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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 10-Q
________________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-32598
 _______________________________________
Entegris, Inc.
(Exact name of registrant as specified in its charter)
 _______________________________________
Delaware 41-1941551
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
129 Concord Road,Billerica,Massachusetts 01821
(Address of principal executive offices) (Zip Code)
(978) 436-6500
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
 _______________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareENTGThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ýAccelerated filer 
Non-accelerated filer ¨Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ý
As of April 17, 2020, there were 134,606,530 shares of the registrant’s common stock outstanding.


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ENTEGRIS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED MARCH 28, 2020
DescriptionPage
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Cautionary Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements may include statements about future period guidance or projections; the Company’s performance relative to its markets; market and technology trends, including the duration and drivers of any growth trends and the impact of the COVID-19 pandemic; the development of new products and the success of their introductions; the focus of the Company’s engineering, research and development projects; the Company’s ability to execute on its business strategies; the Company’s capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the effect of the Tax Cuts and Jobs Act; the impact of the acquisitions the Company has made and commercial partnerships the Company has established; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this Quarterly Report, are not guarantees of future performance and involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. These risks and uncertainties include, but are not limited to, weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for the Company’s products and solutions; risks related to the COVID-19 pandemic on the global economy and financial markets, as well as on the Company, our customers and suppliers, which may impact our sales, gross margin, customer demand and our ability to supply our products to our customers; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers’ rapidly changing requirements; the Company’s concentrated customer base; the Company’s ability to identify, effect and integrate acquisitions, joint ventures or other transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing
2

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processes; raw material shortages, supply constraints and price increases; changes in government regulations of the countries in which the Company operates; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; the level of, and obligations associated with, the Company’s indebtedness; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission, including under the heading “Risks Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 7, 2020, under the heading “Risk Factors” in Item 1A of this Quarterly Report and in the Company’s other periodic filings. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements

ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) 
(In thousands, except share and per share data)March 28, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$335,077  $351,911  
Trade accounts and notes receivable, net of allowance for doubtful accounts of $2,304 and $1,145
277,796  234,409  
Inventories, net300,694  287,098  
Deferred tax charges and refundable income taxes25,650  24,552  
Other current assets27,089  34,427  
Total current assets966,306  932,397  
Property, plant and equipment, net of accumulated depreciation of $540,013 and $522,424
474,841  479,544  
Other assets:
Right-of-use assets50,058  50,160  
Goodwill726,234  695,044  
Intangible assets, net of accumulated amortization of $424,462 and $409,328355,815  333,952  
Deferred tax assets and other noncurrent tax assets11,563  11,245  
Other13,748  13,744  
Total assets$2,598,565  $2,516,086  
LIABILITIES AND EQUITY
Current liabilities:
Long-term debt, current maturities$4,000  $4,000  
Accounts payable81,561  84,207  
Accrued payroll and related benefits29,590  62,340  
Other accrued liabilities60,857  87,778  
Income taxes payable25,982  26,108  
Total current liabilities201,990  264,433  
Long-term debt, excluding current maturities, net of unamortized discount and debt issuance costs of $9,112 and $9,516
1,074,888  932,484  
Pension benefit obligations and other liabilities35,295  37,867  
Deferred tax liabilities and other noncurrent tax liabilities71,516  71,586  
Long-term lease liability43,549  43,827  
Commitments and contingent liabilities    
Equity:
Preferred stock, par value $.01; 5,000,000 shares authorized; none issued and outstanding as of March 28, 2020 and December 31, 2019
    
Common stock, par value $.01; 400,000,000 shares authorized; issued and outstanding shares as of March 28, 2020: 134,808,929 and 134,606,529, respectively; issued and outstanding shares as of December 31, 2019: 134,929,768 and 134,727,368, respectively
1,348  1,349  
Treasury stock, at cost: 202,400 shares held as of March 28, 2020 and December 31, 2019
(7,112) (7,112) 
Additional paid-in capital833,159  842,784  
Retained earnings 390,542  366,127  
Accumulated other comprehensive loss(46,610) (37,259) 
Total equity1,171,327  1,165,889  
Total liabilities and equity$2,598,565  $2,516,086  
See the accompanying notes to condensed consolidated financial statements.

