Note O – Acquisitions

AMTROL

On June 2, 2017, the Company acquired AMTROL, a leading manufacturer of pressure cylinders and water system tanks with operations in the U.S. and Europe. The total purchase price was $291,921,000 after adjusting for excess working capital and was funded primarily with cash on hand. The net assets became part of the Pressure Cylinders operating segment at closing, with the well water and expansion tank operations aligning under the consumer products business and the refrigerant, liquid propane and industrial and specialty gas operations aligning under the industrial products business. Total acquisition-related expenses were $3,568,000, of which $1,568,000 were incurred during fiscal 2018.

The assets acquired and liabilities assumed were recognized at their acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. In connection with the acquisition, we identified and valued the following identifiable intangible assets:

(in thousands)			Useful Life
Category	Amount		(Years)
Customer relationships	$	90,800	14-17
Trade names		62,200	Indefinite
Technology		13,000	15-16
Total acquired identifiable intangible assets	$	166,000

The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g. assembled workforce) or of immaterial value. The purchase price also includes a going-concern element that represents our ability to earn a higher rate of return on this group of assets than would be expected on the separate assets as determined during the valuation process. This additional investment value resulted in goodwill, which is not expected to be deductible for income tax purposes.

The following table summarized the consideration transferred for the assets of AMTROL and the fair value assigned to the assets acquired and liabilities assumed at the acquisition date:

			Measurement
	Preliminary		Period			Revised
(in thousands)	Valuation		Adjustments			Valuation
Cash	$	6,893	$	-		$	6,893
Accounts receivable		40,212		-			40,212
Inventories		37,249		-			37,249
Prepaid expenses		981		-			981
Other assets		2,550		-			2,550
Intangible assets		166,000		-			166,000
Property, plant and equipment		52,870		-			52,870
Total assets		306,755		-			306,755
Accounts payable		25,945		-			25,945
Accrued liabilities		21,016		-			21,016
Long-term debt including current maturities		2,287		-			2,287
Other accrued items		3,993		1,501			5,494
Deferred income taxes, net		64,495		(966	)		63,529
Net identifiable assets		189,019		(535	)		188,484
Goodwill		102,902		535			103,437
Purchase price	$	291,921	$	-		$	291,921

Operating results of AMTROL have been included in the Company’s consolidated statements of earnings since the date of the acquisition. During the fiscal year ended May 31, 2018, AMTROL contributed net sales of $265,198,000 and operating income of $18,899,000.

The following unaudited pro forma information presents consolidated financial information as if AMTROL had been acquired at the beginning of fiscal 2017. Depreciation and amortization expense included in the pro forma results reflect the acquisition-date fair values assigned to the definite-lived intangible assets and fixed assets of AMTROL assuming a June 1, 2016 acquisition date. Adjustment has also been made for the acquisition-related costs incurred in each period presented. Pro forma results for the fiscal year ended May 31, 2018 have also been adjusted to remove the impact of the acquisition-date fair value adjustments to inventories and accrued severance costs related to headcount reductions at AMTROL initiated during the first quarter of fiscal 2018, as discussed in “Note D – Restructuring and Other Expense (Income), Net.” The pro forma adjustments noted above have been adjusted for the applicable income tax impact. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of June 1, 2016

(in thousands, except per share amounts)	2018		2017
Net sales	$	3,581,620	$	3,263,315
Net earnings attributable to controlling interest	$	199,038	$	215,182
Diluted earnings per share attributable to controlling interest	$	3.16	$	3.32