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BUSINESS COMBINATIONS AND DIVESTITURE | 12 Months Ended
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Dec. 28, 2019
Business Combinations [Abstract] |
BUSINESS COMBINATIONS AND DIVESTITURE | BUSINESS COMBINATIONS AND DIVESTITURE HemaCare Corporation On January 3, 2020, the Company acquired HemaCare Corporation (HemaCare), a business specializing in the production of human-derived cellular products for the cell therapy market. The acquisition of HemaCare will expand the Company’s comprehensive portfolio of early-stage research and manufacturing support solutions to encompass the production and customization of high-quality, human derived cellular products to better support clients’ cell therapy programs. The preliminary purchase price of HemaCare was approximately $380 million in cash. The acquisition was funded through a combination of cash on hand and proceeds from the Company’s Credit Facility under the multi-currency revolving facility. See Note 9, “Long-Term Debt and Finance Leases.” This business will be reported as part of the Company’s RMS reportable segment. Due to the limited time between the acquisition date and the filing of this Annual Report on Form 10-K, it is not practicable for the Company to disclose the preliminary allocation of the purchase price to assets acquired and liabilities assumed. The Company incurred transaction and integration costs in connection with the acquisition of $3.3 million during fiscal year 2019, which were included in Selling, general and administrative expenses within the consolidated statements of income. Citoxlab On April 29, 2019, the Company acquired Citoxlab, a non-clinical CRO, specializing in regulated safety assessment services, non-regulated discovery services, and medical device testing. With operations in Europe and North America, the acquisition of Citoxlab further strengthens the Company’s position as a leading, global, early-stage CRO by expanding its scientific portfolio and geographic footprint, which enhances the Company’s ability to partner with clients across the drug discovery and development continuum. The preliminary purchase price for Citoxlab was $527.7 million in cash, subject to certain post-closing adjustments that may change the purchase price. The acquisition was funded through a combination of cash on hand and proceeds from the Company’s Credit Facility under the multi-currency revolving facility. This business is reported as part of the Company’s DSA reportable segment. The preliminary purchase allocation of $491.0 million, net of $36.7 million of cash acquired was as follows:
| April 29, 2019
| (in thousands)
Trade receivables (contractual amount of $35,405) | $ | 35,405 |
Inventories | 5,282 |
Other current assets (excluding cash) | 13,917 |
Property, plant and equipment | 88,605 |
Goodwill | 280,711 |
Definite-lived intangible assets | 162,400 |
Other long-term assets | 20,163 |
Deferred revenue | (15,278 | )
Current liabilities | (46,081 | )
Deferred tax liabilities | (27,458 | )
Other long-term liabilities | (22,624 | )
Redeemable noncontrolling interest | (4,035 | )
Total purchase price allocation | $ | 491,007 |
The preliminary 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. From the date of the acquisition through December 28, 2019, 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. 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 | $ | 134,600 |  |  | 13
Developed technology | 19,900 |  |  | 3
Backlog | 7,900 |  |  | 1
Total definite-lived intangible assets | $ | 162,400 |  |  | 12
The goodwill resulting from the transaction, $7.2 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 Citoxlab and the assembled workforce of the acquired business. The Company incurred transaction and integration costs in connection with the acquisition of $20.7 million during fiscal year 2019, which were primarily included in Selling, general and administrative expenses within the consolidated statements of income. Beginning on April 29, 2019, Citoxlab has been included in the operating results of the Company. Citoxlab revenue and operating income from April 29, 2019 through December 28, 2019 was $123.7 million and $6.2 million, respectively. The following selected unaudited pro forma consolidated results of operations are presented as if the Citoxlab acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition, which is December 31, 2017, after giving effect to certain adjustments. For fiscal year 2019, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $5.7 million, additional interest expense on borrowings of $1.2 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments. For fiscal year 2018, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $9.4 million, additional interest expense on borrowings of $4.1 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
| Fiscal Year
| 2019 |  | 2018
| (in thousands)
| (unaudited)
Revenue | $ | 2,683,610 |  |  | $ | 2,442,283 |
Net income attributable to common shareholders | 268,995 |  |  | 233,288 |
These unaudited 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. MPI Research On April 3, 2018, the Company acquired MPI Research, a non-clinical 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. The acquisition was funded by borrowings on the Credit Facility as well as the issuance of the Company’s 2026 Senior Notes. See Note 9, “Long-Term Debt and Finance Lease Obligations.” This business is reported as part of the Company’s DSA reportable segment. The purchase allocation of $800.8 million, net of $27.7 million of cash acquired and a final net working capital adjustment of $1.2 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) | 5,893 |
Property, plant and equipment | 128,403 |
Goodwill | 441,656 |
Definite-lived intangible assets | 309,200 |
Other long-term assets | 1,081 |
Deferred revenue | (23,926 | )
Current liabilities | (32,885 | )
Deferred tax liabilities | (65,945 | )
Other long-term liabilities | (2,213 | )
Total purchase price allocation | $ | 800,800 |
From the date of the acquisition through March 30, 2019, 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 | $ | 264,900 |  |  | 13
Developed technology | 23,400 |  |  | 3
Backlog | 20,900 |  |  | 1
