Note 8 Acquisition

9 Months Ended

Jul. 02, 2016

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Acquisitions

Fiscal 2016 Acquisitions

Storage Software Provider

On January 5, 2016, the Company purchased all of the outstanding stock of a privately-held provider of data storage software solutions to Original Equipment Manufacturers and Storage Integrators. The acquisition is expected to enable the Company to extend its storage product offerings from storage hardware to a full storage solution product. Total consideration paid for this acquisition was $36.8 million, consisting of $19.0 million of cash and a non-interest bearing promissory note due May 1, 2016 with a discounted value of $17.8 million as of the acquisition date. The promissory note was repaid on the due date. The acquisition will be reported as part of the Company's CPS operating segments.

The Company's allocation of the purchase price was based on management's estimate of the acquisition-date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, as follows:

	(In thousands)
Current assets, including cash of $1.3 million	$	1,618
Noncurrent assets, including identifiable intangible assets of $7.3 million and goodwill of $30.8 million	38,510
Current liabilities	(3,146		)
Noncurrent liabilities	(144		)
Total	$	36,838

Goodwill is tax deductible and reflects the Company's expectation that the acquisition will enable the Company to broaden its relationships with certain of its existing key customers and leverage the acquisition to develop other software solutions. Goodwill and identifiable assets are recorded in other non-current assets on the condensed consolidated balance sheets. Identifiable intangible assets are being amortized over three to four years.

Malaysian Manufacturing Facility

On February 1, 2016, the Company completed its acquisition of a manufacturing facility and related assets from a customer in the industrial end market. As part of this transaction, the Company also entered into a master supply agreement for the provision of products to such customer. The acquisition augments the Company's current manufacturing footprint and technological capabilities for serving this diverse end-user customer base. Total consideration paid for this acquisition was $53.5 million, consisting of $41.2 million of cash and a four-year non-interest bearing promissory note with a discounted value of $12.3 million as of the acquisition date. This acquisition will be reported in the Company's IMS reportable segment.

The Company's allocation of the purchase price was based on management's estimate of the acquisition-date fair values of assets acquired and liabilities assumed, as follows:

	(In thousands)
Current assets	$	31,580
Noncurrent assets	24,122
Noncurrent liabilities	(581		)
Total	$	55,121

Consideration paid was less than the fair values of assets acquired, resulting in a bargain purchase gain of $1.6 million, which was recorded in interest and other, net on the condensed consolidated statements of income in the second quarter of 2016. The Company reassessed the recognition and measurement of identifiable assets and liabilities acquired and concluded that all acquired assets and liabilities were recognized and that the valuation procedures and resulting estimates of fair values were appropriate. The bargain purchase gain resulted from the discount attributable to financing a portion of the purchase price with the acquiree using a non-interest bearing promissory note.

Fiscal 2016 Acquisitions - Aggregate

For the two acquisitions completed in 2016, total consideration paid was $90.3 million, consisting of $60.2 million of cash and non-interest bearing promissory notes with a discounted value of $30.1 million as of the acquisition date. This non-cash portion of consideration paid will be disclosed as a supplemental cash flow item on the condensed consolidated cash flow statement until the period in which it occurred is no longer presented. The amount presented is fixed at the acquisition date value, regardless of future changes resulting from accretion of interest or repayments.

These acquisitions did not materially affect the Company's results of operations for the three or nine months ended July 2, 2016.

Fiscal 2015 Acquisition

During the fourth quarter of 2015, the Company purchased all outstanding stock of a privately-held company that designs and manufactures equipment for the oil and gas industry. Consideration for the acquisition consisted of cash of $13.9 million plus up to an additional $23.5 millionif certain annual earnings targets are achieved. The fair value of contingent consideration was determined to be $11.0 million as of the acquisition date.

During the second quarter of 2016, the fair value of the Company's contingent consideration liability decreased by $7.6 million, resulting in a credit to cost of sales on the condensed consolidated statement of income. The change in fair value resulted from a revision to the Company's estimate of future earnout payments, driven primarily by weakened conditions in the oil and gas industry.