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Acquisition and Divestiture | 12 Months Ended
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Jan. 29, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisition and Divestiture | Acquisition and Divestiture Sierra Wireless, Inc. On January 12, 2023 (the "Acquisition Closing Date"), the Company completed the acquisition of Sierra Wireless, Inc. (“Sierra Wireless”), pursuant to the Arrangement Agreement dated as of August 2, 2022 (the "Arrangement Agreement") by and among the Company, 13548597 Canada Inc., a corporation formed under the Canada Business Corporations Act, and the Company’s wholly-owned subsidiary (the “Purchaser"), and Sierra Wireless. Pursuant to terms and conditions of the Arrangement Agreement, the Purchaser, among other things, acquired all of the issued and outstanding common shares of Sierra Wireless (the "Sierra Wireless Acquisition"). The Sierra Wireless Acquisition was implemented by way of a plan of arrangement (the "Plan of Arrangement") in accordance with the Canada Business Corporations Act. Pursuant to the Arrangement Agreement and Plan of Arrangement, at the effective time of the Sierra Wireless Acquisition, which constituted a change in control of Sierra Wireless, each common share of Sierra Wireless that was issued and outstanding immediately prior to the effective time was transferred to the Purchaser in consideration for the right to receive $31.00 per share of Sierra Wireless’ common shares, in an all-cash transaction representing a total purchase consideration of approximately $1.3 billion. The acquisition was financed with a combination of cash on hand and $895.0 million of capital from term loans as described in Note 10, Long-Term Debt. The transaction was accounted for as a business combination in accordance with ASC 805, "Business Combinations." Acquisition-related transaction costs are not included as a component of consideration transferred, but are accounted for as an expense in the period in which the costs are incurred. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill. The goodwill resulted from expected synergies from the transaction, including complementary products that will enhance the Company’s overall product portfolio, and opportunities within new markets, and is not deductible for tax purposes. The fair value of the developed technology rights acquired was preliminarily determined by estimating the probability-weighted net cash flows attributable to these rights discounted to present value using a discount rate that represents the estimated rate that market participants would use to value this intangible asset. The fair value of the customer relationships was preliminarily determined by estimating the amount that would be required currently to replace the customers from lead generations to product shipment. The purchase price consideration is as follows:
(in thousands) | January 29, 2023
Cash consideration paid to common shareholders | $ | 1,213,091 |
Cash consideration paid to holders of Sierra Wireless equity compensation awards (a) | 37,669 |
Total cash consideration paid to selling equity holders | $ | 1,250,760 |
Sierra Wireless debt settled at close | 58,791 |
Total purchase price consideration | $ | 1,309,551 |
(a) Consideration for Sierra Wireless equity compensation awards consists of $37.7 million paid for the pre-combination portion of unvested equity awards that were accelerated as part of the Arrangement Agreement. The fair value of the unvested equity awards attributable to the post-combination period of $45.7 million is included in the Company's Statements of Income for the fiscal year ended January 29, 2023. The Company's preliminary allocation of the purchase price as of January 12, 2023 is summarized below:
(in thousands) | January 12, 2023
Total purchase price consideration, net of cash acquired $68,794 | $ | 1,240,757 |
Assets: |
Accounts receivable, net | 92,633 |
Inventories | 96,339 |
Other current assets | 72,724 |
Property, plant and equipment | 29,086 |
Intangible assets | 214,780 |
Prepaid taxes | 3,001 |
Deferred tax assets | 22,595 |
Other assets | 14,878 |
Liabilities: |
Accounts payable | 50,413 |
Accrued liabilities | 148,654 |
Deferred tax liabilities | 4,824 |
Other long-term liabilities | 32,785 |
Net assets acquired, excluding goodwill | $ | 309,360 |
Goodwill | $ | 931,397 |
Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. A summary of the preliminary allocation of the purchase price to amortizable intangible assets as of January 12, 2023 follows:
(in thousands) |  | Estimated Useful Life |  | January 12, 2023 |
Amortizable intangible assets: |  |  |  |  |
Developed technology |  | 1-6 years |  | $ | 152,780 |  |