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ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three months ended
(In thousands, except per share data)March 28, 2020March 30, 2019
Net sales$412,327  $391,047  
Cost of sales226,849  213,654  
Gross profit185,478  177,393  
Selling, general and administrative expenses58,891  82,254  
Engineering, research and development expenses29,632  28,991  
Amortization of intangible assets16,211  18,657  
Operating income80,744  47,491  
Interest expense10,559  10,884  
Interest income(321) (1,225) 
Other expense (income), net878  (248) 
Income before income tax expense 69,628  38,080  
Income tax expense8,622  5,422  
Net income $61,006  $32,658  
Basic net income per common share$0.45  $0.24  
Diluted net income per common share$0.45  $0.24  
Weighted shares outstanding:
Basic134,745135,299
Diluted136,369136,692
See the accompanying notes to condensed consolidated financial statements.

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ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 Three months ended
(In thousands)March 28, 2020March 30, 2019
Net income$61,006  $32,658  
Other comprehensive loss, net of tax
Foreign currency translation adjustments(9,361) (2,787) 
Pension liability adjustments10  24  
Other comprehensive loss(9,351) (2,763) 
Comprehensive income $51,655  $29,895  
See the accompanying notes to condensed consolidated financial statements.

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ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)Common
shares
outstanding
Common
stock
Treasury sharesTreasury stockAdditional
paid-in
capital
Retained earnings
(deficit)
Foreign currency translation adjustmentsDefined benefit pension adjustmentsTotal
Balance at December 31, 2018136,179  $1,362  (202) $(7,112) $837,658  $213,753  $(32,776) $(860) $1,012,025  
Shares issued under stock plans572  5  —    (6,817)       (6,812) 
Share-based compensation expense—    —    4,653        4,653  
Repurchase and retirement of common stock(1,035) (10) —    (6,364) (23,413)     (29,787) 
Dividends declared ($0.07 per share)—    —    7  (9,517)     (9,510) 
Pension liability adjustment—    —          24  24  
Foreign currency translation—    —        (2,787)   (2,787) 
Net income—    —      32,658      32,658  
Balance at March 30, 2019135,716  $1,357  (202) $(7,112) $829,137  $213,481  $(35,563) $(836) $1,000,464  

(In thousands)Common
shares
outstanding
Common
stock
Treasury sharesTreasury stockAdditional
paid-in
capital
Retained earnings
(deficit)
Foreign currency translation adjustmentsDefined benefit pension adjustmentsTotal
Balance at December 31, 2019134,930  $1,349  (202) $(7,112) $842,784  $366,127  $(36,468) $(791) $1,165,889  
Shares issued under stock plans483  5  —    (10,894)       (10,889) 
Share-based compensation expense—    —    4,994        4,994  
Repurchase and retirement of common stock(604) (6) —    (3,740) (25,818)     (29,564) 
Dividends declared ($0.08 per share)—    —    15  (10,773)     (10,758) 
Pension liability adjustment—    —          10  10  
Foreign currency translation—    —        (9,361)   (9,361) 
Net income—    —      61,006      61,006  
Balance at March 28, 2020134,809  $1,348  (202) $(7,112) $833,159  $390,542  $(45,829) $(781) $1,171,327  


See the accompanying notes to condensed consolidated financial statements.

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ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Three months ended
(In thousands)March 28, 2020March 30, 2019
Operating activities:
Net income $61,006  $32,658  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation20,648  16,721  
Amortization16,211  18,657  
Share-based compensation expense4,994  4,653  
Provision for deferred income taxes(64) 6  
Other5,627  5,688  
Changes in operating assets and liabilities:
Trade accounts and notes receivable(43,995) (9,109) 
Inventories(18,205) (2,131) 
Accounts payable and accrued liabilities(38,020) (45,019) 
Other current assets5,825  17,778  
Income taxes payable and refundable income taxes(225) (42,873) 
Other(2,399) 433  
Net cash provided by (used in) operating activities11,403  (2,538) 
Investing activities:
Acquisition of property, plant and equipment(22,585) (34,465) 
Acquisition of businesses, net of cash acquired(75,630) (49,789) 
Other5  197  
Net cash used in investing activities(98,210) (84,057) 
Financing activities:
Proceeds from short-term borrowings and long-term debt217,000    
Payments of long-term debt(75,000) (1,000) 
Payments for dividends(10,847) (9,470) 
Issuance of common stock551  917  
Repurchase of common stock(29,564) (35,321) 
Taxes paid related to net share settlement of equity awards(11,440) (7,727) 
Deferred acquisition payments(16,125)   
Other(2,890) (250) 
Net cash provided by (used in) financing activities71,685  (52,851) 
Effect of exchange rate changes on cash and cash equivalents(1,712) (256) 
Decrease in cash and cash equivalents(16,834) (139,702) 
Cash and cash equivalents at beginning of period351,911  482,062  
Cash and cash equivalents at end of period$335,077  $342,360  


