ACQUISITION OF BUSINESS

9 Months Ended

Jul. 31, 2014

ACQUISITION OF BUSINESS [Abstract]

ACQUISITION OF BUSINESS

7. ACQUISITION OF BUSINESS

On July 1, 2013, we acquired the machine tool component business of an Italian designer and manufacturer of electro-mechanical components and accessories for machine tools. We are operating this business through our wholly-owned Italian subsidiary, LCM Precision Technologies, or LCM. The purchase price was allocated to the assets acquired and the liabilities assumed based on their fair values. The purchase price for the acquired assets and the assumed liabilities was $5.0 million. The allocation of the opening balance sheet of LCM as of July 1, 2013 is as follows (in thousands):

Current assets	$	6,723
Property plant and equipment		933
Intangibles		1,437
Goodwill		2,477
Total assets	$	11,570
Current liabilities	$	4,821
Short term debt		4,643
Non-current liabilities		1,726
Total Liabilities	$	11,190
Cash expended, net of cash acquired		380
Indebtedness assumed		4,643
Total purchase price	$	5,023

Intangible assets of $1.4 million were recorded as a result of the transaction. The fair value of the intangible assets was based upon a discounted cash flow method that involves inputs that are not observable in the market (Level 3). Intangible assets are amortized primarily using a straight-line methodology. The intangible assets consisted of the following (in thousands):

			Remaining Economic
			Useful Life
Trademark/name	$	274	13 years
Technology and manufacturing know how		1,111	13 years
Customer relationships		52	16 years
	$	1,437

The excess purchase price over the fair value of the assets acquired and the liabilities assumed was recorded as goodwill in the amount of $2.5 million. Goodwill recognized in the acquisition relates primarily to advancing our machine tool technology and expanding our current product offering. We expect the amount recorded as goodwill to be fully deductible for tax purposes.

The results of operations of LCM have been included in our consolidated financial statements since July 1, 2013.