Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATIONS AND DISPOSITIONS (Tables)

v3.22.1
BUSINESS COMBINATIONS AND DISPOSITIONS (Tables)
 9 Months Ended
Mar. 31, 2022
Business Combinations and Dispositions [Abstract]  
Schedule of Aggregate Purchase Consideration and Preliminary Purchase Price Allocation
The aggregate purchase consideration has been preliminarily allocated as follows (in thousands):
Total purchase consideration $ 443,176 
Less: cash acquired (11,652)
Total purchase consideration, net of cash acquired $ 431,524 
Allocation
Accounts receivable 15,044 
Inventory 13,552 
Goodwill 271,783 
Intangible assets 208,400 
Other assets 5,188 
Accrued officers' bonus (23,889)
Other liabilities (12,759)
Deferred tax liabilities (45,795)
$ 431,524 
Schedule of Estimated Fair Value and Weighted Average Useful Life of Acquired Intangible Assets
The estimated fair value and weighted average useful life of the acquired intangible assets are as follows:
(In thousands) Fair Value Weighted Average Useful Lives
Existing technology(1)
$ 117,900  8
Customer relationships(2)
52,400  7
Order backlog(3)
35,000  1.5
Trade name / trademark(4)
3,100  3
Total identified intangible assets $ 208,400 
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(1)Existing technology was identified from the products of ECI and its fair value was determined using the Relief-from-Royalty method under the income approach, which estimates the cost savings generated by a company related to the ownership of an asset for which it would otherwise have had to pay royalties or license fees on revenues earned through the use of the asset. The discount rate used was determined at the time of measurement based on an analysis of the implied internal rate of return of the transaction, weighted average cost of capital and weighted average return on assets. The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash flows over the forecast period.
(2)Customer relationships represent the fair value of the existing relationships with ECI’s customers and its fair value was determined using the Multi-Period Excess Earning Method which involves isolating the net earnings attributable to the asset being measured based on present value of the incremental after-tax cash flows (excess earnings) attributable solely
to the intangible asset over its remaining useful life. The economic useful life was determined based on historical customer turnover rates.
(3)Order backlog primarily relates to the dollar value of purchase arrangements with customers, effective as of a given point in time, that are based on mutually agreed terms which, in some cases, may still be subject to completion of written documentation and may be changed or cancelled by the customer, often without penalty. ECI’s backlog consists of these arrangements with assigned shipment dates expected, in most cases, within twelve months. The fair value was determined using the Multi-Period Excess Earning Method. The economic useful life is based on the time to fulfill the outstanding order backlog obligation.
(4)Trade name / trademark primarily relates to ECI’s name. The fair value was determined by applying the Relief-from-Royalty Method under the income approach. The economic useful life was determined based on the expected life of the trade names, trademarks and domain names.
Schedule of Net Assets Held-for-sale
As of March 31, 2022 the balances of Orbograph's net assets held for sale were as follows (in thousands):
Cash $ 7,674 
Trade and other receivables, net 20,109 
Fixed assets 1,639 
Intangible assets 18,588 
Goodwill 42,622 
Other long-term assets 1,665 
Trade and other payables (4,099)
Other liabilities (7,776)
Minority interest (540)
$ 79,882