Acquisitions

6 Months Ended

Jul. 02, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisitions

On April 17, 2023, we acquired Berthold Sichert GmbH (Sichert) with cash on hand for $97.5 million, net of cash acquired. Sichert, based in Berlin, Germany, designs and manufactures a portfolio of polycarbonate street cabinets utilized in outside plant passive optical networks (“PON”) and 5G networks. Sichert is reported within the Enterprise Solutions segment. The following table summarizes the estimated, preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Receivables	$	6,781
Inventory	13,061
Other current assets	1,840
Property, plant and equipment	7,057
Intangible assets	52,597
Goodwill	27,831
Other long-lived assets	1,303
Total assets acquired	$	110,470
Accounts payable	$	2,423
Accrued liabilities	1,884
Deferred income taxes	8,659
Total liabilities assumed	$	12,966
Net assets	$	97,504

The above purchase price allocation is preliminary and subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The preliminary measurement of receivables, intangible assets, deferred income taxes, and other assets and liabilities are subject to change. A change in the estimated fair value of the net assets acquired will change the amount of the purchase price allocable to goodwill.

The preliminary fair value of acquired receivables is $6.8 million, which is equivalent to its gross contractual amount. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.

For purposes of the above allocation, we based our preliminary estimate of the fair values for intangible assets on valuation studies performed by a third party valuation firm. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets (Level 3 valuation). Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to the expansion of broadband & 5G product offerings in end-to-end solutions. Our tax basis in the acquired goodwill is zero.

The intangible assets related to the acquisition consisted of the following:

	Fair Value		Amortization Period
	(In thousands)		(In years)
Intangible assets subject to amortization:
Customer relationships	$	49,131	15.0
Trademarks	2,456		2.0
Sales backlog	1,010		0.2
Total intangible assets subject to amortization	$	52,597
Intangible assets not subject to amortization:
Goodwill	$	27,831	n/a
Total intangible assets not subject to amortization	$	27,831
Total intangible assets	$	80,428
Weighted average amortization period			14.1

The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks.