Business Acquisitions

12 Months Ended

Mar. 29, 2014

Business Combinations [Abstract]

Business Acquisitions

Business Acquisition

Fiscal 2015

On January 15, 2015, the Company acquired all of the outstanding shares of Wuhan Topwin Optoelectronics Technology Co., Ltd. (Topwin), a Chinese manufacturer of laser-based systems, for $7.7 million in cash and 748,944 shares issuable over a three year period, valued at approximately $2.8 million as of the acquisition date. Out of the $2.8 million in equity, approximately one-half, or 374,472 shares, is contingent-based consideration and one-half, or 374,472 shares, is non-contingent and will be issued over a three year period beginning June 30, 2015. The contingent consideration is based on future performance of the acquiree, as evaluated against targets for net income for each year over a three year period. One-third of the contingent shares will be issued after each year if the target is met for that year, however failing to meet stated targets will result in none of the contingent shares being issued for that year. As of the acquisition date, the fair value of 374,472 shares of contingent consideration was estimated to be $0.3 million and the 374,472 shares of non-contingent equity consideration was estimated to be $2.5 million. The fair value of the non-contingent and contingent shares to be issued over the three year period is determined based on the estimated share price as of the issuance date derived through Monte Carlo simulation, discounted back to the acquisition date. The value of the contingent shares includes consideration of the estimated probability of attainment of the net income targets. Analysis supporting the preliminary purchase price allocation included a valuation of assets and liabilities as of the closing date, an analysis of intangible assets and a detailed review of the opening balance sheet to determine other significant adjustments required to recognize assets and liabilities at fair value. Additionally, the Company will grant, on the same terms described above, approximately 513,328 shares valued at $2.3 million, as compensation to a Principal in the Company who was also a former shareholder of Topwin. The compensation will be recognized over the term of the Principal's employment agreement with the Company per the purchase contract.

The total purchase price of approximately $10.6 million, net of cash acquired, was allocated to the underlying assets acquired and liabilities assumed based on their fair values. The allocation of purchase price to goodwill and identifiable assets and liabilities is subject to the final determination of purchase price, as the purchase price and asset values are subject to valuation and contractual adjustments of working capital, which has not been settled.

The following table presents the allocation of the purchase price of $10.6 million to the assets acquired and liabilities assumed based on their fair values:

(In thousands)
Accounts receivable, net of allowances of $268	$	454
Inventory	544
Prepaid expense and other current assets	86
Property, plant and equipment	23
Acquired intangibles	3,618
Goodwill	7,717
Accounts payable and other accrued liabilities	(1,859		)
Total purchase price, net of cash acquired	$	10,583

The acquisition is expected to enable the Company to gain entry into the low total-cost-of-ownership solutions market in China. The Company has preliminarily allocated approximately $7.7 million of the purchase price to goodwill, which was assigned to the Topwin reporting unit. The premium paid over the fair value of the individual assets acquired and liabilities assumed reflects the Company’s view that this acquisition was the result of a competitive bid process and has provided the Company with innovative design and manufacturing capabilities for laser-based manufacturing solutions across a variety of complementary applications, together with direct access to local China market, supply chain and opto-electronics knowledge center. None of the goodwill is expected to be deductible for tax purposes.

As a result of the acquisition, the Company recorded approximately $4.7 million of net identifiable assets including $3.6 million of identifiable intangible assets and $1.9 million of identifiable liabilities. The acquired intangible assets consist primarily of $3.5 million of developed technology and will be amortized over their useful lives, which range from one to ten years.

In 2015, the Company also incurred approximately $0.8 million in acquisition-related costs which are included in selling, service and administration expenses in the Consolidated Statements of Operations. The operating results of this acquisition are included in the Company’s results of operations since the date of acquisition. Pro forma financial information has not been provided for the acquisition of Topwin as it was not material to the Company’s current year operations and overall financial position.

Fiscal 2014

On May 3, 2013, the Company completed the purchase of assets related to the Semiconductor Systems business of GSI Group Inc. for a total purchase price of $9.7 million. The acquisition provided the Company with direct access to industry-leading wafer marking, wafer trimming and circuit trimming laser systems. The purchase price was allocated to the underlying assets acquired and liabilities assumed based on their fair values and resulted in a net gain on bargain purchase of $0.5 million. The fair value of the acquired net assets of $10.5 million was in excess of the total purchase consideration of $9.7 million, primarily due to the recognition of certain intangible assets. The resulting gain of $0.8 million was partially offset by $0.3 million of deferred tax liabilities. Analysis supporting the purchase price allocation included a valuation of assets and liabilities as of the closing date, an analysis of intangible assets and a detailed review of the opening balance sheet to determine other significant adjustments required to recognize assets and liabilities at fair value. The acquisition was an asset purchase for tax purposes.

As a result of the acquisition, the Company recorded approximately $8.2 million of inventory, $3.9 million of accounts receivable and other current assets, $0.7 million of identifiable intangible assets, $2.3 million of current liabilities, and a gain on bargain purchase of $0.8 million. The $0.7 million of identifiable intangible assets includes approximately $0.5 million of backlog and $0.2 million of developed technology. The acquired intangibles are amortized over their estimated useful lives, which range from one to three years.

In 2014, the Company also incurred approximately $1.5 million in acquisition related costs which are included in selling, service and administration expenses in the Condensed Consolidated Statements of Operations.

The operating results of this purchase are included in the Company’s results of operations since the date of acquisition. Pro forma financial information has not been provided for the purchase as it was not material to the Company’s overall financial position.