0.7 million during the three and nine months ended September 26, 2015, respectively, which were included in selling, general and administrative expenses. ChanTest On October 29, 2014, the Company acquired ChanTest Corporation (ChanTest), a leading provider of ion channel testing services to the biopharmaceutical industry. The acquisition augments the Company’s early discovery capabilities and enhances the Company’s ability to support clients’ target discovery and lead optimization efforts. The purchase price of the acquisition was $59.2 million, including $0.3 million in contingent consideration. The aggregate, undiscounted amount of contingent consideration that could become payable is a maximum of $2.0 million. The Company estimated the fair value of this contingent consideration based on a probability-weighted set of outcomes. The business is reported in the Company’s Discovery and Safety Assessment (DSA) reportable segment. The purchase price allocation of $52.0 million, net of $7.2 million in cash acquired, was as follows:
| October 29, 2014
| (in thousands)
Current assets (excluding cash) | $ | 4,669 |
Property, plant and equipment | 1,637 |
Definite-lived intangible assets | 23,920 |
Goodwill | 34,775 |
Current liabilities | (3,486 | )
Long-term liabilities | (9,486 | )
Total purchase price allocation | $ | 52,029 |
The breakout of definite-lived intangible assets acquired was as follows:
| October 29, 2014 |  | Weighted average amortization life
| (in thousands) |  | (in years)
Client relationships | $ | 19,000 |  |  | 13
Other intangible assets | 4,920 |  |  | 9
Total definite-lived intangible assets | $ | 23,920 |  |  |
The definite-lived intangibles are largely attributed to the expected cash flows related to client relationships existing at the acquisition closing date. The goodwill resulting from the transaction is primarily attributed to the potential growth of the business and is not deductible for tax purposes. During the three and nine months ended September 26, 2015 and September 27, 2014, the Company incurred insignificant transaction and integration costs in connection with the acquisition, which were included in selling, general and administrative expenses. VivoPath On June 16, 2014, the Company acquired substantially all of the assets of VivoPath LLC (VivoPath), a discovery services company specializing in the rapid, in vivo compound evaluation of molecules in the therapeutic areas of metabolism, inflammation and oncology. The purchase price was $2.3 million, including $1.6 million in contingent consideration, and was allocated primarily to the intangible assets acquired. The Company estimated the fair value of this contingent consideration based on a probability-weighted set of outcomes. The undiscounted total amount of contingent consideration was a maximum of $2.4 million, payable over three years based on the achievement of revenue growth targets and other contractual requirements. During the three months ended September 26, 2015, the Company paid the first year tranche of the contingent consideration of $0.6 million and recorded a gain of $1.0 million based upon a decrease in the expected future contingent consideration payments. As of September 26, 2015, the remaining contingent consideration payable is a maximum of $0.4 million. The business is reported in the Company’s DSA reportable segment. Argenta and BioFocus On April 1, 2014, the Company acquired (1) 100% of the shares of the United Kingdom (U.K.) based entities Argenta and BioFocus, and (2) certain Dutch assets. These businesses have formed the core of the Company’s Early Discovery business. With this acquisition, the Company has enhanced its position as a full service, early-stage contract research organization, with integrated in vitro and in vivo capabilities from target discovery through preclinical development. The purchase price of the acquisition was $191.8 million, including $0.9 million in contingent consideration. The acquisition was funded by cash on hand and borrowings on the Company’s revolving credit facility. The businesses are reported in the Company’s DSA reportable segment. The contingent consideration earn-out period ended on April 1, 2015. As a result, the related contingent consideration liability, as adjusted for subsequent changes in fair value, was reversed and a gain of $0.8 million was recorded in selling, general and administrative expenses during the three months ended March 28, 2015, as no payments are expected to be made. The contingent consideration was a one-time payment that could have become payable in the second quarter of 2015 based on the achievement of a certain revenue target for the twelve-month period following the acquisition. The aggregate, undiscounted amount of contingent consideration that the Company could have paid was €5.0 million ($5.6 million as of September 26, 2015). The Company estimated the fair value of this contingent consideration based on a probability-weighted set of outcomes. The purchase price allocation of $183.6 million, net of $8.2 million of cash acquired, was as follows:
| April 1, 2014
| (in thousands)
Current assets (excluding cash) | $ | 31,682 |
Property, plant and equipment | 21,008 |
Other long term assets | 11,140 |
Definite-lived intangible assets | 104,470 |
Goodwill | 65,235 |
Current liabilities | (13,139 | )
Long term liabilities | (36,802 | )
Total purchase price allocation | $ | 183,594 |
The breakout of definite-lived intangible assets acquired was as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 94,000 |  |  | 18
Backlog | 5,900 |  |  | 1
Trademark and trade names | 1,170 |  |  | 3
Leasehold interests | 1,000 |  |  | 13
Other intangible assets | 2,400 |  |  | 19
Total definite-lived intangible assets | $ | 104,470 |  |  |
The goodwill resulting from the transaction is primarily attributed to the potential growth of the Company’s DSA businesses from clients introduced through Argenta and BioFocus, the assembled workforce of the acquired businesses and expected cost synergies. The goodwill attributable to Argenta and BioFocus is not deductible for tax purposes. The Company incurred insignificant transaction and integration costs in connection with the acquisition during the three and nine months ended September 26, 2015 and costs of $0.5 million and $5.4 million during the three and nine months ended September 27, 2014, respectively, which were included in selling, general and administrative expenses. Argenta and BioFocus revenue and operating loss for the nine months ended September 27, 2014 were $46.8 million and $0.4 million, respectively, since Argenta and BioFocus were acquired on April 1, 2014. Beginning in the three months ended September 27, 2014, Argenta and BioFocus have been fully included in the operating results of the Company. The following selected pro forma consolidated results of operations are presented as if the Argenta and BioFocus acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition after giving effect to certain adjustments, including amortization of intangible assets and depreciation of fixed assets of $3.7 million and other nonrecurring costs.
| Nine Months Ended
| September 27, 2014
| (in thousands)
Revenue | $ | 993,223 |
Net income attributable to common shareholders | $ | 101,029 |
Earnings per common share |
Basic | $ | 2.16 |
Diluted | $ | 2.12 |
These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future. No effect has been given for synergies, if any, that may have been realized through the acquisition.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1497-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1490-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1392-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1486-128463 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4845-128472 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1500-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1524-128463 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4922-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4934-128472 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4926-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1383-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 + Details
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