Note 6. Acquisitions

AvComm and Wireless Test and Measurement Acquisition

On March 15, 2018 (“AW Close Date”), the Company completed the acquisition of the AW Business of Cobham plc. (“AW”) for $469.8 million in cash, subject to working capital adjustments. The acquisition further strengthens the Company’s competitive position in 5G deployment and diversifies the Company into military, public safety and avionics test markets. The acquired business has been integrated into the Company's NE segment.

The Company accounted for the transaction in accordance with the authoritative guidance on business combinations; therefore, the tangible and intangible assets acquired and liabilities assumed are recorded at fair value on the acquisition date.

The identified intangible assets acquired, as of the AW Close Date, were as follows (in millions):



Tangible assets acquired:	$	59.3
Intangible assets acquired:
Developed technology	113.5
Customer relationships	75.0
Trade names	28.0
In-process research and development	9.0
Customer Backlog	6.5
Goodwill	178.5
Total consideration transferred	$	469.8

The preliminary allocation of the purchase price to tangible assets, based on the estimated fair values of assets acquired and liabilities assumed on the AW Close Date, were as follows (in millions):



Cash	$	16.1
Accounts receivable	43.0
Inventory	33.5
Property and equipment	33.5
Other assets	7.6
Accounts payable	(10.9		)
Other liabilities	(29.6		)
Deferred revenue	(10.2		)
Deferred tax liabilities	(23.7		)
Net tangible assets acquired	$	59.3

The allocation of the purchase price was based upon a preliminary valuation, and our estimates and assumptions are subject to refinement, final cash and working capital adjustments within the measurement period (up to one year from the AW Close Date). Adjustments to the purchase price allocation may require adjustments to goodwill prospectively.

Acquired intangible assets are classified as Level 3 assets for which fair value is derived from a valuation based on inputs that are unobservable and significant to the overall fair value measurement. The fair value of acquired developed technology, customer relationships, trade names, acquired in-process research and development (“IPR&D”) and backlog was determined based on an income approach using the discounted cash flow method. The intangible assets, except IPR&D, are being amortized over their estimated useful lives that range from three to six years. Order backlog will be fully amortized within one year.

In accordance with authoritative guidance, the Company recognizes IPR&D at fair value as of March 15, 2018. The IPR&D is accounted for as an indefinite-lived intangible asset until completion or abandonment of the R&D efforts and is tested for impairment in each period it is considered an indefinite lived asset.

Goodwill arising from this acquisition is primarily attributed to sales of future products and services and the assembled workforce of AW. Goodwill has been assigned to the NE segment and is partially deductible for tax purposes.

During the three months ended September 29, 2018, the Company recorded a measurement period adjustment of $6.3 million for a tax related liability, which resulted in a corresponding increase to acquired goodwill.

AW results of operations have been included in the Company’s Consolidated Financial Statements subsequent to the date of acquisition.

Trilithic, Inc. Acquisition

During fiscal 2018 the Company completed the acquisition of Trilithic, Inc. (“Trilithic”) a privately-held provider of electronic test and measurement equipment for telecommunications service providers. The Company acquired all outstanding shares of Trilithic for $56.4 million in cash. The Trilithic acquisition has been integrated into our NE segment.

The Company accounted for the transaction in accordance with the authoritative guidance on business combinations. Therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date.

The identified assets acquired, were as follows (in millions):



Tangible assets acquired:	$	11.8
Intangible assets acquired:
Developed technology	15.5
Customer relationships	11.0
Other	0.3
Goodwill	17.8
Total purchase price	$	56.4

The allocation of the purchase price, were as follows (in millions):



Cash	$	0.2
Accounts receivable	3.2
Inventory	10.1
Property and equipment	1.2
Accounts payable	(1.7		)
Other liabilities, net	(1.2		)
Net tangible assets acquired	$	11.8

Acquired intangible assets are classified as Level 3 assets for which fair value is derived from a valuation based on unobservable inputs and significant to the overall fair value measurement. The fair value of acquired developed technology, customer relationships, and other intangible assets was determined based on an income approach using the discounted cash flow method. The intangible assets are being amortized over their estimated useful lives that range from three to five years for the acquired developed technology and customer relationships.

The goodwill arising from this acquisition is primarily attributed to sales of future products and services and the assembled workforce of Trilithic. Goodwill has been assigned to the NE segment and is not deductible for tax purposes.