Subsequent Events |
9 Months Ended |
|---|---|
Sep. 28, 2019 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Subsequent EventsOn October 4, 2019, the Company acquired the stock of the primary operating subsidiaries as well as certain other assets from mass transit and defense market test solution provider, Diagnosys for $7.0 million in cash. Diagnosys is a developer and manufacturer of comprehensive automated test equipment providing test, support, and repair of high value electronics, electro-mechanical, pneumatic and printed circuit boards focused on the global mass transit and defense markets. The terms of the acquisition allow for a potential earn-out of up to an additional $13.0 million over the next three years based on achievement of new order levels of over $72.0 million during that period. The acquired business has operations in Westford, Massachusetts as well as Ferndown, England, and an engineering center of excellence in Bangalore, India. The Company expects to complete a preliminary allocation during the fourth quarter of 2019. The Company is currently evaluating whether any of the goodwill and purchased intangible assets will be deductible for tax purposes.
AeroSat has incurred delays and losses related to certain projects in the period ended September 28, 2019. In our third-quarter earnings release on November 5, 2019, we announced initiatives that the Company is undertaking commencing in the fourth quarter of 2019 to reduce losses and minimize costs at our AeroSat reporting unit, which is a component of our Aerospace segment. As part of these initiatives, we are evaluating if we should continue with some of those projects. We expect to formulate a restructuring plan out of these initiatives which will result in restructuring charges which may include severance, relocation costs, inventory writedowns, long-lived asset impairment charges, contract cancellation charges and other expenses. The amount and timing of these charges will not be determinable until the restructuring plan has been determined, but it is possible they will be material.
The CCC reporting unit, a component of our Aerospace segment, has also incurred delays and losses related to a significant development project in the period ended September 28, 2019. Contract completion is expected to occur in the fourth quarter. If there are further delays, it is possible that additional losses may be incurred in future periods.
As of September 28, 2019, the AeroSat and CCC reporting units had goodwill of $1.6 million and $2.3 million, respectively, and intangible and long-lived assets totaling $8.9 million and $4.9 million, respectively. The percentage by which the AeroSat and CCC reporting units’ fair values exceeded their carrying values in the last annual goodwill impairment test (as of September 30, 2018) was 35% and 43%, respectively. Based on the Company’s evaluation, no significant events occurred or circumstances changed during the period ended September 28, 2019 that would suggest it is more likely than not that the fair values of these reporting unit have declined below their carrying values or that there were indicators of impairment for our long-lived assets in these reporting units, however, as we formulate our restructuring plan and reassess the long-range prospects for these businesses, factors could arise that result in a decline in the fair value of these reporting units and the indicators of impairment and the Company may be required to perform the applicable impairment tests and record impairment charges.
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