Note 6 - Business Combination and Goodwill

12 Months Ended

Jan. 01, 2022

Notes to Financial Statements

Business Combination Disclosure [Text Block]

On November 12, 2021, we acquired 100% of the outstanding shares of Mirametrix, Inc. ("Mirametrix"), an innovator in advanced AI software and computer vision ("CV") applications. This acquisition combines Mirametrix technology and expertise with Lattice’s innovative hardware and software solution stacks to create an end-to-end AI and computer vision solution that spans from the hardware to the application layer. Total consideration to acquire Mirametrix was $68.5 million, paid 100% in cash to Mirametrix shareholders. There is no contingent consideration included in the determination of the purchase consideration.

Purchase consideration was allocated to the tangible and intangible assets and liabilities assumed on the basis of the respective estimated fair values on the acquisition date. The purchase price allocation has been substantially completed, but may be subject to revision as we perform and complete more detailed analysis of certain tax matters. The fair values of the assets acquired and liabilities assumed in the acquisition of Mirametrix, by major class, were recognized as follows:

(In thousands)	Estimated Fair Value
Assets acquired:
Cash and cash equivalents	$	437
Accounts receivable		3,265
Other current assets		262
Property and equipment		156
Intangible assets		24,800
Goodwill		47,844
Total assets acquired		76,764
Liabilities assumed
Accounts payable		21
Accrued expenses		5
Accrued payroll obligations		247
Long-term liabilities		7,955
Total liabilities assumed		8,228
Fair value of net assets acquired	$	68,536

The following table presents details of the identified intangible assets acquired through the acquisition of Mirametrix:

	Useful Life		Fair Value
	(In years)		(In thousands)
Existing technology		7	$	13,500
Customer relationships		7		9,800
Trade name / trademarks		10		1,500
Total identified intangible assets subject to amortization			$	24,800

We do not believe there is any significant residual value associated with these intangible assets. We are amortizing the intangible assets using the straight-line method over their estimated useful lives.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The goodwill recognized in the acquisition of Mirametrix was derived from expected benefits from cost synergies and the knowledgeable and experienced workforce who joined the Company after the acquisition. Goodwill resulting from the acquisition is not deductible for Canada income tax purposes.

The goodwill balance of approximately $315.4 million at January 1, 2022 is comprised of approximately $267.5 million from prior acquisitions combined with the approximately $47.8 million from the acquisition of Mirametrix. No impairment charges relating to goodwill were recorded for fiscal 2021, 2020, or 2019.