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Business Combinations | 12 Months Ended
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Dec. 31, 2013
Business Combinations | 5. Business Combinations On January 15, 2013, the Company acquired 100% of the outstanding membership interests of NDS Surgical Imaging, LLC and 100% of the outstanding stock of NDS Surgical Imaging KK (collectively, “NDS”) for $82.7 million in cash consideration, subject to customary closing working capital adjustments. In October 2013, the Company finalized the closing working capital adjustments with the seller for $1.9 million in favor of the Company, resulting in an adjusted purchase price of $80.8 million. In addition, a total of $5.4 million held in escrow after the payment of closing working capital adjustments can be utilized as indemnification for certain representations and warranty claims against the seller until the expiration of the escrow arrangement in July 2014. The Company recognized acquisition-related costs, which are included in restructuring, restatement related costs, post emergences fees and other in the consolidated statements of operations, as follows (in thousands):
|  | Year Ended |  |  | Year Ended |  |  | Cumulative Costs |
|  | December 31, 2013 |  |  | December 31, 2012 |  |  | December 31, 2013 |
Acquisition-related charges |  | $ | 1,164 |  |  | $ | 685 |  |  | $ | 1,849 |
The acquisition of NDS has been accounted for as a business combination. The allocation of the purchase price is based upon a valuation of assets and liabilities acquired. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using an income approach, with estimates and assumptions provided by management of NDS and the Company. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The total purchase price allocation was as follows (in thousands):
|  | Estimated Purchase Price Allocation |
Accounts receivable |  | $ | 10,327 |
Inventory |  |  | 14,144 |
Property and equipment |  |  | 2,426 |
Intangible assets |  |  | 37,817 |
Other assets |  |  | 1,782 |
Goodwill |  |  | 26,578 |
Total assets acquired |  |  | 93,074 |
Accounts payable |  |  | 4,768 |
Accrued expenses |  |  | 6,217 |
Deferred tax liabilities |  |  | 384 |
Other liabilities assumed |  |  | 932 |
Total liabilities assumed |  |  | 12,301 |
Total net assets acquired |  | $ | 80,773 |
The fair value of intangible assets is comprised of the following (in thousands):
|  | Estimated Fair Value |  |  | Weighted Average Amortization Period |
Customer relationships |  | $ | 22,294 |  |  |  | 20 years |
Developed technology |  |  | 6,689 |  |  |  | 10 years |
Trademarks and tradenames |  |  | 7,565 |  |  |  | 20 years |
Backlog |  |  | 1,269 |  |  |  | 1 year |
Total |  | $ | 37,817 |  |  |  |  |
The purchase price allocation resulted in $26.6 million of goodwill and $37.8 million of identifiable intangible assets, the majority of which are expected to be deductible for tax purposes. As a result, the Company recorded deferred tax liabilities of $0.4 million in purchase accounting, equal to the deferred tax effect of certain acquired intangible assets. Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which economic benefits related to such assets are expected to be realized. The resulting amount of goodwill reflects the Company’s expectations of the following synergistic benefits: (1) the potential growth due to additional financial resources to spend on research and development activities, increase of sales resources and the ability to enhance product offerings; (2) the potential to sell NDS products into the Company’s existing customer base and to sell the Company’s products into NDS’s customer base; and (3) the Company’s intention to leverage its expertise in light and color measurement technologies. Excluding the $5.4 million dollar representations and warranties claims, the purchase price is final. The results of the NDS operations have been included in the consolidated statements of operations since the acquisition date. NDS contributed sales of $68.4 million and loss from continuing operations before income taxes of $3.4 million for the year ended December 31, 2013. The pro forma information for all periods presented below includes the effects of acquisition accounting, including amortization charges from acquired intangible assets, interest expense on borrowings in connection with the acquisition, acquisition-related charges, and the related tax effects as though the acquisition had been consummated as of the beginning of 2012. These pro forma results exclude the impact of transaction costs included in the historical results and the related tax effects. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisition had taken place at the beginning of 2012. The following unaudited pro forma information presents the combined financial results for the Company and NDS as if the acquisition of NDS had been completed as of January 1, 2012 (in thousands, except per share information):
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |
Sales |  | $ | 342,478 |  |  | $ | 357,247 |
Income from continuing operations, net of tax |  | $ | 9,121 |  |  | $ | 24,370 |
Earnings per share from continuing operations—Basic |  | $ | 0.27 |  |  | $ | 0.72 |
Earnings per share from continuing operations—Diluted |  | $ | 0.26 |  |  | $ | 0.72 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1392-128463 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1486-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6927-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1497-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1490-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1500-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1524-128463 + Details
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