Note

– Business Combinations

November 30, 2017,

the Company acquired RAPID for

$121.9

million, consisting of

$110.6

million in cash (net of cash acquired) and

$11.3

million in the Company’s common stock. The operations of RAPID are 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 offers 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

$99.8

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		99,836
Other intangible assets		8,700
Other long-term assets		8,855
Total assets acquired		124,111

Liabilities assumed:
Current liabilities		2,067
Other long-term liabilities		85
Total liabilities assumed		2,152
Net assets acquired	$	121,959

Cash paid	$	115,378
Cash acquired		(4,755	)
Net cash consideration		110,623
Equity portion of purchase price		11,336
Total purchase consideration	$	121,959

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,
(in thousands)	2017		2016
	(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 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.