XML 21 R15.htm IDEA: XBRL DOCUMENT v2.3.0.15
ACQUISITION OF FORTH DIMENSION DISPLAYS
9 Months Ended
Sep. 24, 2011
ACQUISITION OF FORTH DIMENSION DISPLAYS

8. ACQUISITION OF FORTH DIMENSION DISPLAYS

On January 11, 2011, the Company purchased all of the outstanding equity securities of Forth Dimension Displays Ltd. (FDD) for approximately $11.0 million plus contingent consideration. In addition to the $11.0 million cash paid there is up to an additional $7.0 million the Company may have to pay the former shareholders of FDD depending upon the revenue FDD achieves in 2011. The actual amount of contingent consideration could range from $0 to $7.0 million. Management currently estimates that no contingent consideration will be paid and therefore the fair market value of the contingent consideration is zero.

 

As a result of this transaction the Company owns 100% of the outstanding equity of FDD. Accounting standards for business combinations require that an acquiring entity measure and recognize identifiable assets acquired and liabilities assumed at the acquisition date fair value with limited exceptions. The Company has not yet completed its evaluation of the fair market value of the identifiable assets acquired and liabilities assumed. Final determination of the fair values may result in further adjustments to the values below. In addition, the purchase agreement required that FDD have a net working capital of $1.3 million at the acquisition date and any shortages or overages resulted in a dollar for dollar decrease or increase, respectively, in the purchase price. The final net working capital amount has not yet been agreed upon by the parties. The transaction costs of approximately $0.3 million for the acquisition of FDD were expensed as incurred and recorded as selling, general and administrative expenses. Additional information, which existed as of the acquisition date but was at that time unknown to the Company, may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Changes to amounts recorded as assets or liabilities may result in a corresponding adjustment to goodwill. The goodwill will not be deductible for tax purposes.

 

     January 11, 2011
(As initially
reported)		     Measurement
period
adjustments		     January 11, 2011
(As adjusted)		  

Cash and marketable securities

    $ 1,000,605      $ —        $ 1,000,605   

Accounts receivable

      338,917        2,239        341,156   

Inventory

      1,009,738        (371,407 )      638,331   

Plant and equipment

      1,500,202        —          1,500,202   

Other identifiable assets

      247,711        —          247,711   

Customer relationships

      3,100,000        200,000        3,300,000   

Developed technology

      1,000,000        100,000        1,100,000   

Trademark portfolio

      160,000        60,000        220,000   

Identifiable liabilities

      (1,641,664 )      (310,800 )      (1,952,464 ) 

Goodwill

      5,538,491        (934,032 )      4,604,459   
  

 

 

    

 

 

    

 

 

  

Total

    $ 12,254,000      $ (1,254,000 )    $ 11,000,000   
  

 

 

    

 

 

    

 

 

  

The gross contractual receivables are approximately $845,000.

The Company’s goodwill balance is as follows:

 

Goodwill, December 26, 2010

    $ —     

Goodwill from the acquisition of FDD at Jan. 10, 2011

      5,538,491   

Change in goodwill

      (934,032 ) 

Foreign currency translation

      (34,091 ) 
  

 

 

  

Goodwill, September 24, 2011

    $ 4,570,368   
  

 

 

  

The identified intangible assets will be amortized on a straight-line basis over the following lives:

 

     Years  

Customer relationships

      7   

Developed technology

      7   

Trademark portfolio

      7   

The Company recognized $173,000 and $471,000 in amortization for the three and nine months ended September 24, 2011 related to its intangible assets.

The following unaudited supplemental pro forma disclosures are provided for the three and nine months ended September 25, 2010, assuming the acquisition of the controlling interest in FDD had occurred as December 27, 2009 (the first day of the Company’s 2010 fiscal year). All intercompany transactions have been eliminated.

 

     Three Months Ended
September 25, 2010		      Nine Months Ended
September 25, 2010		  

Revenue

    $ 33,013,000       $ 91,458,000   

Net Income

    $ 1,368,000       $ 335,000