Business Combinations

Certified Thermoplastics Co., LLC

On April 23, 2018, we acquired 100.0% of the outstanding equity interests of Certified Thermoplastics Co., LLC (“CTP”), a privately-held leader in precision profile extrusions and extruded assemblies of engineered thermoplastic resins, compounds, and alloys for a wide range of commercial aerospace, defense, medical, and industrial applications. CTP is located in Santa Clarita, California. The acquisition of CTP was part of our strategy to diversify towards more customized, higher value, engineered products with greater aftermarket potential.

The purchase price for CTP was $30.7 million, net of cash acquired, all payable in cash. We allocated the gross purchase price of $30.8 million to the assets acquired and liabilities assumed at estimated fair values. The excess of the purchase price over the aggregate fair values of the net assets was recorded as goodwill.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):



	Estimated Fair Value
Cash	$	98
Accounts receivable	1,517
Inventories	2,207
Other current assets	27
Property and equipment	603
Intangible assets	8,100
Goodwill	18,622
Total assets acquired	31,174
Current liabilities	(364		)
Total liabilities assumed	(364		)
Total purchase price allocation	$	30,810



	Useful Life (In years)	Estimated Fair Value (In thousands)
Intangible assets:
Customer relationships	10	$	6,900
Trade names and trademarks	10	1,200
		$	8,100

The intangible assets acquired of $8.1 million were determined based on the estimated fair values using valuation techniques consistent with the income approach to measure fair value. The useful lives were estimated based on the underlying agreements or the future economic benefit expected to be received from the assets. The fair values of the identifiable intangible assets were estimated using several valuation methodologies, which represented Level 3 fair value measurements. The value for customer relationships was estimated based on a multi-period excess earnings approach, while the value for trade names and trademarks was assessed using the relief from royalty methodology.

The goodwill of $18.6 million arising from the acquisition is attributable to the benefits we expect to derive from expected synergies from the transaction, including complementary products that will enhance our overall product portfolio, opportunities within new markets, and an acquired assembled workforce. All the goodwill was assigned to the Structural Systems segment. Since the CTP acquisition, for tax purposes, was deemed an asset acquisition, the goodwill recognized is deductible for income tax purposes.

Acquisition related transaction costs are not included as components of consideration transferred but have been expensed as incurred. Total acquisition-related transaction costs incurred by us were $0.6 million during 2018 and charged to selling, general and administrative expenses.

CTP’s results of operations have been included in our consolidated statements of income since the date of acquisition as part of the Structural Systems segment. Pro forma results of operations of the CTP acquisition have not been presented as the effect of the CTP acquisition was not material to our financial results.

Lightning Diversion Systems, LLC

In September 2017, we acquired 100.0% of the outstanding equity interests of Lightning Diversion Systems, LLC (“LDS”), a privately-held, worldwide leader in lightning protection systems serving the aerospace and defense industries, located in Huntington Beach, California. The acquisition of LDS was part of our strategy to enhance revenue growth by focusing on advanced proprietary technology on various aerospace and defense platforms.

The purchase price for LDS was $60.0 million, net of cash acquired, all payable in cash. We allocated the gross purchase price of $62.0 million to the assets acquired and liabilities assumed at estimated fair values. The estimated fair value of the assets acquired included $22.4 million of intangible assets, $2.2 million of cash, $1.7 million of inventories, $0.9 million of accounts receivable, $0.1 million of property and equipment, $0.1 million of other current assets, and $0.3 million of liabilities assumed. The excess of the purchase price over the aggregate fair values of $34.9 million was recorded as goodwill. The intangible assets acquired were comprised of $21.1 million for customer relationships and $1.3 million for trade name, both of which were assigned an estimated useful life of 15 years. All the goodwill was assigned to the Electronic Systems segment. Since the LDS acquisition, for tax purposes, was deemed an asset acquisition, the goodwill recognized was deductible for income tax purposes.

LDS’ results of operations have been included in our consolidated statements of income since the date of acquisition as part of the Electronic Systems segment.