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Acquisition of BAM Labs Inc.
 9 Months Ended
Oct. 03, 2015
Acquisition of BAM Labs, Inc. [Abstract]  
Acquisition of BAM Labs., Inc. [Text Block]
Acquisition of BAM Labs, Inc.

In September 2015, we completed the acquisition of BAM Labs, Inc. (BAM Labs), the leading provider of biometric sensor and sleep monitoring for data-driven health and wellness. The addition of BAM Labs strengthens Sleep Number’s leadership in sleep innovation, adjustability and individualization. The acquisition broadens and deepens electrical, biomedical, software and backend capabilities - API (application program interface) and bio-signal analysis. Our ownership and control of biometric data advances smart, connected products that empower our customers to ‘know better sleep.’

We previously held a $6.0 million minority equity investment in BAM Labs based on the cost method (see Note 4, Investments, for further details). In connection with the acquisition, our equity investment was remeasured to a fair value of $12.9 million. We acquired the remaining capital stock of BAM Labs for $57.1 million for a total enterprise value of $70.0 million. The acquisition of BAM Labs did not have a significant impact on our consolidated results of operations, operating cash flows or financial position.

The following table summarizes the preliminary fair value of the net assets acquired as of October 3, 2015 (in thousands):
 
 
Accounts receivable
$
104

Inventories
98

Prepaid expenses
98

Property and equipment
91

Deferred income taxes
954

Goodwill
56,201

Intangible assets
13,619

Total assets acquired
71,165

Accounts payable
267

Compensation and benefits
322

Other liabilities
558

Total liabilities acquired
1,147

Net assets acquired
$
70,018



Purchased intangible assets of $13.6 million consisted of developed technologies with an estimated useful life of eight years. The definite-lived intangible assets will be deductible for income tax purposes over 15 years on a straight-line basis. The goodwill will not be deductible for income tax purposes. Purchase accounting is considered preliminary, subject to revision, mainly with respect to certain working capital accounts, income taxes and goodwill, as final information was not available as of October 3, 2015.