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Acquisitions | 12 Months Ended
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Jun. 27, 2015
Business Combinations [Abstract] |
Acquisitions |
5. | Acquisitions
Validity On November 7, 2013, or the Acquisition Date, we acquired 100% of the outstanding common and preferred shares and voting interest of a privately held company, Validity Sensors, Inc., or Validity. We accounted for this acquisition using the purchase method for business combinations. The results of Validity’s operations have been included in our consolidated financial statements since the Acquisition Date. The Acquisition Date fair value of the consideration transferred totaled $127.8 million, which consisted of the following (in millions):
Cash |  | $ | 20.0 |
Shares issued |  |  | 70.3 |
Contingent consideration |  |  | 37.5 |
Total identifiable assets acquired |  |  | 127.8 |
In connection with the acquisition, we issued 1,577,559 shares of our common stock to the former Validity stockholders valued at $70.3 million based on the closing price of our common stock of $44.55 on the Acquisition Date. As of June 30, 2015, we may be required to make additional cash payments of up to $112.0 million to the former Validity stockholders and option holders based primarily on sales, calculated quarterly, ending on March 31, 2016, of certain products embodying Validity fingerprint sensor technology. The earn-out consideration is payable in cash, except for the initial $16.3 million of contingent consideration, which was satisfied by delivery of 338,427 shares of our common stock, based on the transaction reference price of $48.278. Renesas SP Drivers On June 11, 2014, we entered into a stock purchase agreement to acquire all of the outstanding stock of Renesas SP Drivers, Inc., or RSP, a leading provider of small- and medium-sized display driver integrated circuits for smartphones and tablets, or the RSP Acquisition. The RSP Acquisition is intended to accelerate our product roadmap for high-performance, low-cost display integration products, strengthen our relationships with key customers, and create opportunities to drive increased revenue. Effective as of October 1, 2014, or the Closing Date, we completed the RSP Acquisition by acquiring 100% of the outstanding capital stock of RSP for an initial purchase price of approximately ¥50.6 billion (or approximately $463 million), with Japanese yen converted into U.S. dollars at the Closing Date conversion rate of 109.4 Japanese yen to one U.S. dollar. The purchase price at the Closing Date was paid entirely in cash, with ¥7.25 billion (or approximately $66 million) held back until the date that is 18 months after the Closing Date to address any post-closing adjustments or claims, or the Indemnification Holdback, and ¥5.25 billion (or approximately $48 million) held back in respect of a potential post-closing working capital, cash balance, indebtedness and transaction expenses adjustments, or the Working Capital Holdback. Subsequent to the Closing Date, we determined that $4.8 million of additional purchase consideration was due to the sellers pursuant to the requirements of the Working Capital Holdback and have adjusted the purchase price to $468 million. We anticipate settlement of the Indemnification Holdback to occur in the fourth quarter of fiscal 2016. The Working Capital Holdback as adjusted for additional purchase consideration was settled in the three months ended March 31, 2015 for a total of ¥5.78 billion (or $48.6 million). The Indemnification Holdback is included in acquisition-related liabilities in the current liabilities section of the condensed consolidated balance sheet and is expected to be settled in our fiscal year 2016. The RSP Acquisition has been accounted for as a business combination and the results of RSP’s operations have been included in our consolidated financial statements since the Closing Date. Under the terms of the stock purchase agreement, RSP entered into an inventory purchase obligation with Renesas Electronics Corporation, or REL, to acquire Closing Date inventory held by REL. This inventory purchase obligation was settled in the three months ended December 31, 2014 for approximately $115 million. Our estimate of the fair values of the acquired intangible assets at June 30, 2015 is final and was based on established and accepted valuation techniques performed by our third-party valuation specialists. During fiscal 2015, we made purchase price allocation adjustments to provisional amounts recorded during the measurement period, including a $9.7 million decrease to intangible assets, a $2.8 million decrease to deferred tax liability, a $9.0 million increase to current deferred tax asset, and an $8.2 million decrease to goodwill. The following table includes the final amounts recorded for the estimated fair values of the assets acquired and liabilities assumed as of the Closing Date (in millions):
