Business Acquisitions

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

On March 11, 2016, we acquired all of the outstanding membership interests in CTG Advanced Materials, LLC (“CTG-AM”), a privately-held company, for $73 million in cash plus 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, we gained technology and proprietary manufacturing methods that expand our offering of piezoelectric materials. This allows us to become the leading large-scale commercial producer of both single crystal materials and traditional piezoelectric ceramics.

The purchase price of $73,063, net of cash acquired of $4, has been allocated to the fair values of assets and liabilities acquired as of March 11, 2016.

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

	Fair Values at March 11, 2016
Current assets	$	4,215
Property, plant and equipment	6,173
Other assets	37
Goodwill	27,879
Intangible assets	35,427
Fair value of assets acquired	73,731
Less fair value of liabilities acquired	(668		)
Net cash paid	73,063

Goodwill recorded in connection with this acquisition represents the value we expect to be created by combining the operations of the acquired business with our existing operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to this acquisition is expected to be deductible for tax purposes.

The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:

	Carrying Value	Weighted Average Amortization Period (in years)
Developed technology	23,730	15.0
Customer relationships and contracts	11,502	14.6
Other	195	0.8
Total	35,427	14.8

We incurred $804 in transaction related costs during the year ended December 31, 2016. These costs are included in selling, general, and administrative costs in our Consolidated Statements of Earnings.

Results of operations for CTG-AM are included in our consolidated 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 Consolidated Statements of Earnings are as follows:

	For the period March 11, 2016 through December 31, 2016
Net sales	$	12,299
Net earnings	$	1,357

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

	December 31, 2016 (Unaudited Proforma)		December 31, 2015 (Unaudited Proforma)
Net sales	$	398,990	$	395,495
Net earnings	$	34,321	$	8,800
Earnings per share:
Basic	$	1.05	$	0.27
Diluted	$	1.03	$	0.26

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 costs of goods sold of $1,151 for the year ended December 31, 2016.

On October 28 2015, we acquired Filter Sensing Technologies Inc. (“FST”), a privately-held company, for $1.9 million in cash, plus contingent consideration of $1.6 million. FST is a developer and designer of sensing technology for radio frequency measurement and control systems. This acquisition added a leading-edge sensing technology to our transportation portfolio and allows the Company to participate in a market that is expected to be $150-$300 million in size by 2025 as new filtering solutions gain traction.

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

	Fair Values at October 28, 2015
Current assets	$	555
Property, plant and equipment	29
Goodwill	1,818
In-process research and development intangible asset	2,200
Other assets	8
Fair value of assets acquired	4,610
Less fair value of liabilities acquired	(1,205		)
Less fair value of contingent consideration	(1,550		)
Net cash paid	$	1,855

Goodwill recorded in connection with the above acquisition is primarily attributable to know-how of the acquired workforce in relation to the technology being developed. Goodwill related to this acquisition is not expected to be deductible for tax purposes.

The FST acquisition was accounted for using the acquisition method of accounting whereby the total purchase price is allocated to tangible and intangible assets and liabilities based on the fair market values on the date of acquisition. We determined the purchase price allocations based on estimates of the fair values of the assets acquired and liabilities assumed. The allocations for goodwill and other intangible assets were based on historical experience and third party evaluation.