Business Combinations

12 Months Ended

Dec. 29, 2012

Business Combinations [Abstract]

Business Combinations

Business Combinations

Forth Dimension Displays

On January 11, 2011, the Company purchased 100% of the outstanding common stock of Forth Dimension Displays Ltd. (FDD) for approximately $11.0 million. Accounting standards for business combinations require that an acquiring entity measures and recognizes identifiable assets acquired and liabilities assumed at the acquisition date fair value of the acquired company with limited exceptions.

The allocation of the purchase price is as follows:

	Jan 11, 2011 (As adjusted)
Cash and marketable securities	$	1,000,605
Accounts receivable	341,156
Inventory	638,331
Plant and equipment	1,500,202
Other identifiable assets	247,711
Customer relationships	3,300,000
Developed technology	1,100,000
Trademark portfolio	220,000
Identifiable liabilities	(1,952,464		)
Goodwill	4,604,459
Total	$	11,000,000

The results of operations of the FDD acquisition have been included in the consolidated statements of operations from its acquisition date of January 11, 2011. FDD contributed approximately $4.9 million of net revenue to the consolidated results of operations for the fiscal year ended December 31, 2011. FDD’s net loss from operations included in the consolidated results of operation for the year ended December 31, 2011 was $6.9 million. The transaction related costs associated to the FDD acquisition were considered immaterial and included within selling, general and administrative expense for the fiscal year ended December 31, 2011.

The unaudited pro forma financial results for the fiscal year ended December 25, 2010 combine the unaudited historical results of the Company along with the unaudited historical results of FDD. The results include the effects of unaudited pro forma adjustments as if FDD was acquired on December 27, 2009 (the first day of the Company’s fiscal year 2010). There were no material nonrecurring pro forma adjustments in the calculation of revenue or earnings. The pro forma financial results presented below do not include any anticipated synergies or other expected benefits of the acquisition. The results of operations of FDD for the period January 1, 2011 through January 10, 2011 were immaterial. These results are presented for informational purposes only and are not necessarily indicative of future operations:

	Twelve months ended December 25, 2010
Revenue	$	63,805,000
Net Income	8,381,000

Ikanos

During the three month period ended March 31, 2012 the Company acquired a 25% interest in Ikanos, a private company, for $0.7 million and accounted for its interest using the equity method of accounting. On July 10, 2012 the Company purchased an additional 70,748 newly issued shares of Ikanos common stock for approximately $2.5 million, from Ikanos (the "Transaction"). As a result of this transaction and the Company's previous investment in Ikanos, the Company's owns approximately 51% of the now outstanding stock of Ikanos. The remaining 49% is held by other investors and employees of Ikanos. The Company began consolidating Ikanos on July 1, 2012.

The total purchase price was $2,581,000 and is comprised of

Cash consideration	$	2,500,000
Fair market value of Kopin's previously held equity method investment in Ikanos	81,000
Total purchase price	$	2,581,000

The preliminary allocation of the purchase price is as follows:

	July 10, 2012 (As initially reported)			Measurement period adjustments			July 10, 2012 (As adjusted)
Cash and marketable securities	$	2,594,000		$	—		$	2,594,000
Accounts receivable	167,000			—			167,000
Property, plant and equipment	277,000			—			277,000
Customer Relationships	—			400,000			400,000
Trade name	—			170,000			170,000
Goodwill	1,141,000			(456,000		)	685,000
Other identifiable assets	111,000			—			111,000
Identifiable liabilities	(325,000		)	(114,000		)	(439,000		)
Noncontrolling interest in Ikanos	(1,384,000		)	—			(1,384,000		)
Total	$	2,581,000		$	—		$	2,581,000

The Company remeasured and decreased its investment in Ikanos by approximately $558,000 within the statement of operations which represented the fair market value of the investment immediately prior to the Transaction.

The results of operations of the Ikanos acquisition have been included in the consolidated statements of operations from the time the Company assumed majority ownership, approximately July 1, 2012. Ikanos's net loss from operations included in the consolidated results of operation for the year ended December 29, 2012 was $1.5 million. The transaction related costs associated to the Ikanos acquisition were considered immaterial and included within selling, general and administrative expense for the fiscal year ended December 29, 2012. The goodwill will not be deductible for tax purposes.

The unaudited pro forma financial results for the fiscal years ended December 31, 2011 and December 29, 2012 combine the unaudited historical results of the Company along with the unaudited historical results of Ikanos. The results include the effects of unaudited pro forma adjustments as if Ikanos was acquired on December 25, 2010 (the first day of the Company's fiscal year 2011). There were no material nonrecurring pro forma adjustments in the calculation of revenue or earnings. The pro forma financial results presented below do not include any anticipated synergies or other expected benefits of the acquisition. These results are presented for informational purposes only and are not necessarily indicative of future operations.

	Twelve Months Ended
	December 29, 2012			December 31, 2011
Revenue	$	34,767,000		$	65,536,000
Net (Loss) Income	(20,580,000		)	3,210,000