Business Combination

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Business Combination

17.  Business Combinations

On June 7, 2012, the Company purchased certain assets of The C-Thru Ruler Company, a leading supplier of drafting, measuring, lettering and stencil products. The Company purchased inventory and intellectual property related to C-Thru’s lettering and ruler business for approximately $1.47 million using funds borrowed under its revolving loan agreement with HSBC. The Company recorded approximately $0.42 million for inventory, as well as approximately $1.05 million for intangible assets, consisting of customer relationships.

The purchase price was allocated to assets acquired and liabilities assumed as follows (in thousands):

Assets:
Inventory		423
Intangible Assets		1,050
Total assets	$	1,473

Net sales from the date of acquisition through December 31, 2012, attributable to C-Thru were approximately $1.7 million. Unaudited net sales attributable to C-Thru for the comparable period in 2011 were approximately $1.4 million.

Assuming C-Thru was acquired on January 1, 2012, unaudited proforma net sales for the year ended December 31, 2012 attributable to C-Thru were approximately $3.2 million. Unaudited proforma net sales for the comparable period in 2011 were approximately $3.0 million.

Unaudited net income for the year ended December 31, 2012 attributable to C-Thru was not material to the Company’s financial statements for those periods.

On February 28, 2011, the Company purchased substantially all of the assets of The Pac-Kit Safety Equipment Company, a leading manufacturer of first aid kits for the industrial, safety, transportation and marine markets. The Company purchased the accounts receivable, inventory, equipment and intangible assets of Pac-Kit for approximately $3.4 million, less liabilities assumed of $310,000, using funds borrowed under the Company’s revolving loan agreement.

The Company recorded $1.9 million for assets acquired, including accounts receivable, inventory and fixed assets, as well as $1.5 million for intangible assets, consisting of customer relationships and the Pac-Kit trade name. During 2011, the Company incurred approximately $125,000 of integration and transaction costs associated with the acquisition.  These costs were recorded in selling, general and administrative expenses.

The purchase price was allocated to assets acquired and liabilities assumed as follows (in thousands):

Assets:
Accounts Receivable	$	592
Inventory		1,196
Equipment		150
Intangible Assets		1,500
Total assets	$	3,438
Liabilities
Accounts Payable	$	310
Net assets acquired
	$	3,128

Net sales for 2011 attributable to Pac-Kit were approximately $5.2 million. The year ended December 31, 2011 represents a comparable period based on the Pac-Kit acquisition date.

Unaudited proforma net income, excluding one time transaction and integration costs of $125,000, for the twelve months ended December 31, 2011, attributable to Pac-Kit was approximately $175,000.

Assuming Pac-Kit was acquired on January 1, 2011, unaudited proforma net sales and net income for the year ended December 31, 2011 attributable to Pac-Kit were approximately $6.0 million and $200,000, respectively.