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Note 2 - Acquisitions and Dispositions | 12 Months Ended
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Mar. 31, 2017
Notes to Financial Statements |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | Note 2 . Acquisitions and Dispositions Acquisitions For the year ended March 31, 2017, our acquisitions of businesses (net of cash acquired) totaled $8,622,000, of which none were individually material in nature (see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ). For the year ended March 31, 2016, our acquisitions of businesses (net of cash acquired) totaled $33,382,000, which consisted primarily of the following material acquisitions: Infitrak On July 6, 2015, we completed a business combination (the “Infitrak Acquisition”) whereby we acquired all of the common stock of 2396081 Ontario Inc. and its wholly owned operating subsidiary, Infitrak Inc. (collectively “Infitrak”), a company whose business provides consulting, packaging and measuring solutions for cold chain applications. The stock purchase agreement (the “Infitrak Agreement”) includes provisions for both contingent consideration based upon the two - year growth in gross profit (as defined in the Earn-Out Agreement) of the packaging component of our cold chain business subsequent to the acquisition and for a holdback payment (subject to a post-closing adjustment), payable at the one year anniversary of the closing date. Under the terms of the Infitrak Agreement, we were required to pay contingent consideration if the gross profit (as defined in the Infitrak Earn-Out Agreement) for our cold chain packaging business for the two years subsequent to the acquisition met certain levels. The potential undiscounted consideration payable ranged from $0 to $15,000,000 CDN and was based upon a sliding scale of growth in gross profit (as defined in the Infitrak Earn-Out Agreement) for year one and year two of 30 to 70 percent and 15 to 75 percent, respectively. Based upon both historical and projected growth rates, we recorded $9,271,000 of contingent consideration payable which represented our best estimate of the then current fair value of the amount that would ultimately be paid. Any changes to the contingent consideration ultimately paid would have resulted in additional income or expense in our consolidated statements of income. In July 2016, we made the first Earn-Out payment in the amount of $6,000,000 CDN ( $4,594,000 ). In March 2017, we agreed to settle the remaining earn-out obligation (which was originally due in the second quarter of our year ending March 31, 2018) early by making a payment of $6,000,000 CDN ( $4,558,000 ). We expected to achieve savings and generate growth as we integrated the Infitrak 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 deductible for tax purposes and it was assigned to our Cold Chain Packaging segment. The Infitrak 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 reflected our allocation of the consideration, subject to customary purchase price adjustments in accordance with the Infitrak Agreement (in thousands):
Cash consideration |  | $ | 8,747 |
Holdback payment liability |  |  | 637 |
Contingent consideration liability |  |  | 9,271 |
Aggregate consideration |  | $ | 18,655 |
Accounts receivable |  | $ | 925 |
Inventories |  |  | 310 |
Property, plant and equipment |  |  | 530 |
Intangibles |  |  | 5,869 |
Goodwill |  |  | 13,833 |
Accounts payable |  |  | (470 | )
Accrued liabilities |  |  | (767 | )
Deferred income taxes |  |  | (1,575 | )
Total purchase price allocation |  | $ | 18,655 |
The accompanying consolidated statements of income include the results of the Infitrak Acquisition from the acquisition date of July 6, 2015. The pro forma effects of the acquisition on the results of operations as if the acquisition had been completed on April 1, 2015 and 2014, are as follows (in thousands, except per share data):
|  | Year Ended March 31, |
|  | 201 6 |  |  | 201 5 |
Revenues |  | $ | 86,499 |  |  | $ | 74,379 |
Net income |  |  | 11,471 |  |  |  | 9,944 |
Net Income per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 3.18 |  |  | $ | 2.82 |
Diluted |  |  | 3.05 |  |  |  | 2.72 |
North Bay On August 6, 2015, we completed a business combination (the “North Bay Acquisition”) whereby we acquired substantially all of the assets (other than certain fixed assets) and certain liabilities of the dental sterilizer testing business of North Bay Bioscience, LLC (“North Bay”). The asset purchase agreement (the “North Bay Agreement”) included a provision for a holdback payment (subject to a post-closing adjustment), payable at the one year anniversary of the closing date. We expected to achieve savings and generate growth as we integrated the North Bay 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 deductible for tax purposes and it was assigned to our Biological Indicators segment. The North Bay 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 reflected our allocation of the consideration, subject to customary purchase price adjustments in accordance with the North Bay Agreement (in thousands):
Cash consideration |  | $ | 10,322 |
Holdback payment liability |  |  | 1,000 |
Aggregate consideration |  | $ | 11,322 |
Cash |  | $ | 20 |
Accounts receivable |  |  | 285 |
Inventories |  |  | 85 |
Property, plant and equipment |  |  | 229 |
Intangibles |  |  | 4,454 |
Goodwill |  |  | 7,962 |
Accrued liabilities |  |  | (100 | )
Unearned revenues |  |  | (1,613 | )
Total purchase price allocation |  | $ | 11,322 |
The accompanying consolidated statements of income include the results of the North Bay Acquisition from the acquisition date of August 6, 2015. The pro forma effects of the acquisition on the results of operations as if the acquisition had been completed on April 1, 2015 and 2014, are as follows (in thousands, except per share data):
|  | Year Ended March 31, |
|  | 201 6 |  |  | 201 5 |
