Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

Business Combination

v2.4.0.8
Business Combination
 6 Months Ended
Jun. 30, 2013
Business Combinations [Abstract]  
Business Combinations

Note 2. Business Combinations

Objet Merger

The Objet merger was accounted for as a reverse acquisition and accordingly, the total purchase price of $1,341 million was calculated as if Stratasys, Inc. had issued its shares to Objet's shareholders and converted options to purchase Objet's ordinary shares to options to purchase Stratasys, Inc. common stock (which became exercisable instead for Stratasys Ltd. ordinary shares upon consummation of the merger).

Under the acquisition method of accounting, the total purchase price was allocated to the net tangible and intangible assets of Objet acquired in the merger, based on their fair values at the merger date. The estimated fair values are preliminary and based on the information that was available as of the merger date. The Company believes that the information provides a reasonable basis for estimating the fair values, but the Company is waiting for additional information necessary to finalize these amounts, particularly with respect to the estimated fair value of intangible assets and property, plant and equipment and deferred taxes related thereto. Thus the preliminary measurements of fair value reflected are subject to changes and such changes could be significant. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable, but no later than one year from the merger date. There were no changes during the six months ended June 30, 2013 to the preliminary measurements of fair value. The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows (in thousands):

  Allocation of
  Purchase Price
Cash and cash equivalents $ 41,524
Restricted cash   845
Short-term bank deposit   30,062
Accounts receivable - Trade   23,633
Accounts receivable - Other   12,477
Prepaid expenses   1,011
Inventories   40,364
Deferred income taxes   1,755
Property, plant and equipment   15,475
Goodwill   797,063
Intangible assets   490,176
Other non-current assets   2,539
Total assets acquired   1,456,924
Accounts payable & other liabilities   49,876
Unearned revenue   8,674
Deferred tax liabilities   51,003
Other non-current liabilities   6,474
Total liabilities assumed   116,027
     
Total purchase price $      1,340,897

The allocation of the purchase price to the net assets acquired and liabilities assumed resulted in the recognition of the following intangible assets (in thousands):

          Weighted Average
        Amount       Life - Years
Developed technology   $ 374,126   9.6
Customer relationships     72,679   10
Trade name     15,291   9
In-process R&D     28,080   Indefinite
Total intangible assets   $       490,176    

In addition, the allocation of the purchase price resulted in the recognition of backlog, which was valued at $6.3 million. Backlog was included in accounts receivable - other and was fully amortized to selling, general and administrative through the three months ended March 31, 2013 based on the pattern in which the economic benefits of backlog were estimated to be realized.

The Company incurred $3.5 million and $4.5 million of acquisition-related costs related to the Objet merger that were expensed during the three and six months ended June 30, 2012, respectively. These costs are included in selling, general and administrative costs in the Company's consolidated statements of operations.

Pending Merger with MakerBot

On June 19, 2013, the Company and privately held Cooperation Technology Corporation ("MakerBot"), announced the signing of a definitive merger agreement ("MakerBot merger agreement") whereby MakerBot agreed to merge with a subsidiary of the Company in a stock-for-stock transaction.

Under the terms of the MakerBot merger agreement, Stratasys will initially issue approximately 4.76 million shares in exchange for 100% of MakerBot's outstanding capital stock. MakerBot stakeholders also qualify for performance-based earn-outs that provide for the issue of up to an additional 2.38 million shares through the end of 2014. Those payments, if earned, will be made in Stratasys shares or cash (in an amount reflecting the value of the Stratasys shares that would have otherwise been issued at the relevant earn out determination date), or a combination thereof, at Stratasys' discretion. The MakerBot merger is subject to customary closing conditions, and is expected to close in the third quarter of 2013. The Company incurred $3.8 million of acquisition-related costs during the three months ended June 30, 2013 related to the pending MakerBot merger.