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Supplemental Cash Flow InformationThree months ended
(unaudited)
(In thousands)March 28, 2020March 30, 2019
Non-cash transactions:
Deferred acquisition payments$1,451  $14,001  
Contingent consideration obligation$  $686  
Equipment purchases in accounts payable$6,689  $7,486  
Dividends payable$89  $65  
Schedule of interest and income taxes paid:
Interest paid$15,296  $17,124  
Income taxes paid, net of refunds received$7,997  $47,770  
See the accompanying notes to condensed consolidated financial statements.
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ENTEGRIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations Entegris, Inc. (“Entegris”, “the Company”, “us”, “we”, or “our”) is a leading global developer, manufacturer and supplier of microcontamination control products, specialty chemicals and advanced materials handling solutions for manufacturing processes in the semiconductor and other high-technology industries.
Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation.
Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, particularly receivables, inventories, property, plant and equipment, right-of-use assets, goodwill, intangibles, accrued expenses, short-term and long-term lease liability, income taxes and related accounts, and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and contain all adjustments considered necessary, and are of a normal recurring nature, to present fairly the financial position as of March 28, 2020 and December 31, 2019, and the results of operations and comprehensive income for the three months ended March 28, 2020 and March 30, 2019, the equity statements as of and for the three months ended March 28, 2020 and March 30, 2019, and cash flows for the three months ended March 28, 2020 and March 30, 2019.
The condensed consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2019. The results of operations for the three months ended March 28, 2020 are not necessarily indicative of the results to be expected for the full year.
Fair Value of Financial Instruments The carrying value of cash equivalents, accounts receivable, accounts payable, accrued payroll and related benefits, and other accrued liabilities approximates fair value due to the short maturity of those items. The fair value of long-term debt, including current maturities, was $1,014.8 million at March 28, 2020, compared to the carrying amount of long-term debt, including current maturities, of $1,078.9 million at March 28, 2020.
Recent Accounting Pronouncements Adopted in 2020 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities are required to use a new forward-looking “expected loss” model that replaces the current “incurred loss” model and generally will result in the earlier recognition of allowances for losses.
The Company adopted ASU No. 2016-13 on January 1, 2020, and there was no material effect on its condensed consolidated financial statements.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within that fiscal year. Early adoption is permitted. The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures.
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2. REVENUES
Revenue Recognition Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold.
The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less.
When the Company receives consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract, the Company records deferred revenue, which represents a contract liability. Such deferred revenue typically results from advance payments received on sales of the Company’s products. The Company makes the required disclosures below.
The Company does not disclose information about remaining performance obligations that have original expected durations of one year or less.
Nature of goods and services The following is a description of principal activities from which the Company generates its revenues. The Company has three reportable segments. For more detailed information about reportable segments, see note 9 to the condensed consolidated financial statements. For each of the three reportable segments, the recognition of revenue regarding the nature of goods and services provided by the segments are similar and described below. The Company recognizes revenue for product sales at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment or delivery, depending on the terms of the underlying contracts. For product sales contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognizes the related revenue as control of each individual product is transferred to the customer, in satisfaction of the corresponding performance obligations.
The Company generally recognizes revenue for sales of services when the Company has satisfied the performance obligation.
The Company also enters into arrangements to license its intellectual property. These arrangements typically permit the customer to use a specialized manufacturing process and in return the Company receives a royalty fee. If applicable, the Company recognizes revenue when the subsequent sale or usage occurs.
The Company offers certain customers cash discounts and volume rebates as sales incentives. The discounts and volume rebates are recorded as a reduction in sales at the time revenue is recognized in an amount estimated based on historical experience and contractual obligations. The Company periodically reviews the assumptions underlying its estimates of discounts and volume rebates and adjusts its revenues accordingly.
In addition, the Company offers free product rebates to certain customers. The Company utilizes an adjusted market approach to estimate the stand-alone selling price of the loyalty program and allocates a portion of the consideration received to the free product offering. The free product offering is redeemable upon future purchases of the Company’s products. The amount associated with free product rebates is deferred in the balance sheet and is recognized as revenue when the free product is redeemed or when the likelihood of redemption is remote. The Company deems the amount immaterial for disclosure.
The Company provides for the estimated costs of fulfilling our obligations under product warranties at the time the related revenue is recognized. The Company estimates the costs based on historical failure rates, projected repair costs, and knowledge of specific product failures (if any). The specific warranty terms and conditions vary depending upon the product sold and the country in which we do business, but generally include parts and labor over a period generally ranging from 90 days to one year. The Company regularly reevaluates its estimates to assess the adequacy of the recorded warranty liabilities and adjust the amounts as necessary.
The Company’s contracts are generally short-term in nature. Most contracts do not exceed twelve months. Payment terms vary by the type and location of the Company’s customers and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. Those customers that prepay are represented by the contract liabilities below until the performance obligations are satisfied.
The following table provides information about contract liabilities from contracts with customers. The contract liabilities are included in other accrued liabilities balance in the condensed consolidated balance sheet.
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(In thousands)March 28, 2020December 31, 2019
Contract liabilities - current$10,610  $13,022  
Significant changes in the contract liabilities balances during the period are as follows:
Three months ended
(In thousands)March 28, 2020
Revenue recognized that was included in the contract liability balance at the beginning of the period$(7,596) 
Increases due to cash received, excluding amounts recognized as revenue during the period5,184  

