16. Acquisition

During the quarter ended March 28, 2014, the Company acquired the U.S., Canada and Uruguay operations of Technolab International Corporation ("Technolab"), an EPM AMS business.

Management's initial purchase consideration was $3.0 million in cash and $1.0 million in shares of the Company’s common stock, which are subject to vesting. In addition, the Sellers had the ability to earn an additional $8.0 million in contingent consideration in cash and stock subject to an earn-out based on actual results achieved. The cash was not subject to vesting, however the stock was subject to service vesting.

During the fourth quarter of 2014, measurement period adjustments related to the Technolab acquisition were finalized. Also, during the fourth quarter of 2014, $9.0 million of cash and equity which were previously accounted for as purchase consideration will now be reflected as compensation expense over the respective vesting period, $4.3 million of which was reflected as compensation expense in 2014. This re-characterization of purchase consideration to compensation expense resulted in a bargain purchase gain of $3.0 million on the acquisition, a deferred tax liability of $1.9 million and intangible assets with definite lives of $7.7 million which will be amortized over periods ranging from 2 years to 5 years. The adjustments mentioned above are reflected in Note 18 for each of the 2014 fiscal quarters.

The following table presents the purchase price allocation of the assets acquired and liabilities assumed, based on the fair values (in thousands):


		Purchase Price
		Allocation
Total consideration	$	3,000
Allocation of purchase price
Cash		522
Accounts receivable		1,346
Total current assets acquired		1,868
Intangible assets		7,749
Total assets acquired		9,617

Accrued expenses and other liabilities		1,711
Deferred tax liability		1,891
Total liabilities acquired		3,602

Net assets identifiable assets	$	6,015

Bargain purchase gain on acquisition	$	3,015

The application of the acquisition method of accounting resulted in a bargain purchase gain of approximately $3.0 million.

Pro forma results of Technolab have not been presented as the acquisition closed at the beginning of 2014 and therefore, the full year results of Technolab are included in the Company’s consolidated financial results. Technolab contributed total revenue of $10.3 million and contribution before depreciation, amortization, interest, corporate overhead allocation and taxes of $3.3 million.

The acquired intangible assets with definite lives are amortized over periods ranging from 2 to 5 years. The following table presents the intangible assets acquired from Technolab as of January 2, 2015:


Category		Amount (in thousands)	Useful Life (in years)

Customer Base	$	4,727	5
Trade Name		115	2
Customer Backlog		2,031	2
Non-Compete		876	5
	$	7,749