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Acquisition | 9 Months Ended
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Mar. 26, 2022
Business Combinations [Abstract] |
Acquisition | 6. Acquisition DSP Group, Inc. On August 30, 2021, we entered into an agreement and plan of merger with DSP Group, Inc., or DSPG, to acquire all of the equity of DSPG, a leading global provider of voice and wireless chipset solutions for converged communications, for $22.00 per share in an all-cash transaction, referred to as the DSPG acquisition. The DSPG acquisition closed on December 2, 2021, or the DSPG Closing Date, whereupon we obtained voice and wireless technology and product solutions for converged communications. The DSPG acquisition has been accounted for using the purchase method of accounting in accordance with the business acquisition guidance. Under the purchase accounting method, the total estimated purchase consideration of the acquisition was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their relative fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets acquired and liabilities has been recorded as goodwill. Our estimate of the fair values of the acquired intangible assets at March 26, 2022, is preliminary and subject to change and has been based on established and accepted valuation techniques performed with the assistance of our third-party valuation specialists. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired and related deferred income taxes. We expect to continue to obtain information for the purpose of determining the fair value of the net assets acquired at the acquisition date throughout the remainder of the measurement period. The adjusted purchase price paid to acquire DSPG was $543.3 million. The following table summarizes the preliminary amounts recorded for the estimated fair values of the assets acquired and liabilities assumed as of the DSPG Closing Date (in millions):
Cash and cash equivalents |  | $ | 40.5 |
Short-term investments |  |  | 71.9 |
Accounts receivable, net |  |  | 12.9 |
Inventory |  |  | 22.6 |
Prepaid expenses and other current assets |  |  | 4.0 |
Property and equipment |  |  | 5.9 |
Intangible assets |  |  | 199.5 |
Right-of-use lease asset |  |  | 11.2 |
Severance pay fund |  |  | 16.2 |
Deferred tax asset |  |  | 6.4 |
Non-current other assets |  |  | 2.3 |
Total identifiable assets acquired |  |  | 393.4 |
Accounts payable |  |  | (6.7 | )
Other accrued expenses |  |  | (19.0 | )
Short-term lease liabilities |  |  | (1.7 | )
Long-term lease liabilities |  |  | (9.4 | )
Accrued severance |  |  | (16.4 | )
Deferred tax liability |  |  | (38.1 | )
Other long-term liabilities |  |  | (3.3 | )
Total liabilities |  |  | (94.6 | )
Net identifiable assets acquired |  |  | 298.8 |
Goodwill |  |  | 244.5 |
Net assets acquired |  | $ | 543.3 |
During the three months ended March 26, 2022, the Company recorded measurement period adjustments of $12.1 million to goodwill consisting of increases in non-current deferred tax assets of $6.1 million, $0.6 million in other accrued liabilities and $7.6 million relating to the acceleration of certain equity awards, offset by a decrease of $1.0 million in acquired in-process research and development. The following table summarizes the preliminary estimated fair value of the intangible assets as of the DSPG Closing Date (in millions):
|  | Estimated Weighted Average Useful Lives in Years |  |  | Estimated Fair Value |
Developed technology |  |  | 5.0 |  |  | $ | 107.5 |
Customer contracts and related relationships |  |  | 4.0 |  |  |  | 65.0 |
In process research and development |  | N/A |  |  |  | 15.0 |
Backlog |  |  | 1.0 |  |  |  | 11.0 |
Trade name |  |  | 1.0 |  |  |  | 1.0 |
Estimated fair value of acquired intangibles |  |  |  |  | $ | 199.5 |
We 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 4% to 18%. The fair value of these intangible assets is primarily affected by the projected revenue, gross margins, operating expenses, the technology migration curve, customer ramp up period 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. In-process research and development consists of advanced semiconductor telecommunications products for the Internet of Things, or IoT, market. We expect to complete the in-process research and development project in calendar year 2023. The value of goodwill reflects the anticipated synergies of the combined operations and workforce of DSPG as of the DSPG Closing Date. As of March 26, 2022, none of the goodwill is expected to be deductible for income tax purposes. Prior to the DSPG acquisition, we did not have an existing relationship or transactions with DSPG. The condensed consolidated financial statements include approximately $44.6 million of revenue from DSPG Closing Date through March 26, 2022. It is impracticable to determine the effect on net income attributable to DSPG as we initiated the integration of a substantial portion of DSPG into our ongoing operations during the second quarter of fiscal 2022, which was completed in the subsequent quarter.

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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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