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Acquisitions | 9 Months Ended
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Mar. 28, 2020
Business Combinations [Abstract] |
Acquisitions | Note 6. Acquisitions 3Z Telecom, Inc. Acquisition On May 31, 2019 (“3Z Close Date”), the Company acquired all of the equity of 3Z Telecom, Inc. (“3Z”) for approximately $23.2 million in cash and contingent consideration (“earn-out”) liability of up to $7.0 million in cash based on the achievement of certain net revenue targets over approximately a two year period, subsequent to the 3Z Close Date. The acquisition of 3Z expands the Company’s Field Instrument offerings. The 3Z acquisition meets the definition of a business and has been accounted for in accordance with the authoritative guidance on business combinations; therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date. Acquisition related costs incurred were not material. The fair value of consideration transferred for the 3Z acquisition consists of the following (in millions):
Cash consideration paid at closing |  | $ | 18.9 |
Escrow payments |  | 4.3 |
Fair value of contingent consideration |  | 5.5 |
Total purchase consideration |  | $ | 28.7 |
The fair value of the earn-out payments at the 3Z Close Date was determined by applying a risk-neutral framework using a Monte Carlo Simulation, which includes inputs not observable in the market, and therefore represents a Level 3 measurement. The fair value of the Company’s earn-out liabilities is further discussed in “Note 8. Investments, Forward Contracts and Fair Value Measurements.” The identified tangible and intangible assets acquired, as of the 3Z Close Date, were as follows (in millions):
Tangible assets acquired: |  | $ | 4.1 |
Intangible assets acquired: |  |
Developed technology |  | 4.4 |
Customer relationships |  | 7.9 |
Customer backlog |  | 0.1 |
Goodwill |  | 12.2 |
Total consideration transferred |  | $ | 28.7 |
The allocation of the purchase price to tangible assets, based on the estimated fair values of assets acquired and liabilities assumed on the 3Z Close Date, was as follows (in millions):
Cash |  | $ | 2.2 |
Total other assets |  | 3.6 |
Total liabilities |  | (1.7 | )
Net tangible assets acquired |  | $ | 4.1 |
Acquired intangible assets are classified as Level 3 assets for which fair value is derived from a valuation based on inputs that are unobservable and significant to the overall fair value measurement. The fair values of acquired customer relationships and developed technology were determined based on the excess earnings method and relief from royalty method, respectively, variations of the income approach. The intangible assets are being amortized over their estimated useful lives, which range from five to six years. Customer backlog will be fully amortized within one year. Goodwill arising from this acquisition is primarily attributed to sales of future products and services of 3Z. Goodwill has been assigned to the NE segment and is not deductible for tax purposes. Results of operations of 3Z have been included in the Company’s Consolidated Financial Statements subsequent to the date of acquisition. Proforma or historical post-acquisition results of operations have not been presented because the effect of the acquisition was not material to prior period financial statements. RPC Photonics, Inc. Acquisition On October 30, 2018 (“RPC Close Date”), the Company acquired all of the equity interest of RPC Photonics, Inc. (“RPC”) for approximately $33.4 million in cash and an additional earn-out of up to $53.0 million in cash based on the achievement of certain gross profit targets over approximately a four years period, subsequent to the RPC Close Date. The achievement or distributions of earn-out payments are not limited in any one period. The acquisition of RPC expands the Company’s 3D Sensing offerings. The Company accounted for the transaction in accordance with the authoritative guidance on business combination; therefore, the tangible and intangible assets acquired and liabilities assumed are recorded at fair value on the acquisition date. The fair value of consideration transferred for the RPC Close Date, were as follows (in millions):
Cash consideration paid at closing |  | $ | 29.9 |
Escrow payments |  | 3.5 |
Fair value of contingent consideration |  | 36.2 |
Total purchase consideration |  | $ | 69.6 |
The fair value of the earn-out payments at the RPC Close Date were determined by applying a risk-neutral framework using a Monte Carlo Simulation, which includes inputs that are not observable in the market, and therefore represents a Level 3 measurement. The fair value of this earn-out is discussed further in “Note 8. Investments, Forward Contracts and Fair Value Measurements”. The identified tangible and intangible assets acquired, as of the RPC Close Date, were as follows (in millions):
Tangible assets acquired: |  | $ | 5.7 |
Intangible assets acquired: |  |
Developed technology |  | 15.7 |
Customer relationships |  | 14.0 |
Customer backlog |  | 0.3 |
Goodwill |  | 33.9 |
Total consideration transferred |  | $ | 69.6 |
The allocation of the purchase price to tangible assets, based on the estimated fair values of assets acquired and liabilities assumed on the RPC Close Date, were as follows (in millions):
Cash |  | $ | 1.8 |
Other current assets |  | 1.8 |
Property and equipment |  | 2.6 |
Total liabilities |  | (0.5 | )
Net tangible assets acquired |  | $ | 5.7 |
The allocation of the purchase price was based upon a valuation performed. Acquired intangible assets are classified as Level 3 assets for which fair value is derived from a valuation based on inputs that are unobservable and significant to the overall fair value measurement. The fair values of acquired customer relationships and developed technology were determined based on the excess earnings method and relief from royalty method, respectively, variations of the income approach. The intangible assets are being amortized over their estimated useful lives that range from six to seven years. Customer backlog will be fully amortized within one year. Goodwill arising from this acquisition is primarily attributed to sales of future products and services of RPC. Goodwill has been assigned to the OSP segment and is not deductible for tax purposes. Results of operations of RPC have been included in the Company’s Consolidated Financial Statements subsequent to the date of acquisition. Proforma or historical post-acquisition results of operations have not been presented because the effect of the acquisition was not material to prior period financial statements.

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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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