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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 complements our current thermal technologies and broadens our diverse customer base, allowing expansion within many non-semiconductor 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

$935.

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 fair values as of

May 24, 2017.

The determination of fair value reflects our estimates and assumptions based on the information available as of the date the estimate is calculated.

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

was completed, was an amount equal to

Ambrell's adjusted EBITDA for

2017

minus the

$22,000

paid at closing. At

March 31, 2018,

we had accrued

$5,833

as earnout payable representing the amount of the

first

earnout. This amount was paid in

April 2018.

The

second

earnout, if any, to be paid after calendar year

2018

is completed, will be an amount equal to

Ambrell's adjusted EBITDA for

2018

minus the sum of the

$22,000

paid at closing and

$5,833,

the 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 and at the end of each quarter, an option based income approach using a Monte Carlo simulation model is utilized due to the non-linear payout structure. As of the acquisition date, this resulted in an estimated fair value of

$4,123

for the

2017

and

2018

earnouts. This amount was recorded as a contingent consideration liability and included in the purchase price as of the acquisition date. At

March 31, 2018,

this same approach resulted in an estimated fair value of

$6,992

for the

2018

earnout which is recorded as a contingent consideration liability on our balance sheet. Changes in the amount of the estimated fair value of the earnouts since the acquisition date are recorded as operating expenses in our statement of operations in the quarter in which they occur.

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 intangible assets		10,100		8.6
Indefinite-lived intangible assets:
Trademarks		6,200
Total intangible assets	$	16,300

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

January 1, 2017.

This proforma summary information does

not

reflect any operating efficiencies or costs savings that

may

be achieved by the combined businesses. It is presented for informational purposes only and is

not

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

	Three Months Ended March 31,
	201 7
Net revenues	$	18,792
Net earnings	$	1,660
Diluted earnings per share	$	0.16

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

$935

incurred by us as a direct result of the transaction.