Acquisitions

6 Months Ended

Jun. 30, 2019

ACQUISITIONS

2018

In 2018, the Company completed six acquisitions:



Business		Date
Technical Glass Products, Inc. ("TGP")		January 2018
Hammond Enterprises, Inc. ("Hammond")		January 2018
Qatar Metal Industries LLC ("QMI")		February 2018
AD Systems, Inc. ("AD Systems")		March 2018
Gainsborough Hardware and API Locksmiths ("Door and Access Systems")		July 2018
ISONAS Security Systems, Inc. ("ISONAS")		July 2018

Total cash paid for these acquisitions was approximately $373 million (net of cash acquired), including $4.6 million during the six months ended June 30, 2019. These acquisitions were accounted for as business combinations. The allocation of the aggregate purchase price to assets acquired and liabilities assumed is complete for all six acquisitions as of June 30, 2019.

The allocation of the aggregate purchase price to assets acquired and liabilities assumed for the acquisitions listed above is as follows:



In millions
Accounts receivable, net	$	28.9
Inventories	28.5
Other current assets	1.3
Property, plant and equipment, net	27.6
Goodwill	139.8
Intangible assets, net	204.3
Other noncurrent assets	2.0
Accounts payable	(11.1		)
Accrued expenses and other current liabilities	(35.7		)
Other noncurrent liabilities	(11.1		)
Total	$	374.5

Intangible assets are primarily comprised of approximately $59 million of indefinite-lived trade names, $112 million of customer relationships and $33 million of completed technologies and other intangibles, which includes approximately $6 million of acquired backlog revenue. The customer relationships have a 17-year weighted-average useful life, while the completed technologies and other intangibles, excluding the backlog revenue, have a 16-year weighted-average useful life. The backlog revenue was fully amortized as of June 30, 2018.

Goodwill results from several factors including Allegion-specific synergies that were excluded from the cash flow projections used in the valuation of intangible assets and intangible assets that do not qualify for separate recognition, for example, assembled workforce. The majority of the goodwill is expected to be deductible for tax purposes.

The following unaudited pro forma financial information for the three and six months ended June 30, 2018, reflects the consolidated results of operations of the Company as if these acquisitions had taken place on January 1, 2017:



In millions	Three months ended June 30, 2018		Six months ended June 30, 2018
Net revenues	$	724.4	$	1,360.3
Net earnings attributable to Allegion plc	118.3		193.8

The unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of results of operations that would have occurred had the pro forma events taken place on the date indicated or the future consolidated results of operations of the combined company. The unaudited pro forma financial information has been calculated after applying the Company's accounting policies and adjusting the historical financial results to reflect additional items directly attributable to the acquisitions that would have been incurred assuming the acquisitions had occurred on January 1, 2017. Adjustments to historical financial information include removal of backlog revenue acquired as well as acquisition and integration expenses incurred related to these acquisitions, partially offset by incremental amortization of intangible assets.

During the three months ended June 30, 2019 and 2018, the Company incurred $0.8 million and $2.6 million, respectively, of acquisition and integration related expenses. During the six months ended June 30, 2019 and 2018, the Company incurred $1.8 million and $4.6 million, respectively, of acquisition and integration related expenses. These expenses are included in Selling and administrative expenses in the Condensed and Consolidated Statements of Comprehensive Income.

In 2018, the Company also made $8 million of equity method investments in three entities, Yonomi Inc., a U.S. based mobile application and cloud platform provider for connected living, Nuki GmbH, a European retrofit residential smart lock innovator, and Conneqtech, a European based IoT platform developer specializing in connected mobility and tracking features for bicycles and healthcare.