Note

– Business Combinations

November 30, 2017,

the Company acquired Rapid Manufacturing Group, LLC (“RAPID”) for $

121.8

million, consisting of

$110.5

million in cash (net of cash acquired) and

$11.3

million in the Company’s common stock. The operations of RAPID will be integrated into the operations of the Company.

RAPID is a New Hampshire-based custom parts supplier specializing in quick-turn sheet metal fabrication and CNC machining. With the acquisition, the Company will be able to offer its customers another quick-turn manufacturing service while expanding its CNC machining capabilities.

The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC

805.

The fair value of the consideration paid exceeded the fair value of the assets acquired and liabilities assumed, which resulted in goodwill of

$99.6

million. The goodwill primarily relates to synergies resulting from the acquisition and is deductible for tax purposes over a

-year period.

The RAPID amortizable intangible assets were valued as of the acquisition date and were deemed to have a weighted-average useful life of

5.5

years. The customer relationships were valued at

$7.5

million based on the Multi-Period Excess Earnings Method and are amortized over

6.0

years. The trade names were valued at

$1.1

million based on the Relief-from-Royalty Method and are amortized over

2.0

years. The non-competition agreement was valued at

$0.1

million based on the Discounted Cash Flow method and will be amortized over

years.

The allocation of the purchase price to assets acquired and liabilities assumed is as follows:


(in thousands)
Assets acquired:
Current assets	$	6,720
Goodwill		99,588
Other intangible assets		8,700
Other long-term assets		9,013
Total assets acquired		124,021

Liabilities assumed:
Current liabilities		2,067
Other long-term liabilities		85
Total liabilities assumed		2,152
Net assets acquired	$	121,869

Cash paid	$	115,288
Cash acquired		(4,755	)
Net cash consideration		110,533
Equity portion of purchase price		11,336
Total purchase consideration	$	121,869

The following unaudited pro forma information represents the Company

’s results of operations as if the fiscal

2017

acquisition of RAPID had occurred at the beginning of fiscal

2016.

These performance results

may

not

be indicative of the actual results that would have occurred under the ownership and management of the Company.


	Year Ended December 31,
	2017		2016
(in thousands )		(unaudited)
Revenue	$	386,677	$	336,634
Net income		55,070		41,805

The unaudited pro forma net income for the year ended

December 31, 2017 excludes transaction costs of

approximately

$1.9

million

and

includes the increase in estimated depreciation expense of approximately

$0.9

million and the increase in estimated amortization expense of approximately

$3.0

million. The unaudited pro forma net income for the year ended

December

31,

2016

includes the impact of new stock options and restricted stock units granted to employees of approximately

$0.2

million in connection with the acquisition, an increase in estimated depreciation expense of approximately

$0.6

million and the increase in estimated amortization expense of approximately

$3.1

million. The pro forma net income for the years ended December

31,

2017

and

2016

include the related tax effects of the adjustments. The pro forma information has been prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts

may

differ materially from these estimates. They do

not

reflect the effect of costs or synergies that would have been expected to result from the integration of the RAPID acquisition. The pro forma information does

not

purport to be indicative of the results of operations that actually would have resulted had the RAPID acquisition occurred on

January 1, 2016.

The Company’s

2017

Consolidated Statements of Comprehensive Income include

$3.6

million of revenue and

$0.7

million of net loss related to RAPID. The net loss was primarily driven by

$1.1

million of bonus payments to RAPID employees as a result of the acquisition.

October 1, 2015,

the Company acquired certain assets of Alphaform AG (Alphaform) through insolvency proceedings administered through the Insolvency Court of Munich, Germany. Included in the acquisition were select assets of Alphaform AG and Alphaform Claho GmbH and shares of Alphaform RPI Oy and Alphaform Ltd., for

$5.0

million net cash consideration, which was funded with cash available in the United States and Europe. As of

December 2016,

the operations of Alphaform have been integrated into the operations of the Company.

Alphaform was a leading service bureau headquartered in Feldkirchen (Munich), Germany and also had locations in Eschenlohe, Germany; Rusko, Finland and Reading, UK. Alphaform produces high-quality parts using stereolithography (SL), selective laser sintering (SLS) and direct metal laser sintering (DMLS) technologies as well as injection molding capabilities and other production processes. The revenue associated with these processes is reported under the

Printing, Injection Molding and Other product lines. In the

second

quarter of

2016,

the Company made the decision to exit the resin resale business.

The results of Alphaform since the date of acquisition and pro forma disclosures of the consolidated results of the Company with the full-year effects of Alphaform have

not

been separately presented since the impact to the Company's results of operations was

not

material.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC

805.

Because Alphaform was insolvent, the fair value of the assets purchased and liabilities assumed exceeded the fair value of consideration paid, which resulted in a bargain purchase gain of

$0.3

million. The bargain purchase gain was recorded in Other Income, Net in the Consolidated Statement of Comprehensive Income for

the year ended

December 31, 2015.

The final allocation of the purchase price to assets acquired and liabilities assumed is as follows:


(in thousands)
Assets acquired:
Current assets	$	2,766
Other long-term assets		3,876
Total assets acquired		6,642

Liabilities assumed:
Current liabilities		1,266
Total liabilities assumed		1,266
Net assets acquired	$	5,376

Cash paid	$	5,570
Cash acquired		(538	)
Total purchase consideration	$	5,032
Gain recognized on bargain purchase	$	344