Business Acquisitions

3 Months Ended

Jan. 02, 2021

BUSINESS ACQUISITIONS

Acquisition of R&D Entities

Effective December 31, 2019, we completed the acquisition of R&D Test Systems, R&D Engineering, R&D Steel, R&D Prague, RGDK Engineering Private Limited and R&D Tools and Structures (collectively, R&D) for an upfront cash purchase price of $58,373. The acquisition was primarily funded through our existing Revolving Credit Facility. The remaining purchase price is based on earn-out payments of up to an additional $26,000 contingent on financial performance through June 2021 and further impacted by fluctuations in exchange rates. As of the acquisition date, we estimated the fair value of the earn-out liability (contingent consideration) to be $16,903. As of January 2, 2021, the fair value of the contingent consideration was

$28,131. See Note 7 for addition information on the fair value of the contingent consideration. Based in Denmark, R&D is a leader in high-quality, durable, rotating test systems, serving primarily the wind energy markets. During the three months ended January 2, 2021, we included $21,601 of revenue from R&D in our Consolidated Statements of Income. Costs of $748 associated with the acquisition of R&D were expensed as incurred during the three months ended January 2, 2021. Pro forma information related to the acquisition of R&D has not been included as the impact on our consolidated results of operations was not considered material.

The following table summarizes the fair value measurement of the assets acquired as of the date of acquisition:


	Fair Value		Finite-Lived Intangible Asset Lives (Years)
Asset (Liability)
Accounts receivable	$	13,557
Unbilled accounts receivable	6,325
Inventories	41
Prepaid expenses and other current assets	533
Property and equipment	1,185
Intangible assets
Customer lists	24,364		15
Trademarks and trade names	8,546		15
Technology	5,083		10
Other intangible assets	4,258		1
Other long-term assets	3,122
Purchased goodwill	35,887
Accounts payable	(12,592)
Accrued payroll and related costs	(2,193)
Advanced payments from customers	(3,203)
Accrued income taxes	(12)
Other accrued liabilities	(5,074)
Deferred income taxes	(11,239)
Other long-term liabilities	(2,230)
Net assets acquired	$	66,358

Supplemental information
Consideration paid at closing	$	58,373
Estimated contingent consideration	16,903
Less: Cash acquired	(8,918)
Purchase price, net of cash acquired	$	66,358

The allocation of purchase price consideration was completed as of January 2, 2021. Measurement period adjustments were recorded in the first quarter of fiscal year 2021 and have been reflected in the table above. The measurement period adjustments were not material.

Goodwill was calculated as the difference between the acquisition date fair value of the total purchase price consideration and the fair value of the net assets acquired and represents the future economic benefits that we expect to achieve as a result of the acquisition. This resulted in a purchase price in excess of the fair value of identifiable assets acquired. The purchase price also included the fair value of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. All of the goodwill was assigned to Test & Simulation. None of the goodwill is deductible for income tax purposes.

The fair value of the acquired intangible assets was $42,251. The acquired intangible assets are being amortized on a straight-line basis over the useful lives identified in the table above.