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BUSINESS COMBINATIONS | 12 Months Ended
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Dec. 26, 2020
Business Combinations [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Distributed Bio On December 31, 2020 (fiscal year 2021), the Company acquired Distributed Bio, Inc (Distributed Bio), a next-generation antibody discovery company with technologies specializing in enhancing the probability of success for delivering high-quality, readily formattable antibody fragments to support antibody and cell and gene therapy candidates to biopharmaceutical clients. The acquisition of Distributed Bio expands the Company’s capabilities with an innovative, large-molecule discovery platform, and creates an integrated, end-to-end platform for therapeutic antibody and cell and gene therapy discovery and development. The preliminary purchase price of Distributed Bio was approximately $83 million in cash, with additional contingent payments of up to $21 million based on future performance. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business will be reported as part of the Company’s DSA 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 $1.2 million during fiscal year 2020, which were included in Selling, general and administrative expenses within the consolidated statements of income. Cellero, LLC On August 6, 2020, the Company acquired Cellero, LLC (Cellero), a provider of cellular products for cell therapy developers and manufacturers worldwide. The addition of Cellero enhances the Company’s unique, comprehensive solutions for the high-growth cell therapy market, strengthening the ability to help accelerate clients’ critical programs from basic research and proof-of-concept to regulatory approval and commercialization. It also expands the Company’s access to high-quality, human-derived biomaterials with Cellero’s donor sites in the United States. The purchase price for Cellero was $37.4 million in cash. The acquisition was funded through available cash. This business is reported as part of the Company’s RMS reportable segment. The preliminary purchase price allocation of $36.9 million, net of $0.5 million of cash acquired was as follows:
| August 6, 2020
| (in thousands)
Trade receivables | $ | 1,500 |
Inventories | 551 |
Other current assets (excluding cash) | 182 |
Property, plant and equipment | 1,648 |
Goodwill | 19,457 |
Definite-lived intangible assets | 16,230 |
Other long-term assets | 849 |
Current liabilities | (1,360) |
Deferred tax liabilities | (1,467) |
Other long-term liabilities | (740) |
Total purchase price allocation | $ | 36,850 |
The preliminary p urchase 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. From the date of the acquisition through December 26, 2020, 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. 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 | $ | 14,740 |  |  | 13
Other intangible assets | 1,490 |  |  | 3
Total definite-lived intangible assets | $ | 16,230 |  |  | 12
The goodwill resulting from the transaction, $10.8 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 RMS business from customers introduced through Cellero and the assembled workforce of the acquired business. The Company incurred transaction and integration costs in connection with the acquisition of $2.7 million during fiscal year 2020, which were 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 revenue and operating income (loss) have not been included because Cellero's financial results are not significant when compared to the Company’s consolidated financial results. 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 expands 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 purchase price of HemaCare was $379.8 million in cash. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s RMS reportable segment. The purchase price allocation of $376.7 million, net of $3.1 million of cash acquired was as follows:
| January 3, 2020
| (in thousands)
Trade receivables | $ | 6,451 |
Inventories | 8,468 |
Other current assets (excluding cash) | 3,494 |
Property, plant and equipment | 10,033 |
Goodwill | 210,196 |
Definite-lived intangible assets | 183,540 |
Other long-term assets | 5,920 |
Current liabilities | (5,188) |
Deferred tax liabilities | (38,529) |
Other long-term liabilities | (7,664) |
Total purchase price allocation | $ | 376,721 |
From the date of the acquisition through December 26, 2020, 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 | $ | 170,390 |  |  | 19
Trade name | 7,330 |  |  | 10
Other intangible assets | 5,820 |  |  | 3
Total definite-lived intangible assets | $ | 183,540 |  |  | 18
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s RMS business from customers introduced through HemaCare and the assembled workforce of the acquired business. The goodwill attributable to HemaCare is not deductible for tax purposes. The Company incurred transaction and integration costs in connection with the acquisition of $6.1 million and $3.3 million during fiscal years 2020 and 2019, respectively, which were primarily included in Selling, general and administrative expenses within the consolidated statements of income. Beginning on January 3, 2020, HemaCare has been included in the operating results of the Company. HemaCare revenue and operating loss during fiscal year 2020 was $43.0 million and $8.1 million, respectively. The following selected unaudited pro forma consolidated results of operations are presented as if the HemaCare acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition, which is December 30, 2018, after giving effect to certain adjustments. For fiscal year 2020, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $1.2 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments. For fiscal year 2019, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $12.8 million, additional interest expense on borrowings of $10.8 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
| Fiscal Year
| 2020 |  | 2019
| (in thousands)
| (unaudited)
Revenue | $ | 2,923,951 |  |  | $ | 2,661,565 |
Net income attributable to common shareholders | 368,800 |  |  | 245,423 |
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. 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 purchase price for Citoxlab was $527.1 million in cash. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment. The purchase price allocation of $490.4 million, net of $36.7 million of cash acquired was as follows:
| April 29, 2019
| (in thousands)
Trade receivables | $ | 35,405 |
Inventories | 5,282 |
Other current assets (excluding cash) | 13,917 |
Property, plant and equipment | 88,605 |
Goodwill | 280,161 |
Definite-lived intangible assets | 162,400 |
Other long-term assets | 20,063 |
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 | $ | 490,357 |
From the date of the acquisition through March 28, 2020, 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 | $ | 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 $4.1 million and $20.7 million during fiscal years 2020 and 2019, respectively, which were primarily included in Selling, general and administrative expenses within the consolidated statements of income. 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. This business is reported as part of the Company’s DSA reportable segment. The purchase price 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 | $ | 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. 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. No significant integration costs were incurred in connection with the acquisition for fiscal years 2020 or 2019. 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.
| Fiscal Year
| 2018
| (in thousands)
| (unaudited)
Revenue | $ | 2,328,213 |
Net income attributable to common shareholders | 225,550 |
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. Other Acquisitions On August 28, 2019, the Company acquired an 80% ownership interest in a supplier that supports the Company’s DSA reportable segment. The purchase price paid was approximately $23 million, net of a $4 million pre-existing relationship. The fair value of the net assets acquired included $13 million of goodwill, $12 million of other long-term assets, and $9 million for a 20% redeemable noncontrolling interest. The business is reported as part of the Company’s DSA reportable segment. Pro forma information and acquisition expenses have not been presented because such information is not material to the financial statements. On January 11, 2018, the Company acquired KWS BioTest Limited (KWS BioTest). 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 paid was approximately $20 million. The fair value of the net assets acquired included $18 million of goodwill and $4 million of client relationships, which had a weighted average life of 12 years. The business is reported as part of the Company’s DSA reportable segment. Pro forma information and acquisition expenses have not been presented because such information is not material to the financial statements.

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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 http://asc.fasb.org/topic&trid=2303972 + Details
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