Business Combinations

12 Months Ended

Dec. 31, 2018

BUSINESS COMBINATIONS

During the fourth quarter of 2018, the Company acquired 100% of the membership units of Genesis System Group, LLC (“Genesis”). Genesis is based in Davenport, Iowa, and has production facilities in the United States, Mexico, and Japan. Genesis develops innovative robotic system solutions for applications that include welding, non-destructive inspection, machine vision, materials handling, removal and dispensing. The Company paid $107,539 to acquire Genesis, which represents the fair value on that date. Of the purchase price, $3,350 was held back in escrow for potential post-closing adjustments related to working capital and indemnities provided by the seller. As a result of the acquisition, the Company recorded intangible assets of $32,350 related to customer relationships with a weighted-average estimated useful life of 11 years and $11,350 related to technology, trademark and tradename with a weighted-average estimated useful life of 6 years. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill, which amounted to $45,236, most of which will be deductible for tax purposes.

The purchase price allocations included in the Company's financial statements are not complete. They represent the preliminary fair value estimates as of December 31, 2018 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to intangibles or income, as applicable.

During the second quarter of 2018, the Company acquired 100% of the shares of robot concept GmbH (“RC”). RC located near Munich, Germany, designs and manufactures customized laser systems. The purchase price was $4,453, which represents the fair value on that date. As a result of the acquisition, the Company recorded intangible assets of $111 related to customer relationships with a weighted-average estimated useful life of 1 year and $594 related to technology, trademark and tradename with a weighted-average estimated useful life of 10 years. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill, which amounted to $4,072. The goodwill arising from this acquisition will not be deductible for tax purposes.

The fair values of net tangible assets and intangible assets acquired were based upon the Company's estimates and assumptions at the acquisition dates. The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition dates for the year ended December 31, 2018:



	Genesis		RC		Total
Cash and cash equivalents	$	2,847	$	30	$	2,877
Assets acquired excluding cash and cash equivalents and deferred tax assets	39,262		2,151		41,413
Liabilities assumed excluding deferred tax liabilities	(23,506)		(1,932)		(25,438)
Deferred tax liabilities, net	—		(573)		(573)
Intangible assets	43,700		705		44,405
Total identifiable net assets	62,303		381		62,684
Goodwill	45,236		4,072		49,308
Total purchase price	$	107,539	$	4,453	$	111,992

The operating results of Genesis are included in the consolidated results of operations from the date of acquisition. The impact of earnings from Genesis from January 1, 2017 to the date of acquisition were not material to the Company. The following table presents consolidated pro forma information as if the acquisition had occurred on January 1, 2017:


	Pro forma (Unaudited)
	Years ended December 31,
	2018		2017
Net sales	$	1,551,373	$	1,511,051

During the fourth quarter of 2017, the Company acquired 100% of the shares of Laser Depth Dynamics Inc. (“LDD”). LDD, located in Kingston, Ontario, Canada, provides in-process quality monitoring and control solutions for laser-based welding applications. The purchase price was $9,992, which represents the fair value on that date. As a result of the acquisition, the Company recorded intangible assets of $1,006 related to customer relationships with a weighted-average estimated useful life of 6 years and $2,608 related to technology, trademark and tradename with a weighted-average estimated useful life of 6 years. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill, which amounted to $5,276. The goodwill arising from this acquisition will be deductible for tax purposes.

During the third quarter of 2017, the Company acquired 100% of the membership units of Innovative Laser Technologies, LLC ("ILT") located in Minneapolis, Minnesota. ILT produces high precision laser-based systems for the medical device industry and other end user markets. The Company paid $40,256 to acquire ILT, which represents the fair value on that date. As a result of the acquisition, the Company recorded intangible assets of $11,660 related to customer relationships with an estimated useful life of 13 years and $7,480 related to technology, trademark and tradename with a weighted-average estimated useful life of 8 years. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill, which amounted to $19,467. The majority of goodwill arising from this acquisition will not be deductible for tax purposes.

During the second quarter of 2017, the Company acquired 100% of the shares of OptiGrate Corporation ("OptiGrate") located in Oviedo, Florida. OptiGrate is a developer and manufacturer of volume Bragg gratings used in the production of lasers and laser diodes. The Company paid $16,870 to acquire OptiGrate, which represents the fair value on that date. As a result of the acquisition, the Company recorded intangible assets of $1,010 related to customer relationships with an estimated useful life of 4 years and $4,650 related to technology, trademark and tradename with a weighted-average estimated useful life of 9 years. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill, which amounted to $8,900. The goodwill arising from this acquisition will not be deductible for tax purposes.

The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition dates for the year ended December 31, 2017:



	LDD		ILT		OptiGrate		Total
Cash and cash equivalents	$	1,002	$	969	$	3,714	$	5,685
Assets acquired excluding cash and cash equivalents and deferred tax assets	1,346		14,353		1,351		17,050
Liabilities assumed excluding deferred tax liabilities	(708)		(11,669)		(687)		(13,064)
Deferred tax liabilities, net	(538)		(2,004)		(2,068)		(4,610)
Intangible assets	3,614		19,140		5,660		28,414
Total identifiable net assets	4,716		20,789		7,970		33,475
Goodwill	5,276		19,467		8,900		33,643
Total purchase price	$	9,992	$	40,256	$	16,870	$	67,118

During the fourth quarter of 2016, the Company acquired BioPhotonic Solutions, Inc. ("BSI") located in East Lansing, Michigan. BSI develops and sells pulse shaping software technology for use in ultrafast lasers. The total purchase price was $1,481, which represents the fair value of BSI on that date. As a result of the acquisition, the Company recorded intangible assets of $1,395 related to patents with an estimated useful life of 7 years.

During the second quarter of 2016, the Company acquired Menara located in Dallas, Texas. Menara develops and sells pluggable transceivers used in telecom and data-com networks. The Company paid $46,831 which represents the fair value of Menara on that date. As a result of the acquisition, the Company recorded intangible assets of $9,900 related to technology and

tradename with a weighted-average estimated useful life of 7 years and $9,500 related to customer relationships with an estimated useful life of 10 years. Additionally, the Company recorded $19,325 of goodwill related to anticipated expansion of the Company's product offerings within the telecom market. The goodwill arising from this acquisition will not be deductible for tax purposes.

The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition dates for the year ended December 31, 2016:


	Year Ended December 31, 2016
	BSI		Menara		Total
Cash and cash equivalents	$	—	$	520	$	520
Assets acquired excluding cash and cash equivalents and deferred tax assets	219		9,585		9,804
Liabilities assumed excluding deferred tax liabilities	(133)		(1,876)		(2,009)
Deferred tax liabilities, net	—		(123)		(123)
Intangible assets	1,395		19,400		20,795
Total identifiable net assets	1,481		27,506		28,987
Goodwill	—		19,325		19,325
Total purchase price	$	1,481	$	46,831	$	48,312

Results of operations for the businesses acquired above have been included in the Company's consolidated financial statements after the date of such acquisitions. Also, pro forma results of operations in accordance with authoritative guidance for prior periods have not been presented because the effect of the acquisitions were not material to the Company's prior period consolidated financial results.