Business Combinations

6 Months Ended

Jun. 30, 2021

On May 3, 2021, the Company acquired all of the outstanding shares of common stock of IMC for $80.8 million. The acquired business provides RF filters to the defense, industrial, and communications markets. The transaction was accounted for under the acquisition method of accounting and the results of operations are included in the Consolidated Financial Statements from the date of acquisition in the Precision Devices (“PD”) segment. Included in the Consolidated Statements of Earnings are IMC’s revenues and loss before income taxes of $1.4 million and $1.5 million, respectively, from the date of acquisition through June 30, 2021.

The table below represents a preliminary allocation of the purchase price to net assets acquired as of May 3, 2021:


(in millions)
Cash	$	2.2
Receivables	3.0
Inventories	2.6
Property, plant, and equipment	8.3
Customer relationships	27.7
Developed technology	5.2
Trademarks and other amortized intangible assets	1.6
Goodwill	31.4
Assumed current liabilities	(1.2)
Total purchase price	$	80.8

The preceding purchase price allocation is subject to change as additional information about the fair values of assets and liabilities becomes available. Any change in the acquisition date fair value of the acquired net assets will change the amount of the purchase price allocated to goodwill. The Company expects to finalize the purchase price allocation as soon as practicable, but not later than one year from the acquisition date.

The fair value for customer relationships was determined using the multi-period excess earnings method under the income approach. This method reflects the present value of expected future cash flows less charges representing the contribution of other assets to those cash flows. The fair value for developed technology was determined using the relief from royalty method under the income approach. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of customer relationships and developed technology include revenue growth rates, customer attrition rates, royalty rates, discount rates, and technology obsolescence rates. Discount rates of 13.0% and 14.0% were applied to the expected future cash flows to reflect the risk related to customer relationships and developed technology, respectively. Customer relationships and developed technology will be amortized on a straight-line basis over estimated useful lives of 8 years and 10 years, respectively.

The excess of the total purchase price over the total fair value of the identifiable assets and liabilities was recorded as goodwill. The goodwill recognized is primarily attributable to synergies and the assembled workforce. All of the goodwill resulting from this acquisition is tax deductible. Goodwill has been allocated to the PD segment, which is the segment expected to benefit from the acquisition.

The Company believes the fair values assigned to intangible assets are based on reasonable assumptions and estimates that approximate the amounts a market participant would pay for these intangible assets as of the acquisition date. Actual results could differ materially from these estimates.

Pro-forma financial information for the three and six months ended June 30, 2021 and 2020 has not been provided as the acquisition did not have a material impact on the Consolidated Statements of Earnings.