Note 2. Acquisition

On June 28, 2011, the Company completed the acquisition of all the outstanding stock of LaBarge, Inc. (“LaBarge”), formerly a publicly-owned company based in St. Louis, Missouri for $325,315,000 (net of cash acquired and excluding acquisition costs). LaBarge was a broad-based provider of electronics to technology-driven companies in diverse markets. LaBarge had significant sales to customers in the aerospace, defense, natural resources, industrial, medical and other commercial markets. The Company provided its customers with sophisticated electronic, electromechanical and mechanical products through contract design and manufacturing services. The operating results for the acquisition have been included in the consolidated statements of operations since the date of the acquisition.

The Company believes the LaBarge acquisition will allow us to expand our presence significantly in the aerospace and defense markets, as well as diversify our sales base across new markets, including industrial, natural resources, medical and other commercial end markets. More specifically, the Company expects to realize the following benefits from the LaBarge acquisition:

•

Strengthen our market position as a significant Tier 2 supplier for both structural and electronic assemblies

•

Diversify our end markets

•

Expand our platforms work content on existing programs and capabilities on new and existing programs

•

Increase value-added manufacturing services content in our product portfolio

•

Expand our technology product portfolio

•

Realize potential synergies.

The following table presents unaudited pro forma consolidated operating results for the Company for the three months and six months ended June 30, 2012 and July 2, 2011, as if the LaBarge acquisition had occurred as of January 1, 2010.


	(In thousands, except per share data)
	Three Months Ended				Six Months Ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011
Net sales	$	184,705	$	188,281	$	369,048	$	371,048
Net income		5,507		678		7,897		2,845
Basic earnings per share		0.52		0.06		0.75		0.27
Diluted earnings per share		0.52		0.06		0.75		0.27

The consolidated financial statements reflect the fair value of the assets acquired and liabilities assumed and the related allocation of the purchase price for LaBarge. The principal estimates of fair value have been determined using expected net present value techniques utilizing a 14% discount rate. Customer relationships are valued assuming an annual attrition rate of 6.5%. The finalization of our initial purchase price allocation during the second quarter of 2012 did not result in any significant adjustments.