BUSINESS AND ASSET ACQUISITIONS

9 Months Ended

Dec. 31, 2012

BUSINESS AND ASSET ACQUISITIONS

BUSINESS AND ASSET ACQUISITIONS

11. BUSINESS AND ASSET ACQUISITIONS

On December 3, 2012, the Company completed its acquisition of all outstanding common stock of Saturn Electronics and Engineering, Inc. (“Saturn”), a supplier of electronics manufacturing services, solenoids and wiring for the automotive, appliance, consumer, energy and industrial markets.  The acquisition of Saturn broadened the Company’s service offering and strengthened its capabilities in the automotive and consumer electronics businesses.  The results of operations were included in the Company’s condensed consolidated financial results beginning on the date of acquisition and did not have a material impact on revenue or net income during the three-month and nine-month periods ended December 31, 2012.

The initial cash consideration for this acquisition amounted to $193.7 million with an additional $15.0 million estimated in relation to potential contingent consideration, for a total purchase consideration of $208.7 million. The total amount of cash acquired from this acquisition amounted to $2.2 million, resulting in net cash of $191.5 million paid during the three-month period ended December 31, 2012.  The Company primarily acquired accounts receivable, inventory, manufacturing assets and customer relationships, and recorded goodwill of $106.2 million in connection with this acquisition.

Preliminary Purchase Price Allocation

The allocation of the purchase price to Saturn’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values as of the date of acquisition. The valuation of these tangible and identifiable intangible assets and liabilities is preliminary, subject to completion of a formal valuation process and further management review, and will be adjusted as additional information becomes available during the allocation period. Such adjustments may have a material effect on the Company’s results of operations. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill.

The following represents the Company’s preliminary allocation of the total purchase price to the acquired assets and liabilities assumed of Saturn (in thousands):

Current assets:
Cash and cash equivalents	$	2,191
Accounts receivable	44,879
Inventories	22,454
Other current assets	770
Total current assets	70,294
Property and equipment	42,621
Goodwill	106,257
Other intangible assets	24,700
Other assets	991
Total assets	$	244,863
Current liabilities:
Accounts payable	$	29,539
Other current liabilities	6,269
Total current liabilities	35,808
Other liabilities	364
Total aggregate purchase price	$	208,691

During the nine-month period ended December 31, 2012, the Company completed three other acquisitions that were not individually, nor in the aggregate, significant to the Company’s consolidated financial position, results of operations and cash flows. The total consideration, which was paid in cash for these acquisitions and earn outs related to certain prior period acquisitions amounted to $72.5 million. The total amount of cash acquired from these acquisitions amounted to $80.1 million, resulting in net cash of $7.6 million acquired for these acquisitions during the nine-month period ended December 31, 2012. One of the acquired businesses expanded the Company’s capabilities primarily in the medical and defense markets; another acquired business will support the hardware product manufacturing needs of an existing customer in the technology industry; and the other acquired business will expand the Company’s capabilities primarily in the LED design and manufacturing market. The Company primarily acquired cash, inventory and certain other manufacturing assets, and recorded goodwill of $66.2 million in connection with these acquisitions. The potential amount of future payments which the Company could be required to make under contingent consideration arrangements relating to these acquisitions is not material.

In connection with one of the acquisitions during the first quarter of fiscal 2013, the Company acquired certain manufacturing assets that were purchased by the acquired company on behalf of an existing customer and will be continued to be used exclusively for the benefit of this customer. These assets are financed by a third party banking institution acting as an agent of the customer under an agreement, the terms of which reset annually.  The Company can settle the obligation related to these assets by returning the respective assets to the customer and will not be required to pay cash by either the customer or the third party banking institution to settle the obligation.  Accordingly, these assets amounting to $258.5 million and the liability amounting to $256.5 million have been included in other current assets and other current liabilities, respectively as of December 31, 2012.  The cash flows relating to the purchase of assets by the Company on behalf of the customer amounting to $101.5 million has been included in other investing cash flows for the nine-month period ended December 31, 2012.  Net cash inflows amounting to $85.6 million relating to the funding of these assets by the financial institution on behalf of the customer has been included in cash flows from other financing activities during the nine-month period ended December 31, 2012.  In conjunction with this acquisition, the Company acquired a license agreement for exclusive manufacturing rights and access to certain manufacturing technologies and processes.  In consideration for this license, the Company is obligated to pay the customer $88.0 million representing the estimated fair value of the license.  The obligation will be reduced over the term of the service arrangement as product is manufactured on behalf of the customer, and if a certain minimum number of products are manufactured over the term of the customer arrangement the $88.0 million obligation will be fully satisfied.

The Company continues to evaluate certain assets and liabilities related to business combinations completed during the recent periods. Additional information, which existed as of the acquisition date, may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Changes to amounts recorded as assets or liabilities may result in a corresponding adjustment to goodwill.

The goodwill generated from the Company’s business combinations completed during the nine-month period ended December 31, 2012 is primarily related to value placed on the employee workforce, service offerings and capabilities, and expected synergies. The goodwill is not deductible for income tax purposes.

The condensed consolidated financial statements include the operating results of each business combination from the date of acquisition and the related transaction costs incurred which are not material. Pro forma results of operations for the acquisitions completed during the nine-month period ended December 31, 2012 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company’s financial results.