Acquisitions

9 Months Ended

Apr. 02, 2021

PHYSICAL OPTICS CORPORATION ACQUISITION

On December 7, 2020, the Company signed a definitive agreement to acquire POC for a purchase price of $310,000, subject to net working capital and net debt adjustments. On December 30, 2020, the transaction closed and the Company acquired POC. Based in Torrance, California, POC more than doubles the Company's global avionics business and expands its collective footprint in the platform and mission management market. The Company funded the acquisition through a combination of cash on hand and the Company's existing revolving credit facility (the "Revolver").

As of January 1, 2021, the Company held $61,626 of Restricted cash and recorded a Deferred consideration liability for a purchase price payout to the employee shareholders of POC. This payout was made during the third quarter of fiscal 2021.

The following table presents the net purchase price and the fair values of the assets and liabilities of POC on a preliminary basis:


	Amounts
Consideration transferred
Cash paid at closing	$	251,229
Cash paid post closing	61,626
Working capital and net debt adjustment	(4,737)

Less cash acquired	(2,855)
Net purchase price	$	305,263

Estimated fair value of tangible assets acquired and liabilities assumed
Cash	$	2,855

Accounts receivable	24,966
Inventory	11,125
Fixed assets	23,236
Other current and non-current assets	14,968
Accounts payable	(3,777)
Accrued expenses	(4,502)

Other current and non-current liabilities	(42,987)
Estimated fair value of net tangible assets acquired	25,884
Estimated fair value of identifiable intangible assets	114,000
Estimated goodwill	168,234
Estimated fair value of net assets acquired	308,118
Less cash acquired	(2,855)
Net purchase price	$	305,263

The amounts above represent the preliminary fair value estimates as of April 2, 2021 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. The preliminary identifiable intangible asset estimate includes customer relationships of $81,000 with a useful life of 11 years, completed technology of $25,000 with a useful life of 9 years and backlog of $8,000 with a useful life of one year. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill.

The estimated goodwill of $168,234 largely reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to the Company’s existing products and markets and is not deductible for tax purposes. The goodwill from this acquisition is reported in the Mission reporting unit. The Company has not furnished pro forma information relating to POC because such information is not material to the Company’s financial results.

The revenues and income before income taxes from POC included in the Company's consolidated results for the third quarter ended April 2, 2021, were $38,492 and $1,065, respectively. The revenues and income before income taxes from POC included in the Company's consolidated results for the nine months ending April 2, 2021 were $38,709 and $782, respectively.

AMERICAN PANEL CORPORATION ACQUISITION

On September 23, 2019, the Company acquired American Panel Corporation (“APC”). Based in Alpharetta, Georgia, APC is a leading innovator in large area display technology for the aerospace and defense market. APC's capabilities are deployed on a wide range of next-generation platforms. The Company acquired APC for an all cash purchase price of $100,000, prior to net working capital and net debt adjustments. The Company funded the acquisition with cash on hand.

The following table presents the net purchase price and the fair values of the assets and liabilities of APC:


	Amounts
Consideration transferred
Cash paid at closing	$	100,826
Working capital and net debt adjustment	(5,952)
Liabilities assumed	2,454
Less cash acquired	(826)
Net purchase price	$	96,502

Fair value of tangible assets acquired and liabilities assumed
Cash	$	826
Accounts receivable	3,726
Inventory	11,233
Fixed assets	690
Other current and non-current assets	3,494
Accounts payable	(1,554)
Accrued expenses	(1,457)
Other current and non-current liabilities	(5,852)
Fair value of net tangible assets acquired	11,106
Fair value of identifiable intangible assets	33,200
Goodwill	53,022
Fair value of net assets acquired	97,328
Less cash acquired	(826)
Net purchase price	$	96,502

On September 23, 2020, the measurement period for APC expired. The identifiable intangible assets include customer relationships of $20,600 with a useful life of 11 years, completed technology of $10,400 with a useful life of 11 years and backlog of $2,200 with a useful life of two years.

The goodwill of $53,022 largely reflects the potential synergies and expansion of the Company's offerings across product lines and markets complementary to the Company's existing products and markets. The goodwill from this acquisition is reported under the Mission reporting unit. Since APC was a qualified subchapter S subsidiary, the acquisition is treated as an asset purchase for tax purposes. The Company has estimated the tax value of the intangible assets from this transaction and is amortizing the amount over 15 years for tax purposes. As of April 2, 2021, the Company had $48,840 of goodwill deductible for tax purposes.