Note

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

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

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

$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

percent and

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.

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

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

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

$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

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