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Business Combinations
9 Months Ended
Oct. 02, 2016
Business Combinations [Abstract]  
Business Combinations
Business Combinations
Acquisitions in fiscal year 2016
During the first nine months of fiscal year 2016, the Company completed the acquisition of two businesses for a total consideration of $72.4 million in cash. The acquired businesses included Bioo Scientific Corporation, which was acquired for total consideration of $63.6 million in cash and one other business acquired for a total consideration of $8.8 million in cash. The excess of the purchase prices over the fair values of each of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired. As a result of the acquisitions, the Company recorded goodwill of $45.8 million, which is not tax deductible, and intangible assets of $19.9 million. The Company has reported the operations for these acquisitions within the results of the Company's Human Health and Environmental Health segments from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names and customer relationships, acquired as part of these acquisitions had weighted average amortization periods of 9.5 years.

The total purchase price for the acquisitions in fiscal year 2016 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
 
2016 Acquisitions
 
(In thousands)
Fair value of business combination:
 
Cash payments
$
72,497

Working capital and other adjustments
(122
)
Less: cash acquired
(2,152
)
Total
$
70,223

Identifiable assets acquired and liabilities assumed:
 
Current assets
$
7,293

Property, plant and equipment
7,542

Identifiable intangible assets:
 
Core technology
5,500

Trade names
570

Customer relationships
13,800

Goodwill
45,787

Deferred taxes
(8,284
)
Liabilities assumed
(1,985
)
Total
$
70,223


Acquisitions in fiscal year 2015
During fiscal year 2015, the Company completed the acquisition of five businesses for a total consideration of $77.1 million in cash. The acquired businesses included Vanadis Diagnostics AB (“Vanadis”), which was acquired for total consideration of $35.1 million in cash, as further described in Note 17 below, and other acquisitions for aggregate consideration of $42.0 million in cash. The Company has a potential obligation to pay the shareholders of Vanadis additional contingent consideration of up to $93.0 million, which at closing had an estimated fair value of $56.9 million. The excess of the purchase prices over the fair values of each of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, of which $9.2 million is tax deductible. The Company has reported the operations for these acquisitions within the results of the Company’s Human Health and Environmental Health segments from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology and trade names, acquired as part of these acquisitions had weighted average amortization periods of nine years.

The total purchase price for the acquisitions in fiscal year 2015 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:
 
2015 Acquisitions
 
(In thousands)
Fair value of business combination:
 
Cash payments
$
75,285

Contingent consideration
56,878

Working capital and other adjustments
1,832

Less: cash acquired
(3,864
)
Total
$
130,131

Identifiable assets acquired and liabilities assumed:
 
Current assets
$
2,551

Property, plant and equipment
998

Identifiable intangible assets:
 
Core technology
15,759

Trade names
200

Licenses
116

Customer relationships
3,073

In-process research and development ("IPR&D")
75,700

Goodwill
52,221

Deferred taxes
(17,637
)
Liabilities assumed
(2,850
)
Total
$
130,131


The preliminary allocations of the purchase prices for acquisitions are based upon initial valuations. The Company's estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete its valuations within the measurement periods, which are up to one year from the respective acquisition dates. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and related valuation allowances, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition dates during the measurement periods. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have resulted in the recognition of those assets and liabilities as of those dates. These adjustments will be made in the periods in which the amounts are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.
Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds, changes in discount rates or product development milestones during the earnout period.
As of October 2, 2016, the Company may have to pay contingent consideration related to acquisitions with open contingency periods of up to $94.6 million. As of October 2, 2016, the Company has recorded contingent consideration obligations with an estimated fair value of $66.9 million, of which $10.2 million was recorded in accrued expenses and other current liabilities, and $56.7 million was recorded in long-term liabilities. As of January 3, 2016, the Company had recorded contingent consideration obligations with an estimated fair value of $57.4 million, of which $9.4 million was recorded in accrued expenses and other current liabilities, and $48.0 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods does not exceed five years from the respective acquisition dates, and the remaining weighted average expected earnout period at October 2, 2016 was two years. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional contingent consideration which would be recognized as a component of operating expenses from continuing operations.
Total transaction costs related to acquisition and divestiture activities for the three and nine months ended October 2, 2016 were $0.4 million and $1.0 million, respectively. Total transaction costs related to acquisition and divestiture activities for the three and nine months ended October 4, 2015 were $0.1 million and $0.5 million, respectively. These transaction costs were expensed as incurred and recorded in selling, general and administrative expenses in the Company's condensed consolidated statements of operations.