XML 29 R9.htm IDEA: XBRL DOCUMENT v2.4.1.9
BUSINESS COMBINATION
 6 Months Ended
Mar. 28, 2015
Business Combinations [Abstract]  
BUSINESS COMBINATION
BUSINESS COMBINATIONS
On December 29, 2014, Kulicke & Soffa Holdings B.V. (“KSH”), the Company's wholly owned subsidiary, entered into a Share Sale and Purchase Agreement (the “Agreement”) with Assembléon Holding B.V. Pursuant to the Agreement, KSH agreed to purchase all of the outstanding equity interests of Assembléon, a subsidiary of Assembléon Holding B.V., in an all cash transaction for approximately $97.4 million (EUR 80 million).

The acquisition was completed on January 9, 2015. Upon acquisition, Assembléon became a wholly owned subsidiary of the Company. The total purchase price of approximately $97.4 million consisted of $72.5 million for 100% of the equity of Assembléon and $24.9 million which was used by Assembléon to settle intercompany loans with its parent company.
The acquisition of Assembléon was accounted for in accordance with ASC No. 805, Business Combinations, using the acquisition method. The Company has estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information available at that time. The valuation of these tangible and identifiable intangible assets and liabilities is subject to further management review and may change materially between the preliminary allocation and end of the purchase price allocation period of January 9, 2016. Any changes in these estimates may have a material impact on our Unaudited Consolidated Results of Operations or Unaudited Consolidated Balance Sheets. At March 28, 2015 the Company held $14.6 million (EUR 12 million) in escrow for a period of eighteen months from the acquisition date as security pending the completion of Assembleon Holding B.V.'s obligations as seller under the Agreement.
The following table summarizes the allocation of the assets acquired and liabilities assumed based on the fair values as of the acquisition date and related useful lives of the finite-lived intangible assets acquired:
(in thousands)
January 9, 2015
Accounts receivable
$
9,941

Inventories
19,861

Prepaid expenses and other current assets
2,322

Deferred tax asset
157

Property, plant and equipment
531

Intangibles
61,463

Goodwill
39,726

Deferred income taxes
638

Accounts payable
(14,386
)
Borrowings financial institutions
(9,491
)
Accrued expenses and other current liabilities
(10,561
)
Income taxes payable
(1,933
)
Deferred tax liabilities
(5,115
)
Total purchase price, net of cash acquired
$
93,153


Tangible net assets (liabilities) were valued at their respective carrying amounts, which the Company believes approximate their current fair values at the acquisition date.
The valuation of identifiable intangible assets acquired reflects management’s estimates based on, among other factors, use of established valuation methods. The technology/software and product brand name was determined using the relief from royalty method. Customer relationships were valued by using multi-period excess earnings method. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method and the estimated useful lives of six to fifteen years. The straight-line method of amortization represents the Company’s best estimate of the distribution of the economic value of the identifiable intangible assets. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. None of the goodwill recorded as part of the acquisition will be deductible for income tax purposes.
In connection with the acquisition of Assembléon, the Company recorded deferred tax liabilities relating to the acquired intangible assets, which is partially offset by the net amount of acquired net operating losses. The net amount of acquired net operating losses comprise of net operating losses less the tax reserves and valuation allowance. The Company has recorded long-term income tax payable due to uncertain tax positions with respect to certain Assembléon entities.
The acquired business contributed revenue of $16.9 million and net loss of $3.9 million to the Company for the period from Jan 9, 2015 to March 28, 2015.
During the three and six months ended March 28, 2015, the Company incurred $0.2 million and $0.8 million of expenses related to the acquisition respectively. These are included within selling, general and administrative expense in the consolidated statements of income.
The following unaudited pro forma information presents the combined results of operations as if the acquisition had been completed on September 29, 2013, the beginning of the comparable prior annual reporting period. The unaudited pro forma results include: (i) amortization associated with preliminary estimates for the acquired intangible assets; (ii) recognition of the post-acquisition share-based compensation and other compensation expense; and (iii) the associated tax impact on these unaudited pro forma adjustments.
The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the periods presented, nor are they indicative of future results of operations:
 
Three months ended
 
Six months ended
(in thousands)
March 28, 2015
 
March 29, 2014

 
March 28, 2015
 
March 29, 2014

Revenue
$
145,915

 
$
133,710

 
$
278,948

 
$
232,636

Net income
7,576

 
5,976

 
10,436

 
1,279

Basic income per common share
0.10

 
0.08

 
0.14

 
0.02

Diluted income per common share
0.10

 
0.08

 
0.13

 
0.02