4. ACQUISITIONS

Portec Rail Products, Inc.

On December 15, 2010, Portec Rail became a wholly-owned subsidiary of the Company pursuant to the terms of the Agreement and Plan of Merger, through the merger of the Company's subsidiary with and into Portec Rail, with Portec Rail surviving as a wholly owned subsidiary of the Company. The merger was consummated pursuant to Section 31D-11-1105 of the West Virginia Business Corporation Act without a vote or meeting of Portec Rail's stockholders. All outstanding shares of common stock of Portec Rail were canceled and converted into the right to receive consideration equal to $11.80 per Share, net to the holder in cash, without interest thereon. The total consideration paid in cash by the Company for the Shares was approximately $113,322,000, including a final payment of $8,952,000 made in January 2011.

The Company recorded its acquisition of Portec Rail in accordance with ASC 805, "Business Combinations."

The Company is in the process of completing its fair market appraisals, including the valuation of property, plant & equipment and certain identified intangible assets. Accordingly, the preliminary purchase price allocation is subject to change.

The following table presents the preliminary allocation of the aggregate purchase price based on estimated fair values:

	In thousands
Cash and cash equivalents	$	16,455
Accounts receivable		19,857
Inventories		21,048
Assets held for sale – insulated joint business		10,179
Other current assets		3,009
Property, plant & equipment		10,998
Identified intangible assets		43,670
Other assets		411
Total identifiable assets acquired		125,627
Debt obligations		(7,492	)
Accounts payable – trade		(10,885	)
Deferred revenue		(2,211	)
Accrued payroll and employee benefits		(4,373	)
Other accrued liabilities		(8,156	)
Other long-term liabilities		(7,066	)
Deferred tax liabilities		(13,280	)
Net identifiable assets acquired		72,164
Goodwill		41,158
Net assets acquired	$	113,322

Due to the timing of the closing, the above purchase price allocation is based on a preliminary valuation. The measurement period for purchase price allocations ends as soon as information on the facts and circumstances becomes available. If new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement recognized for assets assumed or liabilities assumed, the Company will adjust the amounts recognized as of the acquisition date.

The $43,670,000 of acquired identified intangible assets will be amortized over their respective, expected useful lives. Of the amount preliminarily allocated to identifiable intangible assets, $6,280,000 was assigned to trademarks (8-20 year useful lives), $18,880,000 was assigned to acquired technology (8-25 year useful lives), $18,160,000 was assigned to customer relationships (25-year useful life), and $350,000 was assigned to supplier relationships (5-year useful life). The fair value of the acquired identifiable intangible assets is preliminary pending completion of the final valuations for these assets.

The Company repaid all of the outstanding debt of Portec Rail in December 2010.

The acquisition of Portec Rail will help the Company become a strategic provider of products and services below the wheel for the Class I, transit, shortline and regional railroads and contractors in North America, as well as to governmental agencies and rail contractors globally. It will broaden the Company's offerings by adding Portec Rail's friction management and wayside detection products and services. This acquisition will also assist the Company's international expansion as Portec Rail currently has a strong presence in Canada and the United Kingdom, and has continued to improve its presence in Europe, Brazil, Southeast Asia, China and Australia.

The amount allocated to goodwill reflects the premium paid to acquire Portec Rail. More information regarding goodwill can be found in Note 5, "Goodwill and Other Intangible Assets."

The unaudited pro forma results for the period presented below are prepared as if the transaction occurred as of January 1, 2009. Pro forma adjustments exclude operating results of the divested rail joint business, and include depreciation and amortization and other adjustments in connection with the acquisition.

	For the Three Months Ended		For the Six Months Ended
	June 30, 2010		June 30, 2010
	In thousands, except per share data		In thousands, except per share data
Total net sales	$	144,896	$	245,215
Earnings before income taxes	$	9,742	$	12,027
Net income	$	5,693	$	7,134
Basic earnings per share	$	0.56	$	0.70
Dilutive earnings per share	$	0.55	$	0.69

Acquisition costs were approximately $684,000 and $1,155,000 for the three and six month periods ended June 30, 2010, and were classified as "Selling and Administrative Expenses."