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BUSINESS ACQUISITIONS
 3 Months Ended
Jun. 27, 2015
BUSINESS ACQUISITIONS [Abstract]  
BUSINESS ACQUISITIONS

NOTE 5 – BUSINESS ACQUISITIONS

 

On June 22, 2015, Transcat acquired substantially all of the assets of Calibration Technologies, Inc. (“Calibration Technologies”), a regional provider of analytical instrument services including qualification, validation, repair and installation, headquartered in Morris Plaines, New Jersey.

 

This transaction aligns 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 acquisition was 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 business 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 base and covenant not to compete, represent an allocation of a portion of the purchase price to identifiable intangible assets of the acquired business. Intangible assets are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of up to 10 years.

 

The total purchase price paid for the business acquired was approximately $1.0 million. The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on level three inputs, of assets and liabilities acquired:

 

Goodwill   $ 603  
Intangible Assets – Customer Base     291  
Intangible Assets – Covenants Not to Compete     199  
      1,093  
Plus: Current Assets     73  
Less: Current Liabilities     (166 )
Total Purchase Price   $ 1,000  

 

The acquisition of Calibration Technologies contains a holdback provision, as defined in the purchase agreement. The Company accrued contingent consideration relating to the holdback provision based on its estimated fair value at the date of acquisition. No contingent consideration was paid during the first quarter of fiscal year 2016. As of June 27, 2015, $0.3 million of contingent consideration was unpaid and reflected in other liabilities (current) on the Consolidated Balance Sheet.

 

During first quarter of fiscal year 2016, acquisition costs of less than $0.1 million were recorded as incurred as administrative expenses in the Consolidated Statement of Income.

 

In connection with a business acquisition completed in fiscal year 2015, the Company entered into an incentive agreement with the former owner of the acquired business. The Company recorded no expense related to this incentive agreement during the first quarter of fiscal year 2016 and had no unpaid amounts accrued at June 27, 2015.