Note 4.

Acquisition

In July 2012, the Company signed the Original Purchase Agreement with UTC to acquire the Rocketdyne Business from UTC for $550.0 million. On June 10, 2013, the FTC announced that it closed its investigation into the Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On June 12, 2013, the Company entered into an Amended and Restated Purchase Agreement with UTC, which amended and restated the Original Purchase Agreement, as amended. On June 14, 2013, the Company completed the Acquisition of substantially all of the Rocketdyne Business pursuant to the Amended and Restated Purchase Agreement.

The aggregate consideration to UTC was $411.2 million, paid in cash, which represents the initial purchase price of $550.0 million reduced by $55.0 million relating to the pending future acquisition of UTC’s 50% ownership interest of RD Amross (a joint venture with NPO Energomash of Khimki, Russia which sells RD-180 engines to RD Amross), and the portion of the UTC business that markets and supports the sale of RD-180 engines. The purchase price was further adjusted for changes in advance payments on contracts, capital expenditures and other net assets, and is subject to further post-closing adjustments. The components of the estimated purchase price to UTC are as follows (in millions):


Purchase Price	$	495.0
Advance payments on contracts adjustment		(57.3	)
Capital expenditures adjustment		(29.8	)
Target net asset adjustment		3.3

Cash payment to UTC	$	411.2

The Company received a revised purchase price computation from UTC on September 12, 2013 and, per the terms and conditions of the Amended and Restated Purchase Agreement, the Company responded with its objections on December 9, 2013. The Company and UTC have 60 days to resolve the disputed items. If unable to do so within the 60 days, the dispute will be resolved by a mutually selected national accounting firm.

On January 28, 2013, the Company issued $460.0 million in aggregate principal amount of its 7¹/₈% Notes. The 7¹/₈% Notes were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the U.S. in accordance with Regulation S under the Securities Act. The net proceeds of the 7¹/₈% Notes offering were used to fund, in part, the acquisition of the Rocketdyne Business, and to pay related fees and expenses in June 2013 (see Note 6(b)).

The Company incurred substantial expenses in connection with the Acquisition. A summary of the expenses related to the Acquisition recorded in fiscal 2012 ($11.6 million) and fiscal 2013 ($20.0 million) is as follows (in millions):


Legal expenses	$	16.4
Professional fees and consulting		8.9
Internal labor		3.4
Costs related to the previously planned divestiture of the LDACS business, including $0.3 million of internal labor		1.7
Other		1.2

	$	31.6

The operating results of the Rocketdyne Business are included in the Company’s Consolidated Financial Statements since June 13, 2013, the acquisition date, within the Company’s Aerospace and Defense segment. Effective June 14, 2013, deposits on leased facilities of $1.8 million and letters of credit of $12.3 million for various financial assurance obligations were issued in conjunction with the Acquisition.

The preliminary purchase price allocation has been developed based on preliminary estimates of the fair value of the assets and liabilities of the Rocketdyne Business that the Company acquired. In addition, the allocation of the preliminary purchase price to acquired intangible assets is based on preliminary fair value estimates.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):


Current assets	$	105.3
Property, plant and equipment, net		202.7
Other non-current assets		10.0

Total tangible assets acquired		318.0
Intangible assets acquired		128.3
Deferred income taxes		12.9

Total assets acquired		459.2
Liabilities assumed, current		(105.5	)
Liabilities assumed, non-current		(7.2	)

Total identifiable net assets acquired		346.5

Goodwill	$	64.7

The preliminary purchase price allocation resulted in the recognition of $64.7 million in goodwill, all of which is deductible for tax purposes and included within the Company’s Aerospace and Defense segment. Goodwill recognized from the Acquisition primarily relates to the expected contributions of the Rocketdyne Business to the Company’s overall corporate strategy.

Intangible assets acquired in connection with the Rocketdyne Business included the following:


	Gross Carrying Amount (In millions)		Weighted Average Amortization Period (years)
Customer related	$	73.1		8.7
Intellectual property\trade secrets		34.2		13.0
Non-Compete Agreements		0.5		3.0
Trade name		20.5		30.0

Total intangible assets	$	128.3

Amortization of intangible assets is not recoverable in the future through the Company’s U.S. government contracts. Additionally, the Company has a $12.4 million and $20.4 million, respectively, indemnification receivable from and payable to UTC as of November 30, 2013. Pursuant to the terms of the Amended and Restated Purchase Agreement, the Company is indemnified for certain matters.

Net sales and net income of the Rocketdyne Business included in the Company’s operating results for fiscal 2013 from the acquisition date of June 14, 2013 were $319.4 million and $18.3 million, respectively.

The unaudited pro forma information for the periods set forth below gives effect to the Acquisition as if it had occurred at the beginning of each respective fiscal year. These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of the Rocketdyne Business to reflect depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied as at the beginning of each respective fiscal year, together with the tax effects, as applicable. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the Acquisition been consummated as of that time or that may result in the future.


	Year Ended
	2013		2012			2011
	(In millions, except per share amounts)
Net sales:
As reported	$	1,383.1	$	994.9		$	918.1
Pro forma	$	1,762.7	$	1,694.0		$	1,572.7
Net income (loss):
As reported	$	167.9	$	(2.6	)	$	2.9
Pro forma	$	30.7	$	38.2		$	(142.1	)
Basic EPS:
Income (loss) per share:
As reported	$	2.76	$	(0.04	)	$	0.05
Pro forma	$	0.50	$	0.64		$	(2.42	)
Diluted EPS:
Income (loss) per share:
As reported	$	2.11	$	(0.04	)	$	0.05
Pro forma	$	0.47	$	0.56		$	(2.42	)