3. ACQUISITIONS
Sinmat
On January 10, 2020, the Company acquired Sinmat, a chemical mechanical polishing slurry manufacturer. Sinmat reports into the Specialty Chemicals and Engineered Material segment of the Company. The acquisition was accounted for under the acquisition method of accounting and the results of Sinmat are included in the Company’s condensed consolidated financial statements as of and since January 10, 2020. Costs associated with the acquisition of Sinmat were $0.7 million for the three months ended March 28, 2020 and were expensed as incurred. These costs are included in the selling, general and administrative expenses in the Company’s condensed consolidated statement of operations. The acquisition does not constitute a material business combination.
The purchase price for Sinmat includes cash consideration of $76.2 million, or $75.6 million net of cash acquired (subject to revision for certain adjustments), which was funded from the Company’s existing cash on hand.
The purchase price of Sinmat exceeds the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $31.8 million. Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to the Company, which resulted in a purchase price in excess of the fair value of identifiable net assets. This additional investment value resulted in goodwill, which is expected to be non-deductible for income tax purposes.
The following table summarizes the provisional allocation of the purchase price to the fair values assigned to the assets acquired and liabilities assumed at the date of the acquisition date:
(In thousands):As of January 10, 2020
Trade accounts and note receivable, net$1,189  
Inventories, net1,010  
Other current assets8  
Property, plant and equipment63  
Identifiable intangible assets41,680  
Right-of-use assets1,712  
Accounts payable and accrued liabilities(58) 
Short-term lease liability(150) 
Long-term lease liability(1,562) 
Net assets acquired43,892  
Goodwill31,751  
Total purchase price, net of cash acquired$75,643  
The Company recognized the following finite-lived intangible assets as part of the acquisition of Sinmat:
(In thousands)AmountWeighted
average life in
years
Developed technology$7,650  7.0
Trademarks and trade names130  1.3
Customer relationships33,900  15.0
$41,680  13.5
The final valuation of assets acquired and liabilities assumed is expected to be completed as soon as possible, but not later than one year from the acquisition date. The allocation of the purchase price to the assets acquired and the liabilities assumed is
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complete with the exception of the value allocated to income tax and intangible accounts. To the extent that the Company’s estimates require adjustment, the Company will modify the values.
Hangzhou Anow Microfiltration Co., Ltd.
On September 17, 2019, the Company acquired Hangzhou Anow Microfiltration Co., Ltd. (Anow), a filtration company for diverse industries including semiconductor, pharmaceutical, and medical. Anow reports into the Microcontamination Control segment of the Company. The acquisition was accounted for under the acquisition method of accounting and the results of Anow are included in the Company’s condensed consolidated financial statements as of and since September 17, 2019. The acquisition does not constitute a material business combination.
The purchase price for Anow is $72.8 million, net of cash acquired. The purchase price includes (1) cash consideration of $73.0 million, or $69.3 million net of cash acquired (subject to revision for certain adjustments), which was funded from the Company’s existing cash on hand, and (2) $3.5 million deferred payment due to the seller no earlier than September 18, 2021, at which time either the seller of the Company can exercise its option to receive or pay the deferred payment, respectively.
The purchase price of Anow exceeds the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $49.6 million. Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to the Company, which resulted in a purchase price in excess of the fair value of identifiable net assets. This additional investment value resulted in goodwill, which is expected to be non-deductible for income tax purposes.
