Business Acquisitions

9 Months Ended

Sep. 30, 2012

Business Acquisitions

Business Acquisitions

12.  Business Acquisitions

On April 29, 2011, the Company completed the acquisition of Socla and the related water controls business of certain other entities controlled by Danfoss A/S, in a share and asset purchase transaction.  The final consideration paid was EUR 116.3 million.  The purchase price was financed with cash on hand and euro-based borrowings under our Credit Agreement.  The purchase price was equal to approximately $172.4 million based on the exchange rate of Euro to U.S. dollars as of April 29, 2011.

The Company accounted for the transaction as a business combination.  The Company completed a purchase price allocation that resulted in the recognition of $79.7 million in goodwill and $39.9 million in intangible assets.  Intangible assets consist primarily of customer relationships with estimated lives of 10 years and trade names with either 20-year lives or indefinite lives.  The goodwill is attributable to the workforce of Socla and the synergies that are expected to arise as a result of the acquisition.  The goodwill is not expected to be deductible for tax purposes.

Supplemental pro-forma information

Had the Company completed the acquisition of Socla at the beginning of 2011, net sales, net income from continuing operations and earnings per share would have been as follows:

	Nine Months Ended
Amounts in millions (except per share information)	October 2, 2011
Net sales	$	1,123.8
Net income from continuing operations	$	53.9
Net income per share:
Basic EPS – continuing operations	$	1.43
Diluted EPS – continuing operations	$	1.43

Net income from continuing operations for the nine months ended October 2, 2011, was adjusted to include $0.7 million of net interest expense related to the financing and $0.8 million of net amortization expense resulting from the estimated allocation of purchase price to amortizable tangible and intangible assets.  Net income for the nine months ended October 2, 2011, was also adjusted to exclude $4.7 million, of net acquisition-related charges and third-party costs.

On January 31, 2012, the Company completed the acquisition of tekmar Control Systems (tekmar) in a share purchase transaction.  A designer and manufacturer of control systems used in heating, ventilation, and air conditioning application, tekmar is expected to enhance the Company’s hydronic systems product offerings in the U.S. and Canada.  The initial purchase price paid was CAD $18.0 million, with an earn-out based on future earnings levels being achieved.  The initial purchase price paid was equal to approximately $17.8 million based on the exchange rate of Canadian dollar to U.S. dollars as of January 31, 2012.  The total purchase price will not exceed CAD $26.2 million.  Sales for tekmar in 2011 approximated $11.0 million.  The results of tekmar are included in the Company’s North America segment since the acquisition date and are not material to the Company’s consolidated financial statements.  See Note 2 for additional information on purchase price allocations.