Note 2:

Acquisition of Luvata HTS

On November 30, 2016, the Company completed its acquisition of a 100 percent ownership interest in the Luvata HTS business for consideration totaling $415.6 million ($388.2 million, net of cash acquired). Operating as Modine’s Commercial and Industrial Solutions (“CIS”) segment, this business is a leading global supplier of coils, coolers and coatings to the heating, ventilation, air conditioning, and refrigeration industry. For the nine months ended December 31, 2017, the Company included $451.6 million of net sales and operating income of $14.3 million within its consolidated statement of operations attributable to CIS operations. For the nine months ended December 31, 2016, the Company included $34.7 million of net sales and an operating loss of $0.3 million attributable to one month of CIS operations.

The Company has completed the purchase price allocation for its acquisition of Luvata HTS. During the first and second quarters of fiscal 2018, the Company recorded measurement-period adjustments which resulted in an increase in goodwill totaling $1.3 million, primarily due to increases to income tax reserves and changes in liabilities for product warranties.

The Company’s allocation of the purchase price for its acquisition of Luvata HTS is as follows:

Cash and cash equivalents	$	27.4
Trade accounts receivable		86.1
Inventories		55.0
Property, plant and equipment		120.4
Intangible assets		130.2
Goodwill		151.9
Other assets		39.1
Accounts payable		(73.7	)
Accrued compensation and employee benefits		(24.3	)
Deferred income taxes		(39.5	)
Pensions		(14.3	)
Other liabilities		(42.7	)
Purchase price	$	415.6

The following unaudited supplemental pro forma information presents the Company’s consolidated results of operations as though the acquisition of Luvata HTS had occurred at the beginning of fiscal 2016. This pro forma financial information is presented for illustrative purposes only and is not considered to be indicative of the operating results that would have been achieved had the acquisition been completed as of the date indicated.

	Three months ended December 31, 2016		Nine months ended December 31, 2016
Net sales	$	439.5	$	1,393.3
Net earnings attributable to Modine		8.5		26.8
Net earnings per share attributable to Modine shareholders:
Basic	$	0.17	$	0.54
Diluted		0.17		0.53

The supplemental pro forma financial information includes adjustments for: (i) quarterly amortization and depreciation expense totaling $3.2 million for acquired tangible and intangible assets, (ii) estimated quarterly interest expense of $3.5 million resulting from acquisition-related borrowings, and (iii) the estimated income tax impacts related to the pro forma adjustments, considering the statutory tax rates within the applicable jurisdictions. In addition, the pro forma financial information assumes that both $8.6 million of fiscal 2017 acquisition-related transaction costs and a $2.9 million inventory purchase accounting adjustment recorded in the third quarter of fiscal 2017 were incurred during fiscal 2016. The pro forma financial information does not reflect achieved or expected cost and revenue synergies.