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. No significant integration costs were incurred in connection with the acquisition for fiscal year 2019. The Company incurred transaction and integration costs in connection with the acquisition of $16.5 million during fiscal year 2018, which were primarily included in Selling, general and administrative expenses within the consolidated statements of income. MPI Research revenue and operating income from April 3, 2018 through December 29, 2018 was $209.5 million and $33.4 million, respectively. Beginning on April 3, 2018, MPI Research has been included in the operating results of the Company. The following selected unaudited 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, which is January 1, 2017, after giving effect to certain adjustments. For fiscal year 2018, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $14.1 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 fisc al year 2017, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $22.4 million, additional interest expense on borrowings of $27.1 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
| Fiscal Year
| 2018 |  | 2017
| (in thousands)
| (unaudited)
Revenue | $ | 2,328,213 |  |  | $ | 2,095,385 |
Net income attributable to common shareholders | 225,550 |  |  | 126,641 |
These unaudited 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, and was funded by the Company’s various borrowings. In addition to the initial purchase price, the transaction included aggregate, undiscounted contingent payments of up to £3.0 million based on future performance. The terms of these contingent payments were amended during fiscal year 2018, resulting in a fixed payment of £2.0 million or $2.6 million, which was paid during the first quarter of fiscal year 2019. The KWS BioTest business is reported as part of the Company’s DSA reportable segment. The purchase price allocation of $21.5 million, net of $1.0 million of cash acquired and a final net working capital adjustment of $0.4 million, 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 | 17,660 |
Current liabilities | (1,575 | )
Deferred revenue | (151 | )
Long-term liabilities | (596 | )
Total purchase price allocation | $ | 21,529 |
From the date of the acquisition through December 29, 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 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 business 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. No significant integration costs were incurred in connection with the acquisition during fiscal year 2019. The Company incurred transaction and integration costs in connection with the acquisition of $0.7 million during fiscal year 2018, which were included in Selling, general and administrative expenses within the consolidated statements of income. Pro forma financial information as well as actual revenue and operating income (loss) 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 and was funded by the Company’s various borrowings. In addition to the initial purchase price, the transaction included aggregate, undiscounted contingent payments of up to €6.7 million based on future performance. During the first quarter of fiscal year 2019, the terms of these contingent payments were amended, resulting in a fixed payment of $2.6 million, which was paid during the three months ended June 29, 2019. The Brains On-Line business is reported as part of the Company’s DSA reportable segment. 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 the 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 during fiscal years 2019 or 2018. The Company incurred transaction and integration costs in connection with the acquisition of $2.6 million during fiscal year 2017, which were included in selling, general and administrative expenses within the consolidated statements of income. Pro forma financial information as well as actual revenue and operating income (loss) have not been included because Brains On-Line’s financial results are not significant when compared to the Company’s consolidated financial results. Other Acquisition On August 28, 2019, the Company acquired an 80% ownership interest in a supplier that supports the Company’s DSA reportable segment. The remaining 20% interest is a redeemable non-controlling interest. See Note 10, “Equity and Noncontrolling Interests.” The preliminary purchase price was $23.4 million, net of a $4.0 million pre-existing relationship for a supply agreement settled upon acquisition, and subject to certain post-closing adjustments that may change the purchase price. The acquisition was funded through a combination of cash on hand and proceeds from the Company’s Credit Facility under the multi-currency revolving facility. The business is reported as part of the Company’s DSA reportable segment. The preliminary purchase allocation of $23.1 million, net of $0.3 million of cash acquired was as follows:
| August 28, 2019
| (in thousands)
Trade receivables (contractual amount of $189) | $ | 189 |
Inventories | 7,644 |
Property, plant and equipment | 1,462 |
Goodwill | 12,669 |
Other long-term assets | 11,849 |
Current liabilities | (441 | )
Deferred tax liabilities | (1,331 | )
Other long-term liabilities | (238 | )
Redeemable noncontrolling interest | (8,740 | )
Total purchase price allocation | $ | 23,063 |
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. From the date of the acquisition through December 28, 2019, 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. The Company incurred transaction and integration costs in connection with the acquisition of $3.6 million for fiscal year 2019 which are primarily included in Selling, general and administrative expenses within the consolidated statements of income. Pro forma financial information as well as the disclosure of actual results have not been included because these 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 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 consolidated statements of income. The carrying amounts of the major classes of assets and liabilities associated with the divestiture of the CDMO business were as follows:
| February 10, 2017
| (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 |

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