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ACQUISITIONS AND DISPOSITIONS OF LONG LIVED ASSETS
9 Months Ended
Sep. 30, 2011
Acquisitions [Abstract] 
ACQUISITIONS

2.       ACQUISITIONS/DIVESTITURES

The Corporation acquired five businesses and sold the assets of two businesses during the nine months ended September 30, 2011, described in more detail below.

The acquisitions have been accounted for as purchases under the guidance for business combinations, where the excess of the purchase price over the estimated fair value of the tangible and intangible assets acquired is generally recorded as goodwill. The Corporation allocates the purchase price, including the value of identifiable intangibles with a finite life, based upon analysis and input from third party appraisals. The purchase price allocation will be finalized no later than twelve months from acquisition. The results of the acquired businesses have been included in the consolidated financial results of the Corporation from the date of acquisition in the segment indicated.

Flow Control Segment

Legacy Distribution Business

On July 29, 2011, the Corporation sold the assets of the legacy distribution business within in its oil and gas division to McJunkin Red Man Corporation for $4.6 million in cash, subject to adjustment based on closing inventory values. Working capital, exclusive of inventory, was retained by the Corporation. The determination was made to divest the business as it was not considered a core business of the Corporation. The disposal resulted in a loss of less than $0.2 million and was not reported as discontinued operations as the amounts are not considered significant. This business contributed $13.7 million in sales and a pretax loss of $0.3 million for the year ended December 31, 2010.

Douglas Equipment Ltd.

On April 6, 2011, the Corporation acquired the assets of Douglas Equipment Ltd. (“Douglas”) for £12.3 million ($20.1 million) in cash.  The Business Transfer Agreement contains customary representations and warranties, including a portion of the purchase price deposited into escrow as security for potential indemnification claims against the seller. Management funded the purchase from the Corporation's revolving credit facility.

Douglas designs and manufactures aircraft handling systems for the defense and commercial aerospace markets and will operate within the Marine & Power Products division of the Corporation's Flow Control segment.  Douglas has approximately 135 employees and is headquartered in Cheltenham, U.K. Revenues of the acquired business were approximately $28 million for the year ended 2010.

The purchase price of the acquisition has been allocated to the tangible and intangible assets and liabilities assumed with the remainder recorded as goodwill on the basis of estimated fair values, as follows:

(US dollars, in thousands)       Douglas
Accounts receivable      $ 852
Inventory        11,831
Property, plant, and equipment        672
Other current assets        402
Intangible assets        6,697
Current liabilities        (6,159)
Net tangible and intangible assets        14,295
Purchase price        20,095
Goodwill      $ 5,800
         
Goodwill tax deductible       Yes

Motion Control Segment

Hydro-pneumatic (“Hydrop”) product line

On September 29, 2011, the Corporation sold the assets of the Hydrop suspension business, a product line of Curtiss-Wright Antriebstechnik GmbH (CWAT) in Switzerland, to Stromsholmen AB, a subsidiary of the Barnes Group for CHF 3.14 million ($3.5 million) in cash. Trade accounts receivable and payable were retained by the Corporation. The determination was made to divest the business as it was not considered a core business of the Corporation. The disposal resulted in a $1.3 million pre-tax gain and was not reported as discontinued operations as the amounts are not considered significant. This business contributed $0.8 million in sales for the year ended December 31, 2010.

ACRA Control Ltd.

On July 28, 2011, the Corporation acquired the stock of ACRA Control Ltd. (“ACRA”) for €42.0 million (approximately $60.2 million) in cash, net of cash acquired. The Share Purchase Agreement contains customary representations and warranties, including a portion of the purchase price deposited into escrow as security for potential indemnification claims against the seller. Management funded the purchase primarily from the Corporation's revolving credit facility and cash generated from foreign operations.

ACRA is a supplier of data acquisition systems and networks, data recorders, and telemetry ground stations for both defense and commercial aerospace markets and will operate within the Integrated Sensing division of the Corporation's Motion Control segment. ACRA had 128 employees on the date of acquisition, and operates from a leased facility in Dublin, Ireland. ACRA had revenues of approximately €20.5 million ($27.1 million) for its fiscal year ended March 31, 2011.

