Business Combinations

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Business Combinations

Business Combinations

On March 11, 2016, CTS acquired all of the outstanding membership interests in CTG Advanced Materials, LLC (“CTG-AM”), a privately-held company, for $73 million in cash plus or minus a working capital adjustment. CTG-AM, formerly operated as H.C. Materials, is the market leading designer and manufacturer of single crystal piezoelectric materials, serving major original equipment manufacturers throughout the medical marketplace. These materials enable high definition ultrasound imaging (3D and 4D), as well as intravascular ultrasound applications. Other applications for these materials include wireless pacemakers, implantable hearing aids, and defense technologies.

With the CTG-AM acquisition, CTS gains intellectual property and proprietary manufacturing methods that expand its offering of piezoelectric materials. This allows CTS to become the leading large-scale commercial producer of both single crystal materials and traditional piezoelectric ceramics.

The purchase price of $72,830, net of cash acquired of $4, has been preliminarily allocated to the fair values of assets and liabilities acquired as of March 11, 2016. The allocation of purchase price is preliminary pending the completion of the appraisals of property, plant, and equipment, the valuation of intangible assets, and finalization of management's estimates regarding certain assets acquired. The final purchase price allocation may result in a materially different allocation than that recorded as of March 31, 2016.

The following table summarizes the preliminary estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition:

	Estimated Fair Values at March 11, 2016
Current assets	$	4,290
Property, plant and equipment	6,061
Other assets	37
Goodwill and intangible assets	63,110
Fair value of assets acquired	73,498
Less fair value of liabilities acquired	(668		)
Net cash paid	$	72,830

Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is expected to be deductible for tax purposes.

CTS incurred $804 in transaction related costs during the quarter ended March 31, 2016. These costs are included in selling. general, and administrative costs in our condensed consolidated statement of earnings.

Results of operations for CTG -AM are included in our consolidated condensed financial statements beginning on March 11, 2016. The amount of net sales and net loss from CTG-AM since the acquisition date that have been included in the condensed consolidated statements of earnings are as follows:

	For the period March 11, 2016 through March 31, 2016
Net sales	$	758
Net loss	$	(64	)

Supplemental Pro Forma Information

The unaudited pro forma amounts below include CTG-AM's revenues and earnings that would have been included in our consolidated condensed statement of earnings had the acquisition date been January 1, 2015.

	Three Months Ended
	March 31,		March 29,
	2016		2015
Net sales	$	99,017	$	101,601
Net earnings	$	7,766	$	6,718
Earnings per share:
Basic	$	0.24	$	0.20
Diluted	$	0.24	$	0.20

The pro forma results have been prepared for informational purposes only and include adjustments to amortize acquired intangible assets with finite life, reflect additional interest expense on debt used to fund the acquisition, and to record the tax consequences of the pro forma adjustments. Included in the pro forma results are nonrecurring expenses for transaction costs of $804 and additional cost of goods sold of $401 for inventory recognized at fair value as a result of acquisition-related adjustments.