Estimated tax liability

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Purchase price informationThe purchase price allocation was as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Explora BioLabs (1) |  | Vigene |  | Retrogenix |  | Cognate |  | Distributed Bio |
|  | April 5, 2022 |  | June 28, 2021 |  | March 30, 2021 |  | March 29, 2021 |  | December 31, 2020 |
|  | (in thousands) |
| Trade receivables | $ | 7,679  |  |  | $ | 3,548  |  |  | $ | 2,266  |  |  | $ | 18,566  |  |  | $ | 2,722  |  |
| Other current assets (excluding cash) | 1,067  |  |  | 1,657  |  |  | 209  |  |  | 14,128  |  |  | 221  |  |
| Property, plant and equipment | 37,369  |  |  | 7,649  |  |  | 400  |  |  | 52,082  |  |  | 2,382  |  |
| Operating lease right-of-use asset, net | 48,613  |  |  | 22,507  |  |  | 1,385  |  |  | 34,349  |  |  | 1,586  |  |
| Goodwill (2) | 215,752  |  |  | 239,681  |  |  | 34,489  |  |  | 611,555  |  |  | 71,585  |  |
| Definite-lived intangible assets | 70,100  |  |  | 93,900  |  |  | 22,126  |  |  | 270,900  |  |  | 24,540  |  |
| Other long-term assets | 556  |  |  | 694  |  |  | —  |  |  | 6,098  |  |  | 469  |  |
| Deferred revenue | (3,507) |  |  | (4,260) |  |  | (434) |  |  | (20,539) |  |  | (1,319) |  |
| Other current liabilities (3) | (15,507) |  |  | (6,319) |  |  | (1,141) |  |  | (45,388) |  |  | (1,504) |  |
| Operating lease right-of-use liabilities (Long-term) | (57,193) |  |  | (21,220) |  |  | (1,205) |  |  | (31,383) |  |  | (1,123) |  |
| Deferred tax liabilities | (18,601) |  |  | (13,958) |  |  | (4,174) |  |  | (32,503) |  |  | (2,529) |  |
| Other long-term liabilities | (1,807) |  |  | —  |  |  | —  |  |  | —  |  |  | —  |  |
| Total purchase price allocation | $ | 284,521  |  |  | $ | 323,879  |  |  | $ | 53,921  |  |  | $ | 877,865  |  |  | $ | 97,030  |  |
|  |  |  |  |  |  |  |  |  |  |
| (1) Purchase price allocation is preliminary and subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. |
| (2) The goodwill resulting from these transactions is primarily attributable to the potential growth of the Company’s segments from new customers introduced to the acquired businesses and the assembled workforce of the acquirees, thus is not deductible for tax purposes. Explora BioLabs had $5.0 million of goodwill due to a prior asset acquisition that is not deductible for tax purposes.  |
| (3) In connection with its acquisitions of businesses, the Company routinely records liabilities related to indirect state and local taxes for preacquisition periods when such liabilities are estimable and deemed probable. The Company may or may not be indemnified for such indirect tax liabilities under terms of the acquisitions. As these indirect tax contingencies are resolved, actual obligations, and any indemnifications, may differ from the recorded amounts and any differences are reflected in reported results in the period in which these are resolved. Specifically for Cognate, as of March 29, 2021, the Company recorded an estimated liability of $17.0 million pertaining to indirect state sales taxes. During the nine months ended September 24, 2022, the Company received a favorable ruling from the applicable state in which the indirect state sales tax liability arose and, accordingly, this liability was reduced in full, resulting in a gain recorded through selling, general and administrative expenses in the period. |

The definite-lived intangible assets acquired were as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Explora BioLabs |  | Vigene |  | Retrogenix |  | Cognate |  | Distributed Bio |
| Definite-Lived Intangible Assets | (in thousands) |
| Client relationships | $ | 64,000  |  |  | $ | 87,500  |  |  | $ | 17,340  |  |  | $ | 257,200  |  |  | $ | 16,080  |  |
| Other intangible assets | 6,100  |  |  | 6,400  |  |  | 4,786  |  |  | 13,700  |  |  | 8,460  |  |
| Total definite-lived intangible assets | $ | 70,100  |  |  | $ | 93,900  |  |  | $ | 22,126  |  |  | $ | 270,900  |  |  | $ | 24,540  |  |
|  |  |  |  |  |  |  |  |  |  |
| Weighted Average Amortization Life | (in years) |
| Client relationships | 13 |  | 12 |  | 13 |  | 13 |  | 9 |
| Other intangible assets | 4 |  | 2 |  | 3 |  | 2 |  | 4 |
| Total definite-lived intangible assets | 12 |  | 11 |  | 11 |  | 13 |  | 7 |

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