Acquisitions

On February 20, 2014, the Company completed the acquisition of certain industrial filtration businesses of Andrew Industries Limited, an Altham, United Kingdom based corporation. The Industrial Filtration business serves a global customer base in the manufacture of non-woven felt filtration media and filter bags used primarily in industrial air filtration applications including power, cement, asphalt, incineration, food and pharmaceutical. This business, which strengthened the Company’s position as an industry leading, global provider of filtration and engineered materials products, added complementary and new technologies and diversified the Company’s end markets and geographic base. The Company acquired the Industrial Filtration business for $86.9 million in cash (including cash acquired of $7.5 million and a post-closing adjustment payment of $0.2 million to Andrew Industries Limited) and with no debt being acquired. The purchase price was financed with a combination of cash on hand and $60.0 million of borrowings through the Company’s amended $100 million credit facility.

For the year ended December 31, 2014, the Company incurred $2.6 million of transaction related costs. These costs include investment banker fees, legal fees and other professional services fees to complete the transaction and have been recognized in the Company’s Consolidated Statements of Operations as corporate office selling, product development and administrative expenses.

The operating results of the Industrial Filtration business have been included in the Consolidated Statements of Operations since February 20, 2014, the date of the acquisition. The Industrial Filtration business is being reported as a separate reportable segment. From the date of the acquisition through December 31, 2014, the Industrial Filtration segment reported net sales and operating income of $112.2 million and $6.4 million, respectively. Operating income from the date of the acquisition through the year ended December 31, 2014 included $2.1 million of purchase accounting inventory fair value step-up adjustments in cost of sales upon the sale of inventory. The total purchase accounting inventory fair value step-up adjustment included in the balance sheet at the acquisition date was $2.1 million.

The following table summarizes the fair values of identifiable assets acquired and liabilities assumed at the date of the acquisition:



In thousands
Cash	$	7,493
Accounts Receivable	26,779
Inventory	25,046
Other current assets	2,894
Property, plant and equipment	38,780
Deferred Taxes	2,501
Intangible assets (Note 5)	5,596
Goodwill (Note 5)	3,943
Total assets acquired	113,032

Other liabilities	(18,002		)
Deferred taxes	(8,130		)
Total liabilities assumed	(26,132		)
Net assets acquired	$	86,900

The final purchase price allocation was subject to post-closing adjustments pursuant to the terms of the Sale and Purchase Agreement with Andrews Industries Limited. As a result, in the third quarter of 2014, the Company paid an additional $0.2 million to Andrews Industries Limited, representing the final post-closing adjustment.

The following table reflects the unaudited pro forma operating results of the Company for years ended December 31, 2014 and December 31, 2013, which give effect to the acquisition of Industrial Filtration as if it had occurred on January 1, 2013. The pro forma information includes the historical financial results of the Company and Industrial Filtration. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2013, nor are they intended to be indicative of results that may occur in the future.The pro forma information does not include the effects of any synergies related to the acquisition.



	(Unaudited Pro Forma)
	For The Years Ended December 31,
In thousands	2014		2013
Net Sales	$	553,345	$	525,134
Net Income	$	26,302	$	21,500

Earnings per share:
Basic	$	1.58	$	1.30
Diluted	$	1.55	$	1.27

Pro forma earnings during the year ended December 31, 2014 were adjusted to exclude non-recurring items such as acquisition-related costs of $2.6 million and expense related to the fair value adjustment to inventory of $2.1 million, and to include additional amortization of the acquired Industrial Filtration intangible assets recognized at fair value in purchase accounting as well as additional interest expense associated with borrowings under the Company’s Amended Credit Facility. No amount is included in the pro forma earnings during the year ended December 31, 2014 related to inventory fair value adjustments which would have been recognized in cost of sales as the corresponding inventory would have been completely sold during 2013.

Pro forma earnings during the year ended December 31, 2013 were adjusted to include acquisition-related costs of $2.6 million and expense of $2.6 million related to the amortization of the fair value adjustments to inventory and additional amortization of the acquired Industrial Filtration intangible assets recognized at fair value in purchase accounting as well as $0.9 million of interest expense associated with borrowings under the Company’s Amended Credit Facility. Pro forma earnings during the year ended December 31, 2013 were adjusted to exclude acquisition-related costs of $1.2 million from 2013 which would have been included in the year ended December 31, 2012 if the acquisition had been effective January 1, 2013.