Note 14 – Acquisition

On January 21, 2014, the company completed the acquisition of Xsens Holdings B.V., a privately held, high-performance sensor company in a share purchase transaction for approximately $61.0 million in cash. Xsens is a leading innovator in 3D motion tracking technology and products. Its sensor fusion technologies enable a seamless interaction between the physical and the digital world in consumer devices and professional applications such as 3D character animation, motion analysis, and industrial control & stabilization. The purpose of the acquisition was to grow revenue as their technology is very complimentary to the company’s own sensor solutions.

The acquisition was accounted for as a business combination and has been included in the company’s results of operations from January 21, 2014, the date the acquisition was closed. Xsens contributed revenue of $2.7 million and net income of $0.2 million to the company’s results for the period from the acquisition through March 30, 2014.

The total estimated consideration as shown in the table below is allocated to Xsens assets and liabilities based on their preliminary fair value as of the date of the completion of the transaction, January 21, 2014. The fair values are subject to adjustment upon finalization of the valuation, and therefore the current measurements of intangible assets, acquired goodwill, and assumed assets and liabilities are subject to change.


	Estimated Fair Value March 30, 2014
	(In millions)

Fair value of consideration transferred:
Cash consideration to Xsens shareholders	$	61.0

Preliminary allocation of consideration:
Cash and cash equivalents	$	1.2
Inventories		0.7
Other current assets		4.3
Property, plant and equipment, net		0.3
Other assets		3.6
Intangible assets, net		17.6
Goodwill		40.9
Current liabilities		(4.2	)
Deferred income taxes and other liabilities		(3.4	)

Total consideration transferred	$	61.0

The total cash flow impact of $59.8 million results from the $61.0 million cash payment offset by $1.2 million cash balance of Xsens at closing.

Identifiable intangible assets acquired and their estimated useful lives are as follows:


	March 30, 2014
	Asset amount (In millions)		Weighted Average useful life (in years)

Developed technology	$	11.4		3
Customer base		5.0		4
Trademarks and trade names		0.6		5

Intangible assets subject to amortization	$	17.0

In process R&D		0.6

Total intangible assets	$	17.6

The developed technology intangible assets are being amortized on a technology-by-technology basis with the amortization recorded for each technology commensurate with the expected cash flows used in the initial determination of fair value. In-process research and development is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off. Customer base assets consist of Xsens customer relations and customer loyalty related to its end-customer relationships. Customer base is being amortized in a manner consistent with the cash flows used in determining fair value. Trade names includes Xsens corporate name. Trade names are considered to be finite-lived assets and are being amortized using the straight-line method, which management believes is materially consistent with the pattern of benefit to be realized by the asset.

Amortization expense associated with acquired intangible assets was approximately $0.7 million for the period ended March 30, 2014.

The remaining consideration, after adjusting for identifiable intangible assets and the net assets and liabilities recorded at fair value, was $40.9 million and was recorded as goodwill. This goodwill is attributed to Xsens’s product portfolio and workforce expertise. None of the goodwill related to the Xsens acquisition is deductible for tax purposes.