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Merger | 3 Months Ended
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Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
Merger | MERGER In accordance with ASC Topic 805, Business Combinations, we accounted for the below transaction using the acquisition method. We conducted valuations of certain acquired assets and liabilities for inclusion in our Condensed Consolidated Balance Sheets as of the date of the Merger. Assets that normally would not be recorded in ordinary operations, such as intangibles related to contractual relationships, were recorded at their estimated fair values. The excess purchase price over the estimated fair value of the net assets acquired was recorded as goodwill. On the Closing Date, Vectrus completed its previously announced Merger with Vertex, forming V2X by acquiring all of the outstanding shares of Vertex. On the Closing Date, Vertex and its consolidated subsidiaries became wholly-owned subsidiaries of the Company. The combined V2X entity from the Merger is a larger and more diversified Company with the ability to compete for more integrated business opportunities and generate revenue across geographies, clients, and contract types in supporting the mission of our customers. Purchase Price Allocation The Merger is accounted for as a business combination. As such, the assets acquired and liabilities assumed are accounted for at fair value, with the excess of the purchase price over the fair value of the net identifiable assets acquired and liabilities assumed recorded as goodwill. The Closing Date fair value of the consideration transferred totaled $634.0 million, which was comprised of the following:
(In thousands, except share and per share amounts) |  | Purchase Price
Shares of V2X common stock issued |  | 18,591,866 |
Market price per share of V2X as of Closing Date |  | $ | 33.92 |
Fair value of common shares issued |  | $ | 630,636 |
Fair value of cash consideration |  | 3,315 |
Total consideration transferred |  | $ | 633,951 |
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in the Merger as of the Closing Date. The estimated fair value of Vertex’s assets acquired and liabilities assumed at the acquisition date are determined based on preliminary valuations and analyses. As of March 31, 2023, we considered these amounts to be preliminary because we are still in the process of gathering and reviewing information to support the details surrounding tax matters and assumptions underlying certain existing or potential reserves. The final determination could result in further adjustments.
(In thousands) |  | Preliminary Fair Value
Cash and cash equivalents |  | $ | 196,993 |
Receivables |  | 334,655 |
Prepaid expenses |  | 49,172 |
Property, plant, and equipment |  | 53,618 |
Intangible assets |  | 480,000 |
Other non-current assets |  | 18,895 |
Right-of-use assets |  | 21,062 |
Accounts payable |  | (121,515) |
Debt |  | (1,352,303) |
Compensation and other employee benefits |  | (45,968) |
Other current and non-current liabilities |  | (334,469) |
Total identifiable net assets |  | (699,860) |
Goodwill |  | 1,333,811 |
Total purchase consideration |  | $ | 633,951 |
As a result of the Merger, the Company recognized $1,333.8 million of goodwill. The goodwill recognized is attributable to operational and general and administrative cost synergies, expanded market opportunities and other benefits that do not qualify for separate recognition. None of the goodwill is expected to be deductible for tax purposes. In addition, we recognized two intangible assets related to backlog and customer contracts arising from the Merger. The fair value of backlog was $316.0 million, and the fair value of the customer contracts was $164.0 million with amortization periods of 4.5 years and 14.0 years, respectively. The receivables of $334.7 million represent fair value and are considered fully collectible. As part of the Merger, V2X acquired certain contracts, including a Transition Services Agreement (TSA) with Crestview Aerospace LLC (Crestview), which was previously divested to American Industrial Partners Capital Fund VI, L.P. (AIP). As of March 31, 2023, the Company recorded $0.7 million of income related to the TSA with Crestview, which was recorded as a reduction in cost of sales. AIP held approximately 60.0% of V2X common stock as of March 31, 2023. The following unaudited information shows the combined actual results of our operations for the three months ended March 31, 2023 and pro forma results for the three months ended April 1, 2022 as if the Merger had occurred on January 1, 2021. The unaudited pro forma information reflects the effects of applying our accounting policies and certain pro forma adjustments to the combined historical financial information of Vertex. The pro forma adjustments include: a) incremental amortization expense associated with identified intangible assets; b) incremental interest expense resulting from fair value adjustments applied to the Vertex debt that we assumed; and c) a reduction of revenues and operating expenses associated with fair value adjustments made to acquire assets and assumed liabilities, such as contract assets and contract liabilities. This unaudited pro forma information is presented for informational purposes only and may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations.
|  | Three Months Ended
|  | March 31, 2023 |  | April 1, 2022
(Unaudited, in thousands) |  | Actual |  | Pro forma
Revenue |  | $ | 943,460 |  |  | $ | 842,741 |
Net (loss) income |  | $ | (17,480) |  |  | $ | 11,953 |

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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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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