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Acquisition and Divestiture | 12 Months Ended
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Jan. 28, 2024
Business Combination and Asset Acquisition [Abstract] |
Acquisition and Divestiture | Acquisition and Divestiture Sierra Wireless, Inc. On January 12, 2023 (the "Acquisition 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 was allocated to goodwill. The goodwill resulted from expected synergies from the transaction, including complementary products that were expected to 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 represented 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 to replace the customers from lead generations to product shipment. The purchase price allocation for the Sierra Wireless Acquisition was completed during fiscal year 2024. The fair values of acquired intangibles were determined based on estimates and assumptions that were deemed reasonable by the Company. In fiscal year 2023, a preliminary goodwill balance of $931.4 million was recognized for the excess of the consideration transferred over the net assets acquired and represented the expected revenue and cost synergies of the combined company and assembled workforce. In fiscal year 2024, the Company finalized measurement period adjustments related to identifiable intangible assets, inventories, property, plant, and equipment, income and non-income based taxes, legal matters, and other assets and liabilities, which were recorded to reflect facts and circumstances that existed as of the Acquisition Date. These adjustments increased the goodwill balance by $23.9 million to $955.3 million. In fiscal year 2024, the Company also finalized its determination of the reporting units related to the Sierra Wireless Acquisition and completed an allocation of the goodwill balance to these reporting units. See Note 8, Goodwill and Intangible Assets, for additional information. The purchase price consideration was 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 (1) | 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 |
(1) Consideration for Sierra Wireless equity compensation awards consisted 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 Operations for the fiscal year ended January 29, 2023. The following table presents the fair values of assets and liabilities assumed on the Acquisition Date based on valuations and management's estimates:
(in thousands) | Amounts recognized as of Acquisition Date (as initially reported) |  | Measurement period adjustments |  | Amounts recognized as of Acquisition Date (as adjusted)
Total purchase price consideration, net of cash acquired $68,794 | $ | 1,240,757 |  |  |  |  | $ | 1,240,757 |
Assets: |  |  |  |  | — |
Accounts receivable, net | 92,633 |  |  | — |  |  | 92,633 |
Inventories | 96,339 |  |  | (1,899) |  |  | 94,440 |
Other current assets | 72,724 |  |  | 5,003 |  |  | 77,727 |
Property, plant and equipment | 29,086 |  |  | (2,628) |  |  | 26,458 |
Intangible assets | 214,780 |  |  | — |  |  | 214,780 |
Prepaid taxes | 3,001 |  |  | — |  |  | 3,001 |
Deferred tax assets | 22,595 |  |  | 285 |  |  | 22,880 |
Other assets | 14,878 |  |  | — |  |  | 14,878 |
Liabilities: |  |  |  |  |
Accounts payable | 50,413 |  |  | 210 |  |  | 50,623 |
Accrued liabilities | 148,654 |  |  | 26,232 |  |  | 174,886 |
Deferred tax liabilities | 4,824 |  |  | 350 |  |  | 5,174 |
Other long-term liabilities | 32,785 |  |  | (2,106) |  |  | 30,679 |
Net assets acquired, excluding goodwill | $ | 309,360 |  |  | $ | (23,925) |  |  | 285,435 |
Goodwill | $ | 931,397 |  |  | $ | 23,925 |  |  | $ | 955,322 |
Goodwill is the excess of the consideration transferred over the net assets recognized and represented the expected revenue and cost synergies of the combined company and assembled workforce as of the Acquisition Date. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. See Note 8, Goodwill and Intangible Assets, for additional information about goodwill impairments recorded in fiscal year 2024 related to the Sierra Wireless Acquisition. A summary of the purchase price allocation to amortizable intangible assets is as 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 Company recognized $74.5 million of acquisition-related costs that were expensed in the Statements of Operations in fiscal year 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 from the Acquisition Date through January 29, 2023 was $15.0 million and net loss attributable to Sierra Wireless from the Acquisition 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 Statements of Operations since the Acquisition Date. The following table provides a summary of the pro forma unaudited consolidated results of operations of Sierra Wireless as if the Sierra Wireless Acquisition had been completed on February 1, 2021 (the first day of fiscal year 2022):
|  | Fiscal Year Ended
|  | January 29, 2023 |  | January 30, 2022
(in thousands) |  | (unaudited) |  | (unaudited)
Total revenues |  | $ | 1,415,721 |  |  | $ | 1,214,067 |
Net (loss) income |  | 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 2023, which was recorded in "Gain on sale of business" in the Statements of Operations. 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 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 was not considered a strategic shift that would have a major effect on the Company’s operations or financial results, it was 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 -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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