Business Combinations

Acquisitions in fiscal year 2015

During the first three months of fiscal year 2015, the Company completed the acquisition of two businesses for total consideration of $4.7 million, in cash. The excess of the purchase prices over the fair values of each of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and have been allocated to goodwill, of which $0.03 million is tax deductible. The Company reported the operations for these acquisitions within the results of the Company's Human Health and Environmental Health segments from the acquisition dates. As of March 29, 2015, the purchase accounting allocations related to these acquisitions were preliminary. In addition, subsequent to March 29, 2015, the Company completed the acquisition of a business for total consideration of $14.0 million, in cash, as of the closing date. The operations for this acquisition will be reported within the results of the Company's Environmental Health segment.

Acquisitions in fiscal year 2014

Acquisition of Perten Instruments Group AB. In December 2014, the Company acquired all of the outstanding stock of Perten Instruments Group AB ("Perten"). Perten is a provider of analytical instruments and services for quality control of food, grain, flour and feed. The Company expects this acquisition to enhance its industrial, environmental and safety business by expanding the Company's product offerings to the academic and industrial end markets. The Company paid the shareholders of Perten $269.9 million in cash for the stock of Perten. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company has reported the operations for this acquisition within the results of the Company’s Environmental Health segment from the acquisition date. Identifiable definite-lived intangible assets, such as core technology, customer relationships and trade names, acquired as part of this acquisition had weighted average amortization periods of approximately 5 to 10 years.

Other acquisitions in fiscal year 2014. In addition to the Perten acquisition, the Company completed the acquisition of two businesses in fiscal year 2014 for total consideration of $18.0 million in cash and $4.3 million of assumed debt. The excess of the purchase price over the fair value of each of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill, none of which is tax deductible. The Company reported the operations for these acquisitions within the results of the Human Health and Environmental Health segments from the acquisition dates. As of March 29, 2015, the purchase accounting allocations related to acquisitions completed during fiscal year 2014 were preliminary.

The total purchase price for the acquisitions in fiscal year 2014 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:



	Perten			2014 Other
	(Preliminary)
	(In thousands)
Fair value of business combination:
Cash payments	$	269,937		$	17,898
Working capital and other adjustments	—			151
Less: cash acquired	(16,732		)	(124		)
Total	$	253,205		$	17,925
Identifiable assets acquired and liabilities assumed:
Current assets	$	32,805		$	1,965
Property, plant and equipment	1,485			125
Other assets	—			364
Identifiable intangible assets:
Core technology	16,000			1,705
Trade names	7,000			—
Customer relationships	87,000			6,800
IPR&D	—			1,266
Goodwill	164,164			15,981
Deferred taxes	(31,454		)	(3,072		)
Deferred revenue	—			(589		)
Liabilities assumed	(16,195		)	(2,333		)
Debt assumed	(7,600		)	(4,287		)
Total	$	253,205		$	17,925

The preliminary allocations of the purchase prices for acquisitions completed in fiscal years 2015 and 2014 were based upon initial valuations. The Company's estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete its valuations within the measurement periods, which are up to one year from the respective acquisition dates. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and related valuation allowances, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition dates during the measurement periods. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have resulted in the recognition of those assets and liabilities as of those dates. Adjustments to the preliminary allocation of the purchase prices during the measurement period require the revision of comparative prior period financial information when reissued in subsequent financial statements. The effect of adjustments to the allocation of the purchase prices made during the measurement periods would be as if the adjustments had been completed on the acquisition dates. The effects of any such adjustments, if material, may cause changes in depreciation, amortization, or other income or expense recognized in prior periods. All changes that do not qualify as adjustments made during the measurement periods are included in current period earnings.

Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period.

The Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $31.4 million as of March 29, 2015. As of March 29, 2015, the Company has recorded contingent consideration obligations relating to the acquisition of Tetra Teknolojik Sistemler Limited Sirketi with an estimated fair value of $0.1 million. The earnout period for acquisitions with open contingency periods does not exceed three years from the respective acquisition date. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional consideration which would be expensed.

Total transaction costs related to acquisition activities for the three months ended March 29, 2015 and March 30, 2014 were $0.2 million and $0.1 million, respectively, which were expensed as incurred and recorded in selling, general and administrative expenses in the Company's condensed consolidated statements of operations.