Note 2 - Business Acquisitions, Goodwill and Purchased Intangible Assets |
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Business Combination Disclosure [Text Block] |
Kita On January 4, 2017, we completed the acquisition of all the outstanding share capital of Kita Manufacturing Co., LTD. and Kita USA, Inc. (together “Kita”) (the “Acquisition”). Kita, headquartered in Osaka, Japan, and with operations in Attleboro, Massachusetts and Kyoto, Japan, designs, manufactures and sells spring probe pins used in final test contactors, probe cards, PCB test boards and connectors sold to customers worldwide. The acquisition of Kita was a strategic transaction to expand our total available market, extend our market leadership and broaden our product offerings. In connection with the Acquisition we incurred acquisition related costs, which were expensed to selling, general and administrative that totaled $0.2 million during the six months ended June 24, 2017. No acquisition related costs were incurred during the six months ended June 30, 2018. The Acquisition has been accounted for in conformity with FASB Accounting Standards Codification 805, Business Combinations . The purchase price for Kita was funded primarily by cash reserves and consisted of the following (in thousands ):
The contingent consideration represents the estimated fair value of future payments totaling up to $3.0 million we would be required to make as a result of Kita achieving annual revenue and EBITDA targets in 2017 and 2018 as specified in the purchase agreement for the Acquisition. The fair value of the contingent consideration recognized on the acquisition date and at June 30, 2018 was estimated by using the Monte Carlo simulation model. Adjustments to the fair value of contingent consideration are reflected in selling, general, and administrative expense in our condensed consolidated statements of income. The contingent consideration payable has been classified as level 3 in the fair value hierarchy. See Note 4 “Financial Instruments Measured at Fair Value” for additional information on the three -tier fair value hierarchy. The fair value of the contingent consideration is recorded in our condensed consolidated balance sheets in current other accrued liabilities.The following table presents the changes in fair value of contingent consideration during the year ended December 30, 2017, and the six -month period ended June 30, 2018 ( in thousands ):
The Acquisition was nontaxable to Cohu and certain of the assets acquired, including goodwill and intangibles, will not be deductible for tax purposes. The acquired assets and liabilities of Kita were recorded at their respective fair values including an amount for goodwill which represented the difference between the Acquisition consideration and the fair value of the identifiable net assets and was allocated to our ITS operating segment.Goodwill and Intangible Assets Changes in the carrying value of goodwill during the year ended December 30, 2017, and the six -month period ended June 30, 2018 were as follows (in thousands ):
Purchased intangible assets, subject to amortization are as follows ( in thousands ):
Amortization expense related to intangible assets was approximately $1.0 million in the second quarter of fiscal 2018 and 2017 and $2.1 million in the first six months of fiscal 2018 and 2017. Changes in the carrying values of these intangible assets are a result of the impact of fluctuations in currency exchange rates. |