Predator Systems, Inc.

On January 7, 2011, the Corporation acquired all the issued and outstanding stock of Predator Systems, Inc. (“PSI”), for $13.5 million in cash. The Stock Purchase Agreement contains customary representations and warranties, including a portion of the purchase price deposited into escrow as security for potential indemnification claims against the seller. Management funded the purchase from the Corporation's revolving credit facility.

PSI designs and manufactures motion control components and subsystems for ground defense, ordnance guidance, and aerospace applications, and will operate within the Flight Systems division of the Corporation's Motion Control segment. PSI had 45 employees as of the date of the acquisition and is headquartered in Boca Raton, FL. Revenues of the acquired business were approximately $8 million for the year ended December 31, 2010.

The purchase price of the acquisitions have been allocated to the tangible and intangible assets and liabilities assumed with the remainder recorded as goodwill on the basis of estimated fair values, as follows:

(US dollars, in thousands)  ACRA PSI  Total
Accounts receivable $ 8,451  862 $ 9,313
Inventory   6,545  1,856   8,401
Property, plant, and equipment   1,601  2,100   3,701
Other current assets   456  67   523
Intangible assets   17,069  4,700   21,769
Current liabilities   (6,831)  (190)   (7,021)
Deferred income taxes   (2,281)  -   (2,281)
Net tangible and intangible assets   25,010  9,395   34,405
Purchase price   60,245  13,503   73,748
Goodwill $ 35,235  4,108 $ 39,343
         
Goodwill tax deductible  No Yes   

Metal Treatment Segment

IMR Test Labs

On July 22, 2011, the Corporation acquired the assets of IMR Test Labs (“IMR”) for approximately $20.0 million in cash, with $18.0 million paid at closing and the remaining $2.0 million held back as security for potential indemnification claims against the seller. The Asset Purchase Agreement contains customary representations and warranties, and provides for contingent consideration of $1.6 million, based on achievement of certain sales targets over a two-year period. Management funded the purchase primarily from the Corporation's revolving credit facility, and excess cash on hand.

IMR is a provider of mechanical and metallurgical testing services for the aerospace, power generation, and general industrial markets and diversifies the Metal Treatment segment with new, synergistic offerings. The business has approximately 115 employees at three operating facilities located in Ithaca, NY, Portland, OR and Louisville, KY. Revenues of the acquired business were approximately $14 million for the year ended December 31, 2010.

Surface Technologies Division of BASF Corporation

On April 8, 2011, the Corporation acquired certain assets of BASF Corporation's Surface Technologies (“BASF”) business for $20.5 million in cash. The Asset Purchase Agreement contains customary representations and warranties and provides for a purchase price adjustment based on the value of the closing day inventory. The purchase price adjustment is reflected in the disclosed purchase price. Management funded the purchase from the Corporation's revolving credit facility.

The Surface Technologies business is a supplier of metallic and ceramic thermal spray coatings primarily for the aerospace and power generation markets and expands the coatings capabilities within the Corporation's Metal Treatment segment. The business has approximately 150 employees at three operating facilities located in East Windsor, CT, Wilmington, MA and Duncan, SC. Revenues of the acquired business were approximately $29 million for the year ended December 31, 2010.

The purchase price of the acquisitions have been allocated to the tangible and intangible assets and liabilities assumed with the remainder recorded as goodwill on the basis of estimated fair values, as follows:

(In thousands)  BASF IMR  Total
Accounts receivable $ -  2,050 $ 2,050
Inventory   1,514  -   1,514
Property, plant, and equipment   12,774  3,125   15,899
Other current assets   -  134   134
Intangible assets   3,000  3,830   6,830
Current liabilities   (263)  (519)   (782)
Other liabilities   -  (1,956)   (1,956)
Holdback   -  (2,000)   (2,000)
Net tangible and intangible assets   17,025  4,664   21,689
Purchase price   20,501  18,000   38,501
Goodwill $ 3,476  13,336 $ 16,812
         
Goodwill tax deductible  Yes Yes