Revenues |  | $ | 86,053 |  |  | $ | 75,649 |
Net income |  |  | 11,463 |  |  |  | 10,182 |
Net Income per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 3.18 |  |  | $ | 2.89 |
Diluted |  |  | 3.05 |  |  |  | 2.79 |
For the year ended March 31, 2015, our acquisitions of businesses (net of cash acquired) totaled $20,955,000, which consisted primarily of the following material acquisitions: PCD On October 15, 2014, we completed a business combination (the “PCD Acquisition”) with PCD-Process Challenge Devices, LLC (“PCD”) whereby we acquired substantially all the assets (other than cash and accounts receivable) and certain liabilities of PCD’s process challenge device business segment. The asset acquisition agreement (the “PCD Agreement”) includes provisions for both contingent consideration based upon the cumulative three year revenues of our process challenge device business subsequent to the acquisition and for a holdback payment (subject to a post-closing adjustment), payable at the one year anniversary of the closing date. Under the terms of the PCD Agreement, we are required to pay contingent consideration if the cumulative revenues for our process challenge device business for the three years subsequent to the acquisition meet certain levels. The potential consideration payable ranges from $0 to $1,500,000 and is based upon a sliding scale of three -year cumulative revenues between $9,900,000 and $12,600,000. Based upon both historical and projected growth rates, we initially recorded $300,000 of contingent consideration payable which represented our best estimate of the amount that would ultimately be paid. We paid $150,000 of the contingent consideration during the year ended March 31, 2016 ( based upon the then current run rate projected over the entire three -year contingent consideration period). Since the initial payment, the revenues have significantly increased and as a result, during the year ended March 31, 2017 we recorded an additional $450,000 accrual (which is included in other expense, net in our consolidated statements of income for the year ended March 31, 2017). We paid an additional $450,000 of the contingent consideration in our third quarter ended December 31, 2016. The remaining contingent consideration amount is also subject to modification at the end of the third year of the earn-out period based upon the actual revenues earned over the contingent consideration period. Any changes to the contingent consideration ultimately paid will result in additional income or expense in our consolidated statements of income. We will continue to monitor the results of our process challenge device business and we will adjust the contingent liability on a go forward basis, based on then current information. We expected to achieve savings and generate growth as we integrated the PCD 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 deductible for tax purposes and it was assigned to our Biological Indicators segment. The PCD 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 reflected our allocation of the consideration, subject to customary purchase price adjustments in accordance with the PCD Agreement (in thousands):
Cash consideration |  | $ | 5,000 |
Holdback payment liability |  |  | 250 |
Contingent consideration liability |  |  | 300 |
Aggregate consideration |  | $ | 5,550 |
Inventories |  | $ | 137 |
Property, plant and equipment |  |  | 7 |
Intangibles |  |  | 3,678 |
Goodwill |  |  | 1,743 |
Accrued expenses |  |  | (15 | )
Total purchase price allocation |  | $ | 5,550 |
The accompanying consolidated statements of income include the results of the PCD Acquisition from the acquisition date of October 15, 2014. The pro forma effects of the acquisition on the results of operations as if the acquisition had been completed on April 1, 2014 and 2013, are as follows (in thousands, except per share data):
|  | Year E nded March 31, |
|  | 2015 |  |  | 2014 |
Revenues |  | $ | 73,068 |  |  | $ | 56,541 |
Net income |  |  | 9,673 |  |  |  | 9,512 |
Net income per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 2.75 |  |  | $ | 2.76 |
Diluted |  |  | 2.65 |  |  |  | 2.63 |
BGI On April 15, 2014, we completed a business combination (the “BGI Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of BGI, Incorporated and BGI Instruments, Inc. (collectively “BGI”), a business focused on the sale of equipment primarily used for particulate air sampling. The purchase price for the acquired assets was $10,268,000. We expected to achieve savings and generate growth as we integrated the BGI 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 deductible for tax purposes and it was assigned to our Instruments segment. The BGI 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 reflected our allocation of the consideration, subject to customary purchase price adjustments in accordance with the BGI Agreement (in thousands):
Inventories |  | $ | 1,268 |
Property, plant and equipment |  |  | 47 |
Intangibles |  |  | 5,711 |
Goodwill |  |  | 3,295 |
Accrued expenses |  |  | (53 | )
Total purchase price allocation |  | $ | 10,268 |
The accompanying consolidated statements of income include the results of the BGI Acquisition from the acquisition date of April 15, 2014. The pro forma effects of the acquisition on the results of operations as if the acquisition had been completed on April 1, 2014 and 2013, are as follows (in thousands, except per share data):
|  | Year E nded March 31, |
|  | 2015 |  |  | 2014 |
Revenues |  | $ | 71,648 |  |  | $ | 60,388 |
Net income |  |  | 9,661 |  |  |  | 11,141 |
Net income per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 2.74 |  |  | $ | 3.23 |
Diluted |  |  | 2.65 |  |  |  | 3.09 |

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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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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