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ACQUISITION

May 24, 2017,

we completed our acquisition of Ambrell, a manufacturer of precision induction heating systems. Ambrell's systems are used to conduct fast, efficient, repeatable non-contact heating of metals or other electrically conductive materials, in order to transform raw materials into finished parts. The Ambrell acquisition complement

s our current thermal technologies and broadens our diverse customer base, allowing expansion within many non-ATE related markets, such as consumer product packaging, fiber-optics, automotive and other markets.

The purchase price for Ambrell was

$22,000

in cash paid at closing, subject to a customary post-closing working capital adjustment. Additional consideration in the form of earnouts

may

be paid based upon a multiple of adjusted EBITDA for

2017

and

2018,

as further discussed below. The acquisition was completed by acquiring all of the outstanding capital stock of Ambrell. Total acquisition costs incurred to complete this transaction were

$880.

Acquisition costs were expensed as incurred and included in general and administrative expense.

The acquisition of Ambrell has been accounted for as a business combination using purchase accounting, and, accordingly, the results of Ambrell have been included in our consolidated results of operations from the date of acquisition. The allocation of the Ambrell purchase price was based on estimated fair values as of

May 24, 2017.

The determination of fair value reflects the assistance of

third

-party valuation specialists, as well as our own estimates and assumptions.

The excess of the purchase price over the identifiable intangible and net tangible assets was allocated to goodwill and is

not

deductible for tax purposes. Goodwill is attributed to synergies that are expected to result from the operations of the combined businesses.

The total purchase price of

$26,733

was comprised of:

Cash paid to acquire the capital stock of Ambrell	$	22,610
Estimated fair value of contingent consideration		4,123
Total purchase price	$	26,733

As noted above, the consideration paid for the acquisition of Ambrell includes contingent consideration in the form of earnouts based on the future adjusted EBITDA of Ambrell. Adjusted EBITDA is earnings (or loss) from operations before interest expense, benefit or provision for income taxes, depreciation and amortization, and excludes other non-recurring income and expense items as defined in the stock purchase agreement for Ambrell. The

first

earnout, to be paid after calendar year

2017

is completed, will be an amount equal to

Ambrell's adjusted EBITDA for

2017

minus the

$22,000

paid at closing. The

second

earnout, to be paid after calendar year

2018

is completed, is an amount equal to

Ambrell's adjusted EBITDA for

2018

minus the sum of the

$22,000

paid at closing and any earnout paid with respect to

2017.

The

2017

and

2018

earnouts, in the aggregate, are capped at

$18,000.

To estimate the fair value of the contingent consideration at the acquisition date, an option based income approach using a Monte Carlo simulation model was utilized due to the non-linear payout structure. This resulted in an estimated fair value of

$4,123,

which was recorded as a contingent consideration liability as of the acquisition date.

The total purchase price of

$26,733

has been allocated as follows:

Goodwill	$	12,032
Identifiable intangible assets		16,300
Tangible assets acquired and liabilities assumed:
Cash		648
Trade accounts receivable		3,621
Inventories		1,917
Other current assets		200
Property and equipment		614
Accounts payable		(1,420	)
Accrued expenses		(1,280	)
Customer advances		(554	)
Deferred tax liability		(5,345	)
Total purchase price	$	26,733

We estimated the fair value of identifiable intangible assets acquired using a combination of the income, cost and market approaches.

Identifiable intangible assets acquired include customer relationships, customer backlog, technology and trademarks. We generally amortize our finite-lived intangible assets over their estimated useful lives on a straight-line basis, unless an alternate amortization method can be reliably determined. Any such alternate amortization method would be based on the pattern in which the economic benefits of the intangible asset are expected to be consumed.

The following table summarizes the estimated fair value of Ambrell's identifiable intangible assets and their estimated useful lives as of the acquisition date:

	Fair Value		Weighted Average Estimated Useful Life
			(in years)
Finite-lived intangible assets:
Customer relationships	$	9,000		9.0
Technology		600		9.0
Customer backlog		500		0.3
Total finite-lived intan gible assets		10,100		8.6
Indefinite-lived intangible assets:
Trademarks		6,200
Total intangible assets	$	16,300

For the period from

May 24, 2017

September 30, 2017,

Ambrell contributed

$6,925

of net revenues and had net

earnings of

$336,

which includes the impact of a

$549

reduction in the amount of our contingent consideration liability during the

third

quarter of

2017.

The following unaudited pro forma information gives effect to the acquisition of Ambrell as if the acquisition occurred on

January 1, 2016.

These proforma summaries do

not

reflect any operating efficiencies or costs savings that

may

be achieved by the combined businesses. These proforma summaries are presented for informational purposes only and are

not

necessarily indicative of what the actual results of operations would have been had the acquisition taken place as of that date, nor are they indicative of future consolidated results of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Net revenues	$	17,352	$	15,458	$	55,040	$	44,225
Net earnings	$	2,291	$	709	$	6,452	$	593
Diluted earnings per share	$	0.22	$	0.07	$	0.61	$	0.06

The pro forma results shown above do

not

reflect the impact on general and administrative expense of investment advisory costs, legal costs and other costs of

incurred by us as a direct result of the transaction. The pro forma results shown above include a

$549

reduction in the amount of our contingent consideration liability which we recorded during the

third

quarter of

2017.