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BUSINESS ACQUISITIONS
 9 Months Ended
Dec. 26, 2015
BUSINESS ACQUISITIONS [Abstract]  
BUSINESS ACQUISITIONS

NOTE 5 – BUSINESS ACQUISITIONS

 

During the first nine months of fiscal year 2016, the Company completed three business acquisitions.

 

•         On June 22, 2015, Transcat 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, Transcat 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, Transcat acquired Nordcal Calibration Inc. (“Nordcal”), a provider of radio frequency and electronic calibration and repair services, located in Montreal, Quebec.

 

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 Anmar and Nordcal acquisitions is not expected to be deductible for tax purposes.

 

The total purchase price paid for the acquired businesses was approximately $3.6 million, net of $0.2 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:

 

Goodwill   $ 2,032  
Intangible Assets – Customer Bases     1,031  
Intangible Assets – Covenants Not to Compete     250  
Deferred Tax Liabilities   (208 )
      3,105  
Plus: Current Assets     430  
         Non-Current Assets   945  
Less: Current Liabilities     (208 )
         Non-Current Liabilities   (641 )
Total Purchase Price   $ 3,631  

 

The business acquisitions completed in the first nine months of 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 the first nine months of fiscal year 2016. As of December 26, 2015, $0.3 million of contingent consideration and $0.4 million of other holdback amounts were unpaid and reflected in current liabilities on the Consolidated Balance Sheet.

 

During the first nine months of fiscal year 2016, acquisition costs of $0.4 million were incurred and recorded as administrative expenses in the Consolidated Statement of Income. $0.2 million of these acquisition costs were incurred and recorded in the third quarter of fiscal year 2016.

 

The results of the acquired businesses are included in Transcat's consolidated operating results as of the dates 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 years.  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)

 

 

Nine Months Ended

 

 

December 26, 2015

 


December 27, 2014

 

 


 

 

 


 

Total Revenue

 

$

90,680

 

 

$

93,894

Net Income

 


2,710

 

 


2,418

Basic Earnings Per Share

 


0.39

 

 


0.36

Diluted Earnings Per Share

 


0.38

 

 


0.34