Acquisition Activity

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Diversified Technical Systems, Inc.

On June 1, 2021, VPG completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a manufacturer of data acquisition systems and sensors for product safety and testing, for a purchase price of $47.2 million. The Company used cash on hand and borrowings under its revolving credit facility to fund the purchase price under the purchase agreement. DTS reports into the Company's Measurement Systems segment. The following table summarizes the final fair values assigned to the assets and liabilities of DTS as of June 1, 2021 (in thousands):


	June 1, 2021
Working capital	$	12,494
Property and equipment	1,209
Deferred income tax liability	(6,215)

Intangible assets:
Acquired technology	13,167
Customer relationships	8,135
Trade names	2,393
Total intangible assets	23,695
Fair value of acquired identifiable assets	31,183
Purchase price	$	47,216
Goodwill	$	16,033

(a) Working capital accounts include accounts receivable, inventory, prepaid expenses, accounts payable, accrued expenses, and accrued payroll.

The Company utilizes certain valuations and studies to determine the fair value of the tangible and intangible assets acquired. The estimated weighted average useful lives for the acquired technology and customer relationships are 15 years. Trade names are treated as indefinite-lived intangible assets. None of the goodwill associated with DTS is deductible for income tax purposes. The Company recorded acquisition costs associated with this transaction of $1.2 million in the second quarter of 2021, which included legal fees, appraisal fees, investments banker fees and insurance costs.

Following are the supplemental consolidated financial results for the Company on an unaudited pro forma basis, as if the DTS acquisition had been consummated on January 1, 2021 (unaudited):


	Year ended December 31,
	2021
	(unaudited)
Pro forma net revenues	$	331,155

Pro forma net earnings attributable to VPG stockholders	$	23,602

Pro forma basic earnings per share attributable to VPG stockholders	$	1.73
Pro forma diluted earnings per share attributable to VPG stockholders	$	1.73