2.	Business Acquisitions and Investments

On August 31, 2018, we acquired 100% of the outstanding stock of Flight Systems Automotive Group LLC (“Flight Systems” or “Flight”), a privately-held manufacturer and remanufacturer of complex automotive electronics and diesel fuel system components, based in Lewisberry, Pennsylvania. We paid $27.5 million in cash which is subject to customary purchase price adjustments. In connection with this acquisition, we preliminary recorded $13.3 million in goodwill and $14.2 million of other net assets, primarily $2.0 million of accounts receivables, $11.6 million of inventory, and $0.6 million of net other assets and liabilities. We expect that, upon completion of our valuation, we will recognize intangible assets with an offsetting reduction in the preliminary goodwill that was recognized as of September 29, 2018. The purchase price allocation is preliminary and subject to adjustment as we complete our assessment of the fair values of acquired assets and assumed liabilities. We believe that the goodwill and intangible assets resulting from the acquisition will be deductible for tax purposes. The financial results of the acquisition have been included in the Consolidated Financial Statements since the date of acquisition. Flight generated $1.7 million of net sales and an immaterial amount of net income since the date of acquisition. We believe complex electronics and diesel fuel system components represent important growth opportunities for us and Flight’s product portfolio delivers valuable alternatives to aftermarket professionals.

On October 26, 2017, we acquired 100% of the outstanding stock of MAS Automotive Distribution Inc. (“MAS Industries” or “MAS”), a privately-held manufacturer of premium chassis and control arms based in Montreal, Canada. The purchase price was $67.2 million net of $3.3 million of cash acquired and including contingent consideration at fair value and other purchase price adjustments.

We believe MAS is complementary to our business and growth strategy. We see opportunities to leverage MAS’ existing presence in the automotive aftermarket, as well as our product development capabilities and financial resources to accelerate the growth of MAS’ premium chassis and control arm products.

We have included the results of MAS in our Consolidated Financial Statements since the acquisition date of October 26, 2017. The Consolidated Statement of Operations for the thirty-nine weeks ended September 29, 2018 includes $30.0 million of net sales and an immaterial amount of net income related to MAS. The Consolidated Balance Sheets as of September 29, 2018 and December 30, 2017 reflects the acquisition of MAS Industries, effective October 26, 2017.

The following table summarizes the fair value of the total consideration related to MAS:

(in thousands)	Total Acquisition Date Fair Value
Cash consideration (net of $3.3 million cash acquired)	$	56,859
Contingent cash consideration		7,982
Seller liability assumed		896
Working capital adjustment		1,486
Total consideration assigned to net assets acquired	$	67,223

Included in the table above is $8.0 million of estimated contingent payments which represents the fair value of the estimated payments which will become due if certain sales thresholds are achieved through December 2020. The fair value of the contingent cash consideration was estimated by using an option pricing model framework, which represents our own assumptions and data, and is based on our best available information. As of September 29, 2018, we had $8.2 million recorded which includes $0.2 million of accretion which was included in Selling, General and Administrative expenses for the thirty-nine weeks ended September 29, 2018, related to this payment. The maximum contingent payment would be $11.7 million. Additionally, during the thirty-nine weeks ended September 29, 2018, we finalized working capital and other purchase price adjustments based on the MAS standalone audited 2017 financial statements, resulting in a payment to the former shareholder of $1.5 million. This amount had previously been accrued on our Consolidated Balance Sheet.

The transaction was accounted for as a business combination under the acquisition method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded at fair value, with the remaining purchase price recorded as goodwill. The following table summarizes the fair values of the assets acquired and liabilities assumed as of October 26, 2017:

(in thousands)	October 26, 2017 (As initially reported)		Measurement period adjustments			October 26, 2017 (As adjusted)
Current assets (net of $3.3 million cash acquired)	$	21,756	$	90		$	21,846
Property, plant and equipment		1,615		-			1,615
Intangible assets		20,440		-			20,440
Goodwill		35,624		(193	)		35,431
Total assets acquired		79,435		(103	)		79,332
Current liabilities		5,691		(50	)		5,641
Long-term liabilities		6,468		-			6,468
Total liabilities assumed		12,159		(50	)		12,109
Net assets acquired	$	67,276	$	(53	)	$	67,223

Our measurement period adjustments for MAS were complete as of September 29, 2018.

The valuation of the intangible assets acquired and related amortization periods are as follows:

(in thousands)	Valuation		Amortization Period (in years)
Customer relationships	$	14,840	8-12
Tradenames		5,600	15
Total	$	20,440

The fair values of the Customer Relationships and Tradenames were estimated using a discounted present value income approach. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, we used cash flows discounted at rates ranging from 15% to 17%, which were considered appropriate given the inherent risk associated with each type of asset. We believe that the level and timing of cash flows appropriately reflect market participant assumptions.

The goodwill recognized is attributable primarily to strategic and synergistic opportunities related to existing automotive aftermarket businesses, the assembled workforce of MAS and other factors. The goodwill is expected to be deductible for tax purposes.

Pro Forma Financial Information (Unaudited)

The unaudited pro forma information for the periods set forth below give effect to the MAS acquisition as if it occurred as of December 27, 2015, the start of our 2016 fiscal year. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of the operations that actually would have been achieved had the acquisition been consummated as of that time:

	Thirty-Nine Weeks Ended
(in thousands)	September 30, 2017
Net sales	$	702,811
Net income	$	85,307
Diluted earnings per share	$	2.49

The unaudited pro forma net income for the thirty-nine weeks ended September 30, 2017 was adjusted to include amortization of intangible assets, accretion for contingent consideration liabilities and to exclude financing costs of MAS which we do not believe would have occurred.