Business Combinations (Notes)

12 Months Ended

Dec. 28, 2019



5.	Business Combinations

Acquisition of Robopolis

In October 2017, the Company closed the acquisition of its largest European distributor, Robopolis SAS, a French company ("Robopolis"). The acquisition will better enable the Company to maintain its leadership position and grow its business in several Western European countries through direct control of pre- and post-sales market activities including sales, marketing, branding, channel relationships and customer service. The purchase price was $169.4 million in cash, net of acquired cash of $38.0 million. The acquisition was a stock purchase. The results of operations for this acquisition have been included in the Company’s operating results since the acquisition date.

The following table summarizes the final allocation of the purchase price (in thousands):



Cash	$	37,981
Accounts receivable, net (1)	21,426
Inventory	36,304
Goodwill	80,419
Intangible assets	36,597
Other assets	2,456
Total assets	215,183

Accounts payable	(29,391		)
Accrued expenses	(3,376		)
Deferred tax liabilities	(10,864		)
Other liabilities	(2,138		)
Total liabilities assumed	(45,769		)
Net assets acquired	$	169,414

(1) The accounts receivable balance includes reserves for product returns, discounts and promotions assumed as part of the acquisition.

The following table reflects the fair value of the acquired identifiable intangible assets and related estimates of useful lives (in thousands):



	Useful Life	Fair Value
Reacquired distribution rights	2.25 years	$	29,296
Customer relationships	14 years	7,029
Non-competition agreements	3 years	272
Total		$	36,597

Acquisition of Sales On Demand Corporation

In April 2017, the Company closed its acquisition of the iRobot-related distribution business of Sales On Demand Corporation ("SODC") for $16.6 million in cash, equal to the book value of the acquired assets. The acquisition will better enable the Company to maintain its leadership position and accelerate the growth of its business in Japan through direct control of pre- and post-sales market activities including sales, marketing, branding, channel relationships and customer service. It also expands the Company's presence and customer outreach opportunities in Japan. The acquisition was a stock purchase. The results of operations for this acquisition have been included in the Company's operating results since the acquisition date.

During 2017, the Company finalized the purchase price allocation and made measurement period adjustments to the provisional amounts reported as the estimated fair values of assets acquired. These measurement period adjustments resulted in a $2.2 million non-taxable gain on business acquisition which represents the excess of the fair value of the net assets acquired over the purchase price. The gain on business acquisition was recorded within other income, net in the consolidated statements of income. The Company believes that the gain on business acquisition was due to the transaction not being subjected to a competitive bidding process and the purchase price being determined based on the net book value of the net assets acquired.

The following table summarizes the final allocation of the purchase price (in thousands):



Cash	$	125
Accounts receivable, net (1)	(5,496		)
Inventory	18,290
Other assets	2,065
Deferred tax assets, net	409
Goodwill	—
Intangible assets	8,640
Total assets acquired	24,033

Accrued expenses and other current liabilities	(4,450		)
Other liabilities	(691		)
Total liabilities assumed	(5,141		)
Net assets acquired	$	18,892
Gain on business acquisition	(2,243		)
Total purchase price	$	16,649

(1) The accounts receivable balance reflects reserves for product returns, discounts and promotions assumed as part of the acquisition.

The following table reflects the fair value of the acquired identifiable intangible assets and related estimates of useful lives (in thousands):

Pro Forma Results (Unaudited)

The following table shows unaudited pro forma results of operations as if the Company had acquired Robopolis on January 1, 2017 (in thousands, except per share amounts):



	Fiscal Year Ended
	December 30, 2017
Revenue	$	901,612
Net income	51,887
Net income per share:
Basic income per share	$	1.88
Diluted income per share	$	1.80

The Company has not furnished pro forma financial information relating to its acquisition of SODC in 2017 and an immaterial acquisition during the fiscal year 2019, because such information is not material, individually or in the aggregate, to its financial results. The unaudited pro forma results of operations are not necessarily indicative of the actual results that would have occurred had the transactions taken place at the beginning of the periods indicated.

Useful Life

Fair Value

Customer relationships

Reacquired distribution rights