On the “Acquisition Date”), SMTC entered a Stock Purchase Agreement (the “Purchase Agreement”), to purchase all of the issued and outstanding shares of capital stock of MC Assembly Holdings, Inc. (“MC Assembly” or “MC”). The MC acquisition includes an initial purchase price of plus contingent consideration payable of up to by the Company upon the achievement of certain performance milestones. The Purchase Agreement and the MC acquisition were unanimously approved by the Board of Directors of the Company, and closed on

 

The table below represents the fair value of the total purchase price consideration:

 

Purchase price – cash		$	63,498
Contingent consideration payable			3,050
Working capital adjustment - cash			1,052
Total purchase consideration		$	67,600

 

The contingent consideration is based upon the achievement of certain performance milestones determined after the completion of the Company’s fiscal quarter of The contingent consideration is estimated based on forecasted results, and change upon the resolution of the contingency at the end of the Company’s quarter of The key assumptions in valuing the contingent consideration include: estimated projected adjusted earnings before interest, depreciation and taxes for MC Assembly on a trailing months ended and a discount rate of As at there was change in the fair value of the contingent consideration, based on the forecasted results for the quarter of The contingent consideration fair value is sensitive to adjustments in results as it is based on a formula which includes a multiple of earnings. The initial working capital adjustment of was cash settled on the Acquisition Date.

 

During the quarter of the fair value of the contingent consideration liability was determined to be resulting in the recognition of a gain of The contingent consideration liability was initially recognized at fair value in the quarter and relates to a contingent earn-out payment associated with the acquisition of MC Assembly. Fair value estimate under purchase accounting of was derived from a multiple of earnings based on MC Assembly’s forecasted month earnings for the period ended Based on actual earnings, the contingent consideration liability was considered resolved and longer payable as at

 

The following table summarizes the fair values of the assets acquired and liabilities assumed at the Acquisition Date:

 

		Fair Value
Fair value consideration transferred		$	67,600
Assets
Accounts receivable			19,863
Inventories			22,813
Unbilled contract assets			12,136
Prepaids and other assets			2,523
Property, plant and equipment			16,030
Intangible assets			21,000
Goodwill			18,165
Total assets			112,530
Liabilities
Accounts payable			27,795
Accrued liabilities			3,297
Contingent consideration			3,050
Capital lease obligation			10,788
Total liabilities			44,930
Net assets acquired			67,600

 

The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of MC Assembly and was allocated to the Mexico and US operating segments of the combined SMTC and MC Assembly business. of the goodwill is expected to be deductible for tax purposes. Changes to SMTC and MC Assembly combined deferred tax assets and liabilities as a result of the purchase price allocation is fully offset by a corresponding net reduction to its valuation allowance.

 

The Company recognized  of acquisition related costs that were expensed during the period and included in selling, general and administrative expenses in the consolidated statement of operations and comprehensive loss. The Company also incurred costs related to financing the transaction. Fees incurred for the long-term debt facility (note ) were and have been recorded as a contra debt amount against the long-term debt balance on the consolidated balance sheet. Fees incurred for the PNC Revolving Credit Facility were and have been recorded as a deferred financing cost asset on the consolidated balance sheet. These costs are amortized to interest expense over the term of the debt and included in interest expense in the consolidated statement of operations and comprehensive loss.

 

The Company identified the following intangible assets and corresponding useful lives:

 

Intangible Assets					Estimated useful life (years)
Customer relationships		12,350			10
Order backlog		6,990			1.5
Trade name		1,300			1
Non-compete agreements		360			2
Total intangible assets		21,000

 

Amortization expense of has been included in the cost of sales in the consolidated statement of operations and comprehensive loss pertaining to the acquired intangible assets for the period ended

 

The following summary of MC Assembly’s select financial results included in the Company’s consolidated statement of operations and comprehensive loss from the Acquisition Date to are as follows:

 

		Period ended December 30, 2018
Revenue		$	23,530
Net income			1,667

 

The following summary of unaudited select pro forma financial results as if MC Assembly had been included in the consolidated results of the Company for the years ended and

 

		Year ended December 30, 2018				Year ended December 31, 2017
Pro forma revenue		$	345,194			$	281,493
Pro forma net loss			(11,044	)			(16,682	)

 

These amounts have been calculated after applying the Company’s accounting policies and including the impacts of the purchase price adjustments.