XML 19 R8.htm IDEA: XBRL DOCUMENT
v3.10.0.1

BUSINESS ACQUISITIONS AND DIVESTITURE | 6 Months Ended
--- | ---
Jun. 30, 2018
Business Combinations [Abstract] |
BUSINESS ACQUISITIONS AND DIVESTITURE | BUSINESS ACQUISITIONS AND DIVESTITURE MPI Research On April 3, 2018, the Company acquired MPI Research, a non-clinical contract research organization (CRO) providing comprehensive testing services to biopharmaceutical and medical device companies worldwide. The acquisition enhances the Company’s position as a leading global early-stage CRO by strengthening its ability to partner with clients across the drug discovery and development continuum. The purchase price for MPI Research was $829.7 million in cash, subject to certain post-closing adjustments that may change the purchase price. The acquisition was funded by borrowings on the Company’s $2.3B Credit Facility as well as the issuance of the Company’s Senior Notes. See Note 9, “Long-Term Debt and Capital Lease Obligations.” This business is reported as part of the Company’s DSA reportable segment. The preliminary purchase allocation of $800.2 million, net of $27.7 million of cash acquired and a preliminary net working capital adjustment of $1.7 million, was as follows:
| April 3, 2018
| (in thousands)
Trade receivables (contractual amount of $35,073) | $ | 35,073 |
Inventories | 4,463 |
Other current assets (excluding cash) | 5,627 |
Property, plant and equipment | 128,403 |
Goodwill | 440,372 |
Definite-lived intangible assets | 309,200 |
Other long-term assets | 1,081 |
Deferred revenue | (22,600 | )
Current liabilities | (32,788 | )
Deferred tax liabilities | (66,379 | )
Other long-term liabilities | (2,213 | )
Total purchase price allocation | $ | 800,239 |
The purchase price allocation is subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. 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 | $ | 264,900 |  |  | 13
Developed technology | 23,400 |  |  | 3
Backlog | 20,900 |  |  | 2
Total definite-lived intangible assets | $ | 309,200 |  |  | 12
The goodwill resulting from the transaction, $4.1 million of which is deductible for tax purposes due to a prior asset acquisition, is primarily attributable to the potential growth of the Company’s DSA business from customers introduced through MPI Research and the assembled workforce of the acquired business. The Company incurred transaction and integration costs in connection with the acquisition of $11.7 million and $14.5 million for the three and six months ended June 30, 2018, respectively, which were primarily included in Selling, general and administrative expenses. MPI Research revenue and operating income for both the three and six months ended June 30, 2018 were $66.6 million and $8.2 million, respectively, since MPI Research was acquired on April 3, 2018. The following selected pro forma consolidated results of operations are presented as if the MPI Research acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition after giving effect to certain adjustments. For the six months ended June 30, 2018, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $9.4 million, additional interest expense on borrowings of $2.8 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments. For the six months ended July 1, 2017, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $11.4 million, additional interest expense on borrowings of $13.5 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
| Three Months Ended |  | Six Months Ended
| June 30, 2018 |  | July 1, 2017 |  | June 30, 2018 |  | July 1, 2017
| (in thousands)
Revenue | $ | 585,297 |  |  | $ | 504,710 |  |  | $ | 1,141,388 |  |  | $ | 1,031,198 |
Net income attributable to common shareholders | 60,161 |  |  | 43,113 |  |  | 109,575 |  |  | 90,968 |
Earnings per common share |  |  |  |  |  |  |
Basic | $ | 1.25 |  |  | $ | 0.91 |  |  | $ | 2.28 |  |  | $ | 1.91 |
Diluted | $ | 1.23 |  |  | $ | 0.89 |  |  | $ | 2.24 |  |  | $ | 1.88 |
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 dates indicated or that may result in the future. No effect has been given for synergies, if any, that may be realized through the acquisition. KWS BioTest Limited On January 11, 2018, the Company acquired KWS BioTest Limited (KWS BioTest), a CRO specializing in in vitro and in vivo discovery testing services for immuno-oncology, inflammatory and infectious diseases. The acquisition enhances the Company’s discovery expertise, with complementary offerings that provide the Company’s customers with additional tools in the active therapeutic research areas of oncology and immunology. The purchase price for KWS BioTest was $20.3 million in cash, subject to certain post-closing adjustments that may change the purchase price, and was funded by the Company’s various borrowings. In addition to the initial purchase price, the transaction includes aggregate, undiscounted contingent payments of up to £3.0 million (approximately $4.0 million based on recent exchange rates), based on future performance. The KWS BioTest business is reported as part of the Company’s DSA reportable segment. The contingent payments become payable based on the achievement of certain revenue and earnings targets. If achieved, the payments become due in the first quarter of fiscal year 2019. The Company estimated the fair value of this contingent consideration based on a probability-weighted set of outcomes. The preliminary purchase price allocation of $22.0 million, net of $1.0 million of cash acquired, was as follows:
| January 11, 2018
| (in thousands)
Trade receivables (contractual amount of $1,309) | $ | 1,309 |
Other current assets (excluding cash) | 99 |
