Annual report pursuant to Section 13 and 15(d)

Acquisitions

v2.4.0.8
Acquisitions
 12 Months Ended
Dec. 28, 2013
Business Combinations [Abstract]  
ACQUISITIONS
ACQUISITIONS
On April 1, 2013, the Company acquired the remaining 60% of the capital stock of WhiteOak that it did not already own for $1,000. WhiteOak has been merged into HCT and relocated to HCT's facility in California. HCT manufactures, markets, sells and has design control for all current WhiteOak products. The combination of HCT and WhiteOak gives Sun full ownership of the technology to develop the next generation of Sun's electronic control products.
The Company recorded approximately $726 in goodwill, $746 in definite lived intangible assets, and $12 in transaction costs related to the acquisition. Of the $746 of acquired intangible assets, $18 was assigned to the WhiteOak trade name (1 year useful life), $11 was assigned to non-compete agreements (2 year useful life), $276 was assigned to customer relationships (15 year useful life), and $441 was assigned to technology (10 year useful life). Additionally, the Company recorded a gain of $528 as a result of remeasuring to fair value its 40% equity interest in WhiteOak held before the business combination. This gain is included in miscellaneous income on the Company's Consolidated Statement of Operations.
On October 18, 2012, the Company, through Sun Korea, purchased all of the outstanding stock of Seungwon Solutions Corporation (“Seungwon”) for approximately $1,458. Seungwon is a component supplier, and approximately 80% of its sales are to Sun Korea.
The Company recorded approximately $1,731 in goodwill and approximately $80 in transaction costs related to the acquisition.
The results of operations of WhiteOak and Seungwon have been included in the Company’s consolidated results since the dates of acquisition. Supplemental pro forma information and disclosure of acquired assets and liabilities have not been provided as these acquisitions did not have a material impact on the consolidated financial statements individually or in the aggregate.

On September 27, 2011, Sun purchased the remaining preferred and common shares of HCT that it did not already own. HCT designs and produces encapsulated, modular, highly ruggedized digital and analog electronic controller products for the global fluid power and motion control industry. HCT’s products complement Sun’s electro-hydraulic line of valves providing reliable, easy, simple and accurate control of individual valves, or seamless management of systems and sub-systems.

Goodwill arising from the acquisition was $1,976 consisting of the value of the workforce, synergies and competitive advantages obtained as a result of the acquisition. Identifiable intangible assets arising from the acquisition consist of the HCT Trade Name, Patented Technology, Unpatented Technology, and Customer Relationships. These identifiable intangibles totaled $2,658, and are amortized over ten years with the exception of Customer Relationships, which are amortized over twenty years. These amounts are recorded as other assets on the consolidated balance sheet.

The following table summarizes the consideration paid for HCT and the amounts of the assets acquired and liabilities assumed,
recognized at the acquisition date.

At September 27, 2011
 
 
Consideration
 
 
Cash
 
$
1,894

Stock
 
12

Fair value of total consideration transferred
 
$
1,906

Fair value of Sun's equity interest in HCT held before the business combination
 
1,472

Total
 
$
3,378

Acquisition-related costs (included in Selling, engineering, and administrative expenses)
 
40

Recognized amounts of identifiable assets acquired and liabilities assumed
 
 
Cash
 
$
130

Accounts receivable
 
570

Inventory
 
444

Property, plant, and equipment
 
317

Identifiable intangible assets
 
2,658

Other assets
 
210

Accounts payable and accrued expenses
 
(748
)
Notes payable
 
(2,123
)
Other liabilities
 
(56
)
Total identifiable net assets
 
$
1,402

Goodwill
 
1,976

Total
 
$
3,378



Approximately half of the acquisition-related costs above were incurred in the third quarter with the remainder incurred in the
Company’s fourth quarter. The amount of notes payable above is primarily made up of amounts due to Sun Hydraulics and eliminated upon consolidation.

Sun Hydraulics’ fair value of the equity interest in HCT held before the business combination was $1,472. The fair value of the previously held equity interest was determined based on the current purchase price per the purchase agreement before the deduction for option and warrant proceeds. Sun Hydraulics recognized a gain of $1,244 as a result of remeasuring to fair value, based on the current purchase price, its 38% equity interest in HCT held before the business combination. The equity interest was diluted from the original investment as a result of warrant and option exercises. This gain was included in net miscellaneous income on the consolidated statements of operations for the year ending December 31, 2011.


For the period ending October 1, 2011, the Company accounted for HCT under the equity method. The revenue and earnings for HCT included in Sun’s Consolidated Statement of Operations for the year ended December 31, 2011, and the revenue and earnings of the combined entity had the acquisition date been January 2, 2011 were:
 
 
Revenue
 
Earnings
Actual from 10/02/11 to 12/31/2011
 
$
1,270

 
$
(58
)
 
 
Revenue (unaudited)
 
Earnings (unaudited)
Supplemental pro forma from 01/02/2011 to 12/31/2011
 
$
206,968

 
$
37,534