Customer relationships |  | 2-10 years |  | 53,000 |  |
Trade name |  | 2-10 years |  | 9,000 |  |
Total amortizable intangible assets |  |  |  | $ | 214,780 |  |
The purchase price allocation for the Sierra Wireless Acquisition is preliminary. The Company made an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities based on the information currently available. As of January 29, 2023, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the Sierra Wireless Acquisition are subject to adjustment until the end of the respective measurement period. The Company is in the process of specifically identifying the amounts assigned to certain tangible assets and liabilities acquired, identifiable intangible assets, certain legal matters, income and non-income based taxes, residual goodwill, and the allocation of goodwill to reporting units, and the Company is in the process of reviewing the related third-party valuation. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. The amounts recorded as of January 29, 2023 are preliminary since there was insufficient time between the Acquisition Closing Date and the end of the period to finalize the analysis. These preliminary estimates are subject to change and related accounting adjustments may be materially different, as the Company obtains additional information on these matters and as additional information is made known during the post-acquisition measurement period. The Company recognized $74.5 million of acquisition-related costs that were expensed in the Statements of Income in the fiscal year ended January 29, 2023 as follows:
(in thousands) | Share-based compensation acceleration expense |  | Other acquisition costs expensed |  | Total
Cost of sales | $ | 802 |  |  | $ | — |  |  | $ | 802 |
Selling, general and administrative | 33,937 |  |  | 28,798 |  |  | $ | 62,735 |
Product development and engineering | 11,010 |  |  | — |  |  | $ | 11,010 |
Total acquisition costs expensed | $ | 45,749 |  |  | $ | 28,798 |  |  | $ | 74,547 |
Net sales attributable to Sierra Wireless since the Acquisition Closing Date through January 29, 2023 was $15.0 million and net loss attributable to Sierra Wireless since the Acquisition Closing Date through January 29, 2023 was $52.4 million, which included $45.7 million of share-based compensation acceleration expense. Pro Forma Financial Information The results of operations of Sierra Wireless have been included in the Company’s consolidated statements of income since the Acquisition Closing Date. The following table provides a summary of the pro forma unaudited consolidated results of operations as if the Sierra Wireless Acquisition had been completed on February 1, 2021:
|  | Fiscal Year Ended
|  | January 29, 2023 |  | January 30, 2022
(in thousands) |  | (unaudited) |  | (unaudited)
Total revenues |  | $ | 1,415,721 |  |  | $ | 1,214,067 |
Net income (loss) |  | 22,174 |  |  | (144,342) |
The unaudited pro forma information presented does not purport to be indicative of the results that would have been achieved had the acquisition been consummated at the beginning of each period presented nor of the results which may occur in the future. The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The unaudited pro forma information does not include any adjustments for any restructuring activities, operating efficiencies or cost savings. The Company ends its fiscal year on the last Sunday in January. Prior to the transaction, Sierra Wireless's fiscal year ended on December 31. To comply with SEC rules and regulations for companies with different fiscal year ends, the pro forma combined financial information has been prepared utilizing periods that differ by up to a month. Divestiture On May 3, 2022, the Company completed the divestiture of its high reliability discrete diodes and assemblies business (the “Disposal Group”) to Micross Components, Inc. for $26.2 million, net of cash disposed, in an all-cash transaction. The divestiture resulted in a gain $18.3 million in fiscal year ended January 29, 2023, which was recorded in "Gain on sale of business" in the Statements of Income. As a result of the transaction, the Company disposed of $0.8 million of goodwill based on the relative fair value of the Disposal Group and the portion of the applicable reporting unit that was expected to be retained. The estimated fair value of the Disposal Group less estimated costs to sell exceeded its carrying amount as of the transaction date. As the sale of the Disposal Group is not considered a strategic shift that will have a major effect on the Company’s operations or financial results, it is not reported as discontinued operations.

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