The following table summarizes the provisional allocation of the purchase price to the fair values assigned to the assets acquired and liabilities assumed at the date of the acquisition date and as adjusted as of March 28, 2020:
(In thousands):As of September 17, 2019As of March 28, 2020
Trade accounts and note receivable, net$3,455  $3,455  
Inventories, net4,242  4,459  
Other current assets202  794  
Property, plant and equipment8,863  8,257  
Identifiable intangible assets42,179  16,439  
Right-of-use assets  2,328  
Other noncurrent assets1,565  74  
Accounts payable and accrued liabilities(1,814) (5,022) 
Short-term lease liability  (88) 
Long-term lease liability  (107) 
Noncurrent deferred tax liabilities(10,890) (4,129) 
Other noncurrent liabilities  (3,270) 
       Net assets acquired47,802  23,190  
Goodwill25,212  49,608  
Total purchase price, net of cash acquired$73,014  $72,798  
The change in the allocation of purchase price is due to the acquisition occurring near the quarter end date of September 29, 2019 which required an estimated allocation of values.
The Company recognized the following finite-lived intangible assets as part of the acquisition of Anow:
(In thousands)AmountWeighted
average life in
years
Developed technology$6,764  6.8
Trademarks and trade names2,019  7.3
Customer relationships7,656  14.3
$16,439  10.3
The final valuation of assets acquired and liabilities assumed is expected to be completed as soon as possible, but not later than one year from the acquisition date. The allocation of the purchase price to the assets acquired and the liabilities assumed is complete with the exception of the value allocated to income tax accounts. To the extent that the Company’s estimates require adjustment, the Company will modify the values.
MPD Chemicals
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On July 15, 2019, the Company acquired MPD Chemicals (MPD), a provider of advanced materials to the specialty chemical, technology, and life sciences industries. MPD reports into the Specialty Chemicals and Engineered Material segment of the Company. The acquisition was accounted for under the acquisition method of accounting and the results of MPD are included in the Company’s condensed consolidated financial statements as of and since July 15, 2019. The acquisition does not constitute a material business combination.
The purchase price for MPD is $162.4 million, net of cash acquired. The purchase price includes (1) cash consideration of $157.9 million (subject to revision for customary working capital adjustments), which was funded from the Company’s existing cash on hand, and (2) a fixed deferred payment of $5.0 million that is due on January 15, 2022, recorded at $4.5 million, which represents the fair value of this fixed deferred payment as of the acquisition date.
The fair value of the fixed deferred payment was determined by taking the present value of this fixed deferred payment based on the term and a discount factor. The fixed deferred payment is reflected in pension benefit obligations and other liabilities in the Company’s condensed consolidated balance sheets.
The purchase price of MPD exceeds the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $63.0 million. Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to the Company, which resulted in a purchase price in excess of the fair value of identifiable net assets. This additional investment value resulted in goodwill, which is expected to be deductible for income tax purposes.
The following table summarizes the provisional allocation of the purchase price to the fair values assigned to the assets acquired and liabilities assumed at the date of the acquisition date and adjusted as of March 28, 2020:
(In thousands):As of July 15, 2019As of March 28, 2020
Trade accounts and note receivable, net$3,575  $3,575  
Inventories, net21,899  8,689  
Other current assets318  313  
Property, plant and equipment14,571  11,465  
Identifiable intangible assets74,900  79,390  
Right-of-use assets3,677  3,621  
Accounts payable and accrued liabilities(2,440) (2,153) 
Short-term lease liabilities(144) (88) 
Long-term lease liabilities(4,016) (4,016) 
Other noncurrent liabilities(1,416) (1,416) 
       Net assets acquired110,924  99,380  
Goodwill51,457  63,042  
Total purchase price, net of cash acquired$162,381  $162,422  

