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BUSINESS ACQUISITIONS
 12 Months Ended
Mar. 26, 2016
BUSINESS ACQUISITIONS [Abstract]  
BUSINESS ACQUISITIONS

NOTE 9 – BUSINESS ACQUISITIONS

 

The Company has engaged in a number of business acquisitions. During fiscal years 2015 and 2016, Transcat completed the following:

• On August 31, 2014, acquired Ulrich Metrology Inc. (“Ulrich”). Headquartered in Montreal, Quebec, Ulrich is a provider of accredited and commercial calibrations throughout Canada that specializes in providing custom metrology solutions for the aerospace and defense, industrial manufacturing and life science industries.
 
• On March 6, 2015, acquired substantially all of the assets of Apex Metrology Solutions (“Apex”). Apex is a provider of accredited and commercial calibrations, specializing in 3D metrology services, through its ISO 17025 accredited lab located in Ft. Wayne, Indiana.
 
• 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.

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 2016 was approximately $13.9 million, net of $0.2 million cash acquired. The total purchase price paid for the businesses acquired in fiscal year 2015 was approximately $7.3 million, net of $0.1 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 2016     FY 2015   
Goodwill   $ 8,421       $ 4,392  
Intangible Assets – Customer Base     5,617       2,179  
Intangible Assets – Covenants Not to Compete     509       114  
Deferred Tax Liability   (299 )     (711 )
      14,248       5,974  
Plus: Current Assets     1,257       872  
          Non-Current Assets   1,198       669  
Less: Current Liabilities     (2,809 )     (236 )
Total Purchase Price   $ 13,894       $ 7,279  

 

The business acquisitions completed during fiscal year 2016 contain holdback provisions, 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. No contingent consideration or other holdback amounts were paid during fiscal years 2015 or 2016. 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 Sheet. As of March 28, 2015, contingent consideration and other holdback amounts totaling less than $0.1 million were unpaid and reflected in current liabilities on the Consolidated Balance Sheet.

 

During fiscal year 2016, acquisition costs of $0.6 million were incurred and recorded as administrative expenses in the Consolidated Statement of Income. Acquisition costs of $0.2 million were incurred and recorded in fiscal year 2015.

 

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 26, 2016

 


March 28, 2015

 

 


 

 

 


 

Total Revenue

 

$

128,516

 

 

$

135,474

Net Income

 


5,161

 

 


5,509

Basic Earnings Per Share

 


0.75

 

 


0.81

Diluted Earnings Per Share

 


0.72

 

 


0.78