Acquisition

9 Months Ended

Sep. 30, 2011

Acquisition [Abstract]

Acquisition

NOTE 2. ACQUISITION

On September 28, 2011, the Company entered into an agreement to acquire certain assets of Sequoia Floorings Inc. ("Sequoia") relating to Sequoia's quality control and assurance, product development, claims management and logistics operations in China. In connection with the agreement, the Company expects to retain certain key Sequoia personnel in Shanghai, China and assume direct control of sourcing previously managed by Sequoia. Through September 28, 2011, Sequoia, a trading company, provided sourcing services on approximately 90% of the Company's 2011 merchandise purchases from Asia, which represented approximately 42% of the Company's total 2011 merchandise purchases. The acquisition strengthens the Company's mill direct relationships pursuant to its long-term sourcing strategy, and allows for a coordinated and efficient transition to direct servicing of mill relationships by an experienced team of quality and product development experts. As part of the transaction, the Company established a representative office in Shanghai in October 2011.

The acquisition agreement included a purchase price of approximately $8.3 million, of which approximately $4.7 million was paid in cash. Selling, general and administrative expenses in the condensed consolidated statements of income include acquisition-related expenses of approximately $0.5 million, generally considered non-deductible for tax purposes, for the three months ended September 30, 2011.

The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill and approximated $8.5 million, of which all is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including workforce additions, growth opportunities and direct servicing of mill relationships. Other liabilities primarily consist of reserves for warranty claims related to mills previously managed by Sequoia. The total purchase price has been preliminarily allocated to the net tangible and intangible assets as follows:

Property and Equipment	$	97
Other Assets		170
Other Liabilities		(427	)
Goodwill		8,473
Fair Value of Purchase Consideration	$	8,313