Acquisitions Level 1 (Notes)

9 Months Ended

Sep. 30, 2011

ACQUISITIONS [Abstract]

Business Combination Disclosure

4. ACCQUISITIONS

On September 2, 2011, the Company acquired Target Electronic Supply (“Target”) for $14.2 million, inclusive of working capital adjustments and contingent consideration. Target, founded in 1978, has become part of the Company's Industrial Distribution segment. Target is a leading motion control distributor in the New England area with locations in Massachusetts, Connecticut and New Hampshire.

The acquisition was accounted for as a purchase transaction. The value of the assets acquired and liabilities assumed were recorded based on their fair value at the date of acquisition. The fair value of assets acquired and liability assumed are as follows (in thousands):

Cash	$	20
Accounts receivable	1,583
Inventories	1,822
Property, plant and equipment	88
Other tangible assets	20
Goodwill	8,451
Other intangible assets	2,980
Other liabilities	(710		)
Total of net assets acquired	14,254
Less cash received	(20		)
Plus debt assumed	—
Total consideration	$	14,234

The Company has paid $10.6 million of the total consideration of $14.2 million through September 30, 2011. The remaining $3.6 million represents the contingent consideration and working capital adjustment holdback. The Company recorded a $3.4 million contingent consideration liability, which is based on the attainment of certain gross profit targets by the acquired business through 2014. The total possible undiscounted payments could range from zero to $4.0 million. The goodwill is tax deductible (excluding the portion relating to the contingent consideration liability, which is not deductible until paid). The goodwill is the result of expected synergies from combining the operations of the acquired business with the Company's operations and intangible assets that do not qualify for separate recognition, such as an assembled workforce. There is $1.1 million of revenue from this acquisition included in the Condensed Consolidated Statement of Operations for the three months and nine months ended September 30, 2011.

The fair value of the identifiable intangible assets of $3.0 million, consisting of trade names and customer relationships, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for the trade names and the discounted cash flows method was utilized for the customer relationships. The trade names, $0.1 million, are being amortized over a period of 3 years, and the customer relationships, $2.9 million, are being amortized over a period of 8 years, the estimated lives of the assets.

During the second quarter, the Company acquired a distribution business comprised of two locations for a purchase price of $0.9 million that has been merged into our existing distribution operations.