Cash |  | $ | 54.7 |
Short-term deposit |  |  | 36.6 |
Accounts receivable |  |  | 140.2 |
Current deferred tax assets |  |  | 11.8 |
Inventory |  |  | 6.3 |
Property and equipment |  |  | 11.7 |
Acquired intangible assets |  |  | 240.9 |
Other assets |  |  | 4.0 |
Total identifiable assets acquired |  |  | 506.2 |
Accounts payable |  |  | 66.5 |
Income taxes payable |  |  | 32.5 |
Deferred tax liabilities |  |  | 56.8 |
Other accrued liabilities |  |  | 28.0 |
Net identifiable assets acquired |  |  | 322.4 |
Goodwill |  |  | 145.2 |
Net assets acquired |  | $ | 467.6 |
Of the $240.9 million of acquired intangible assets, $143.6 million was allocated to developed technology and will be amortized over an estimated weighted average useful life of 5 years; $44.6 million was allocated to customer relationships and will be amortized over estimated useful lives of 2 to 3 years; $22.0 million was allocated to a supplier arrangement and will be amortized over an estimated useful life of 1 to 2 years; $10.3 million was allocated to backlog and will be amortized over an estimated useful life of less than 1 year; and $20.4 million was allocated to in-process research and development which has been determined to be substantively complete as of the fourth quarter of fiscal 2015 and will be amortized over an estimated useful life of 7 years. Developed technology consists of established small- and medium-sized display driver technology designed for and sold into the smartphone and tablet markets. We preliminarily estimated the fair value of the identified intangible assets using a discounted cash flow model for each of the underlying identified intangible assets. These fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement. Key assumptions include the level and timing of expected future cash flows, conditions and demands specific to each intangible asset over its remaining useful life, and discount rates we believe to be consistent with the inherent risks associated with each type of asset, which range from 9% to 14%. The fair value of these intangible assets is primarily affected by the projected income and the anticipated timing of the projected income associated with each intangible asset coupled with the discount rates used to derive their estimated present values. We believe the level and timing of expected future cash flows appropriately reflects market participant assumptions. The value of goodwill reflects the anticipated synergies of the combined operations and workforce of RSP as of the Closing Date. None of the goodwill is expected to be deductible for income tax purposes. Prior to the RSP Acquisition, we did not have an existing relationship or transactions with RSP. The condensed consolidated financial statements include approximately $715.5 million of revenue from RSP from the Closing Date through June 30, 2015. Earnings contributed by RSP are not separately identifiable. The following unaudited pro forma financial information presents the combined results of operations for us and RSP as if the RSP Acquisition had occurred on June 30, 2013. The unaudited pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the RSP Acquisition actually taken place on June 30, 2013, and should not be taken as indicative of future consolidated operating results. Additionally, the unaudited pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisition.
|  | 2015 |  |  | 2014 |
|  | (in millions except per share data) |
Revenue |  | $ | 1,913.9 |  |  | $ | 1,646.3 |
Net income |  |  | 149.8 |  |  |  | 96.9 |
Net income per share - diluted |  |  | 3.85 |  |  |  | 2.61 |
Pro forma adjustments used to arrive at pro forma net income for fiscal 2015 and 2014 were as follows (in millions):
|  | 2015 |  |  | 2014 |
Buyer transaction costs |  | $ | 4.3 |  |  | $ | 4.8 |
Amortization of debt issuance costs |  |  | (0.3 | ) |  |  | (1.0 | )
Interest expense |  |  | (1.2 | ) |  |  | (4.9 | )
Intangible amortization |  |  | 14.6 |  |  |  | (78.1 | )
Income tax adjustment |  |  | (5.2 | ) |  |  | 28.1 |
Total |  | $ | 12.2 |  |  | $ | (51.1 | )

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