The Company recognized the following finite-lived intangible assets as part of the acquisition of MPD:
(In thousands)AmountWeighted
average life in
years
Developed technology$12,750  11.0
Trademarks and trade names620  2.0
Customer relationships66,020  17.0
$79,390  16.0
The allocation of the purchase price to the assets acquired and liabilities assumed is complete with the exception of the value allocated to income tax accounts. To the extent that the Company’s estimates require adjustments, the Company will modify the value.
Digital Specialty Chemicals
On March 8, 2019, the Company acquired Digital Specialty Chemicals Limited (DSC), a Toronto, Canada-based provider of advanced materials to the specialty chemical, technology, and pharmaceutical industries. DSC reports into the Specialty Chemicals and Engineered Materials segment of the Company. The acquisition was accounted for under the acquisition method of accounting and the results of operations of DSC are included in the Company’s condensed consolidated financial statements as of and since March 8, 2019. Costs associated with the acquisitions of DSC were $2.1 million for the three months ended march 30, 2019 and were expensed as incurred. These costs were included in selling, general and administrative expense in the
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Company’s condensed consolidated statements of operations. The acquisition does not constitute a material business combination.
The purchase price for DSC is $64.1 million, net of cash acquired. The purchase price includes (1) cash consideration of $49.9 million, or $49.4 million net of cash acquired, which was funded from the Company’s existing cash on hand, (2) a fixed deferred payment of $16.1 million that is due on March 31, 2022, recorded at $14.0 million representing the fair value of this fixed deferred payment as of the acquisition date, and (3) an earnout-based contingent consideration of $0.7 million based on the operating performance of DSC for a twelve-month period ended March 31, 2021.
The fair value of the fixed deferred payment was determined by taking the present value of this fixed deferred payment based on the term and a discount factor. The fixed deferred payment is reflected in pension benefit obligations and other liabilities in the Company’s condensed consolidated balance sheets.
Upon closing the acquisition, the Company recorded a contingent consideration obligation of $0.7 million, which represents the fair value of the earnout-based contingent consideration. This amount was estimated based on a Black Scholes model. Subsequent changes in the fair value of this obligation will be recognized as adjustments to the contingent consideration obligation and reflected within the Company’s condensed consolidated statements of operations.
On December 3, 2019 the Company entered into a settlement agreement to accelerate the fixed deferred payment of $16.1 million to no later than March 8, 2020. This payment was made in the first quarter of 2020. The Company adjusted the fair value of the fixed deferred payment from its fair value to the full value resulting in an additional $1.6 million charge to interest expense in the fourth quarter of 2019 and the liability was adjusted from other long-term liabilities to other accrued liabilities in the condensed consolidated balance sheet as of December 31, 2019. In addition to the acceleration of the fixed deferred payment, it was determined that the earnout-based contingent consideration of $0.7 million will never become owed to the sellers under the original purchase agreement. The Company removed the liability and credited selling, general and administrative expensed in the fourth quarter of 2019.
The purchase price of DSC exceeds the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $36.5 million. Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to the Company, which resulted in a purchase price in excess of the fair value of identifiable net assets. This additional investment value resulted in goodwill, which is expected to be non-deductible for income tax purposes.
The following table summarizes the final allocation of the purchase price to the fair values assigned to the assets acquired and liabilities assumed at the date of the acquisition and as adjusted as of December 31, 2019:
(In thousands):As of March 8, 2019As of December 31, 2019
Trade accounts and note receivable, net$