Property, plant and equipment | 1,136 |
Definite-lived intangible assets - client relationships | 3,647 |
Goodwill | 18,165 |
Current liabilities | (1,575 | )
Deferred revenue | (151 | )
Long-term liabilities | (596 | )
Total purchase price allocation | $ | 22,034 |
The purchase price allocation is subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. 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 only definite-lived intangible asset relates to client relationships, which will be amortized over a weighted average life of 12 years. The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s DSA businesses from customers introduced through KWS BioTest and the assembled workforce of the acquired business. The goodwill attributable to KWS BioTest is not deductible for tax purposes. The Company incurred transaction and integration costs of $0.1 million and $0.5 million in connection with the acquisition for the three and six months ended June 30, 2018, respectively, which were included in Selling, general and administrative expenses, within the unaudited condensed consolidated statements of income. Pro forma financial information as well as actual revenue and operating income have not been included because KWS BioTest’s financial results are not significant when compared to the Company’s consolidated financial results. Brains On-Line On August 4, 2017, the Company acquired Brains On-Line, a CRO providing critical data that advances novel therapeutics for the treatment of central nervous system (CNS) diseases. Brains On-Line strategically expands the Company’s existing CNS capabilities and establishes the Company as a single-source provider for a broad portfolio of discovery CNS services. The purchase price for Brains On-Line was $21.3 million in cash, subject to certain post-closing adjustments, was funded by the Company’s various borrowings. In addition to the initial purchase price, the transaction includes aggregate, undiscounted contingent payments of up to €6.7 million (approximately $7.8 million based on recent exchange rates), based on future performance. The Brains On-Line business is reported as part of the Company’s DSA reportable segment. The contingent payments become payable based on the achievement of certain revenue and earnings targets. If achieved, the payments become due in the first quarter of fiscal year 2019. The Company estimated the fair value of this contingent consideration based on a probability-weighted set of outcomes. The purchase price allocation of $20.1 million, net of $0.6 million of cash acquired, was as follows:
| August 4, 2017
| (in thousands)
Trade receivables (contractual amount of $1,146) | $ | 1,146 |
Other current assets (excluding cash) | 640 |
Property, plant and equipment | 664 |
Other long-term assets | 29 |
Definite-lived intangible assets | 9,300 |
Goodwill | 12,582 |
Current liabilities | (1,683 | )
Deferred revenue | (405 | )
Long-term liabilities | (2,151 | )
Total purchase price allocation | $ | 20,122 |
From the date of acquisition through June 30, 2018, the Company recorded measurement-period adjustments related to the acquisition that resulted in an immaterial change to the purchase price allocation on a consolidated basis. No further adjustments will be made to the purchase price allocation. 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 | $ | 7,000 |  |  | 13
Other intangible assets | 2,300 |  |  | 10
Total definite-lived intangible assets | $ | 9,300 |  |  | 12
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s DSA businesses from customers and technology introduced through Brains On-Line and the assembled workforce of the acquired business. The goodwill attributable to Brains On-Line is not deductible for tax purposes. No significant integration costs were incurred in connection with the acquisition for the three and six months ended June 30, 2018. Pro forma financial information as well as actual revenue and operating income have not been included because Brains On-Line’s financial results are not significant when compared to the Company’s consolidated financial results. Contract Manufacturing On February 10, 2017, the Company sold its CDMO business to Quotient Clinical Ltd., based in London, England, for $75.0 million in proceeds, net of $0.6 million in cash and cash equivalents transferred in conjunction with the sale and $0.3 million of working capital adjustments. The CDMO business was acquired in April 2016 as part of the acquisition of WIL Research and was reported in the Company’s Manufacturing reportable segment. The Company determined that the CDMO business was not optimized within the Company’s portfolio at its current scale, and that the capital could be better deployed in other long-term growth opportunities. During the three months ended April 1, 2017, the Company recorded a gain on the divestiture of the CDMO business of $10.6 million, which was included in Other income, net within the Company’s unaudited condensed consolidated statements of income. As of February 10, 2017, the carrying amounts of the major classes of assets and liabilities associated with the divestiture of the CDMO business were as follows (in thousands):
Assets |
Current assets | $ | 5,505 |
Property, plant and equipment, net | 11,174 |
Goodwill | 35,857 |
Long-term assets | 17,154 |
Total assets | $ | 69,690 |
Liabilities |
Deferred revenue | $ | 4,878 |
Other current liabilities | 1,158 |
Total liabilities | $ | 6,036 |

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: 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
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration