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Acquisitions and Dispositions | 9 Months Ended
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Dec. 31, 2013
Acquisitions and Dispositions |
Acquisitions and Dispositions | Note 2 — Acquisitions and Dispositions Acquisitions Amega Scientific On November 6, 2013, we completed a business combination (the “Amega Acquisition”) whereby we acquired substantially all of the assets and certain liabilities of Amega Scientific Corporation’s (“Amega”) business which provides continuous monitoring systems to regulated industries. The asset acquisition agreement (the “Amega Agreement”) includes provisions for both contingent consideration based on the cumulative three year revenues of our Continuous Monitoring Division and for a holdback payment, payable to the seller no later than November 6, 2014 less any losses incurred by the buyer, as defined. Under the terms of the Amega Agreement, we are required to pay contingent consideration if the cumulative revenues for our Continuous Monitoring Division for the three years subsequent to the acquisition meet certain levels. The potential consideration payable ranges from $0 to $10,000,000 and is based upon a sliding scale of three-year cumulative revenues between $31,625,000 and $43,500,000. Based on both historical and projected growth rates, we recorded $500,000 of contingent consideration payable. We expect to achieve savings and generate growth as we integrate the Amega operations and sales and marketing functions. These factors, among others, contributed to a purchase price in excess of the estimated fair value of the net identifiable assets acquired and, as a result, we recorded goodwill in connection with this transaction. The goodwill is expected to be deductible for tax purposes and it was assigned to our Continuous Monitoring segment. The Amega Acquisition constituted the acquisition of a business and was recognized at fair value. Due to the recent nature of the transaction, the purchase price allocation was based upon a preliminary estimated fair value of the assets and liabilities acquired as we are in the process of finalizing our valuation of the assets acquired and liabilities assumed. We determined the preliminary estimated fair values using discounted cash flow analyses and estimates made by management. The following reflects our preliminary allocation of the consideration, subject to customary purchase price adjustments in accordance with the Amega Agreement (in thousands):
Cash consideration |  | $ | 11,268 |
Holdback payment liability |  | 1,000 |
Contingent consideration liability |  | 500 |
Aggregate consideration |  | $ | 12,768 |
The purchase price was allocated as follows:
Accounts receivable, net |  | $ | 734 |
Inventories, net |  | 410 |
Prepaid expenses and other |  | 11 |
Property, plant and equipment, net |  | 115 |
Intangibles, net |  | 5,838 |
Goodwill |  | 6,756 |
Accrued salaries and payroll taxes |  | (53 | )
Unearned revenues |  | (1,043 | )
Total purchase price allocation |  | $ | 12,768 |
Tempsys On November 6, 2013, we completed a business combination (the “TempSys Acquisition”) whereby we acquired all of the common stock of TempSys, Inc. (“TempSys”), a company in the business of providing continuous monitoring systems to regulated industries, for $9,826,000. We expect to achieve savings and generate growth as we integrate the TempSys operations and sales and marketing functions. These factors, among others, contributed to a purchase price in excess of the estimated fair value of the net identifiable assets acquired and, as a result, we recorded goodwill in connection with this transaction. The goodwill is not expected to be deductible for tax purposes and it was assigned to our Continuous Monitoring segment. The TempSys Acquisition constituted the acquisition of a business and was recognized at fair value. Due to the recent nature of the transaction, the purchase price allocation was based upon a preliminary estimated fair value of the assets and liabilities acquired as we are in the process of finalizing our valuation of the assets acquired and liabilities assumed. We determined the preliminary estimated fair values using discounted cash flow analyses and estimates made by management. The following reflects our preliminary allocation of the consideration, subject to customary purchase price adjustments in accordance with the TempSys Agreement (in thousands): The purchase price was allocated as follows:
Cash |  | $ | 57 |
Accounts receivable, net |  | 838 |
Inventories, net |  | 447 |
Prepaid expenses and other |  | 21 |
Property, plant and equipment, net |  | 25 |
Deferred income taxes |  | 585 |
Intangibles, net |  | 6,135 |
Goodwill |  | 6,954 |
Accounts payable |  | (255 | )
Accrued salaries and payroll taxes |  | (2,134 | )
Unearned revenues |  | (485 | )
Other accrued expenses |  | (135 | )
Deferred income taxes |  | (2,227 | )
Total purchase price allocation |  | $ | 9,826 |
