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BUSINESS ACQUISITIONS

12 Months Ended

Mar. 25, 2017

NOTE 9 – BUSINESS ACQUISITIONS

The Company has engaged in a number of business acquisitions. During fiscal years 2017 and 2016, Transcat completed the following:

●	On June 22, 2015, acquired substantially all of the assets of Calibration Technologies, Inc., a regional provider of analytical instrument services including qualification, validation, repair and installation, headquartered in Morris Plains, New Jersey.
●	Effective August 24, 2015, acquired Anmar Metrology, Inc. (“Anmar”), a calibration and repair service provider with significant focus on the life science and defense market, headquartered in San Diego, California.
●	On August 25, 2015, acquired Nordcal Calibration Inc. (“Nordcal”), a provider of radio frequency and electronic calibration and repair services, located in Montreal, Quebec.
●	Effective December 31, 2015, acquired substantially all of the assets of Spectrum Technologies, Inc. ("Spectrum"). Headquartered in Paxinos, Pennsylvania, Spectrum provides commercial calibrations, test equipment repair services and product sales throughout North America.
●	Effective January 18, 2016, acquired Dispersion Laboratory Inc. ("Dispersion"), headquartered near Montreal, Quebec, Dispersion provides fully accredited services for the calibration, repair and product sales of weights, balances, temperature instruments and liquid handling devices.
●	On April 1, 2016, acquired substantially all of the assets of Excalibur Engineering, Inc. (“Excalibur”). Headquartered in Irvine, California, Excalibur is a provider of calibration services, new and used test equipment, and product rentals.

These transactions align with the Company’s acquisition strategy of targeting service businesses that expand the Company’s geographic reach and leverage its infrastructure while also increasing the depth and breadth of the Company’s service capabilities.

The acquisitions were accounted for using the acquisition method of accounting. Goodwill, calculated as the excess of the purchase price paid over the fair value of the underlying net assets of the businesses acquired, generally represents expected future economic benefits arising from the reputation of an acquired business, the assembled workforce, expected synergies and other assets acquired that could not be individually identified and separately recognized. Other intangible assets, namely customer bases and covenants not to compete, represent an allocation of a portion of the purchase price to identifiable intangible assets of the acquired businesses. Intangible assets are being amortized for financial reporting purposes on an accelerated basis over an estimated useful life of up to 10 years. Amortization of goodwill and the intangible assets relating to the Ulrich, Anmar, Nordcal and Dispersion acquisitions is not expected to be deductible for tax purposes.

The total purchase price paid for the businesses acquired in fiscal year 2017 was approximately $7.6 million, net of less than $0.1 million cash acquired. The total purchase price paid for the businesses acquired in fiscal year 2016 was approximately $16.3 million, net of $0.2 million cash acquired. The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of assets and liabilities acquired during each period presented:

		FY 2017			FY 2016
Goodwill		$	3,455		$	8,418
Intangible Assets – Customer Base			1,990			5,617
Intangible Assets – Covenants Not to Compete			100			510
Deferred Tax Liability			-			(297	)
			5,545			14,248
Plus:	Current Assets		973			1,272
	Non-Current Assets		1,652			1,709
Less:	Current Liabilities		(606	)		(343	)
	Non-Current Liabilities					(611	)
Total Purchase Price		$	7,564		$	16,275

The business acquisitions completed during fiscal years 2017 and 2016 include holdback provisions for contingent consideration and other holdback amounts, as defined by the respective purchase agreements. The Company accrues contingent consideration, if any, based on its estimated fair value at the date of acquisition, in addition to other amounts relating to the holdback provisions. Contingent consideration of $0.3 million and other holdback amounts of $2.7 million were paid during fiscal year 2017. No contingent consideration or other holdback amounts were paid during fiscal year 2016. As of March 25, 2017, no contingent consideration or other holdback amounts were unpaid and included on the Consolidated Balance Sheets. As of March 26, 2016, $0.8 million of contingent consideration and $1.6 million of other holdback amounts were unpaid and reflected in current liabilities on the Consolidated Balance Sheets.

During fiscal years 2017 and 2016, acquisition costs of $0.1 million and $0.6 million, respectively, were incurred and recorded as general and administrative expenses in the Consolidated Statement of Income.

The results of the acquired businesses are included in Transcat’s consolidated operating results as of the date the businesses were acquired. The following unaudited pro forma information presents the Company’s results of operations as if the acquisitions had occurred at the beginning of the respective fiscal year. The pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred at the beginning of each period presented or what the Company’s operating results will be in future periods.

	(Unaudited)
	For the Years Ended
	March 25,		March 26,
	2017		2016
Total Revenue	$	144,048	$	136,292
Net Income		4,525		5,323
Basic Earnings Per Share		0.65		0.77
Diluted Earnings Per Share		0.64		0.75