Suretorque On July 1, 2013, we completed a business combination (the “Suretorque Acquisition”) whereby we acquired substantially all of the assets of ST Acquisitions, LLC’s (“ST Acquisitions”) business involving the design, manufacturing, sale and service of its SureTorque line of bottle cap torque testing instrumentation. The asset acquisition agreement (the “Suretorque Agreement”) includes a provision for a holdback payment, payable to the seller one year from the effective date less any losses incurred by the buyer, as defined. We expect to achieve savings and income growth as we integrate the Suretorque operations and sales marketing functions. These factors, among others, contributed to a purchase price in excess of the estimated fair value of the net identifiable assets acquired and, as a result, we recorded goodwill in connection with this transaction. The goodwill is expected to be deductible for tax purposes. All of the goodwill was assigned to our Instruments segment. The Suretorque Acquisition constituted the acquisition of a business and was recognized at fair value. We determined the estimated fair values using discounted cash flow analyses and estimates made by management. The following reflects our allocation of the consideration in accordance with the Suretorque Agreement (in thousands):
Cash consideration |  | $ | 1,721 |
Holdback payment liability |  | 100 |
Aggregate consideration |  | $ | 1,821 |
The purchase price was allocated as follows:
Inventories, net |  | $ | 230 |
Property, plant and equipment, net |  | 7 |
Intangibles, net |  | 1,005 |
Goodwill |  | 579 |
Total purchase price allocation |  | $ | 1,821 |
Bios On May 15, 2012, we completed a business combination (the “Bios Acquisition”) by acquiring specific assets and assuming certain liabilities of Bios International Corporation (“Bios”), a New Jersey corporation. The asset acquisition agreement (the “Bios Agreement”) includes a provision for contingent consideration based on revenue growth over a three year earn-out period. The Bios Acquisition further diversified and grew our Instruments segment. The contingent consideration arrangement requires us to pay Bios if cumulative revenues related to the acquisition for the three years subsequent to the acquisition exceed $22,127,000. The potential undiscounted future payment that we could be required to make ranges from $0 to $6,710,000. The fair value of the contingent consideration arrangement included in the purchase price below was estimated based on the historic revenue growth rates of Bios. Over the remaining term of the agreement, we are accreting through interest expense the difference between the estimated fair value of the contingent consideration, $2,140,000, and the amount we estimate we will pay, $2,240,000. The Bios Acquisition constituted the acquisition of a business and was recognized at fair value. We determined the estimated fair values using discounted cash flow analyses and estimates made by management. The financial statements for the three months ended June 30, 2012, reflected our preliminary purchase price allocation, which was finalized in the second quarter of the year ended March 31, 2013. The following reflects our allocation of the consideration in accordance with the Bios Agreement (in thousands):
Cash consideration |  | $ | 16,660 |
Contingent purchase price liability |  | 2,140 |
Aggregate consideration |  | $ | 18,800 |
The purchase price was allocated as follows:
Accounts receivable, net |  | $ | 478 |
Inventories, net |  | 910 |
Other current assets |  | 28 |
Property, plant and equipment, net |  | 63 |
Intangibles, net |  | 8,200 |
Goodwill |  | 9,190 |
Other accrued expenses |  | (69 | )
Total purchase price allocation |  | $ | 18,800 |
Pro forma results Our condensed consolidated statements of income include the results of the Bios Acquisition from the acquisition date of May 15, 2012, the Suretorque Acquisition from the acquisition date of July 1, 2013, and the TempSys and Amega Acquisitions from the acquisition date of Nov 6, 2013. The pro forma effects of these acquisitions were adjusted for the following material nonrecurring events that occurred prior to, but directly attributable to, the business combinations discussed: a one-time bonus accrual at TempSys in the amount of $2,048,000 for employees’ past services and a one-time disposal of inventories at TempSys in the amount of $335,000, related to an un-marketed product that will not be developed post-acquisition. The adjusted pro forma effect of these acquisitions on our results of operations as if the acquisitions had been completed on April 1, 2013 and 2012 are as follows:
|  | Three Months Ended December 31, |  | Nine Months Ended December 31, |
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Revenues |  | $ | 14,777 |  | $ | 14,074 |  | $ | 43,559 |  | $ | 42,476 |
Net income |  | 2,112 |  | 2,116 |  | 6,849 |  | 6,982 |
Net Income per common share: |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.62 |  | $ | 0.63 |  | $ | 2.01 |  | $ | 2.08 |
Diluted |  | 0.58 |  | 0.60 |  | 1.91 |  | 1.98 |
Dispositions On August 12, 2013, we entered into an agreement whereby we sold our NuSonics product line (the “Nusonics Disposal”) for $661,000. The carrying value of this product line was $193,000 which resulted in a pre-tax gain of $468,000.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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