MERGER WITH THE PPG CHEMICALS BUSINESS

12 Months Ended

Dec. 31, 2014

MERGER WITH THE PPG CHEMICALS BUSINESS

MERGER WITH THE PPG CHEMICALS BUSINESS

2. MERGER WITH THE PPG CHEMICALS BUSINESS

On January 28, 2013, we completed our acquisition of substantially all of the assets and liabilities of the Merged Business and completed the related financings (collectively, the "Transactions"). We manage the Merged Business as part of our chlorovinyls business, and have reported the results of operations of the Merged Business as part of our chlorovinyls segment since January 28, 2013.

The purchase price of the Merged Business of approximately $2.8 billion consisted of: (i) the issuance of approximately 35.2 million shares of our common stock valued at approximately $1.8 billion; (ii) assumed debt of approximately $967.0 million; and (iii) the assumption of other liabilities, including pension liabilities and other postretirement ("OPEB") obligations.

Goodwill recognized from the acquisition of the Merged Business is primarily due to the increase in size and economies of scale of the merged companies, a significant increase in chlorine production flexibility, an increase in natural gas integration and strategic, geographic and product synergies. Approximately $5.9 million of the goodwill recognized in the Merger was deductible for tax purposes. The fair value of the noncontrolling interest in TCI was estimated based on the present value of estimated future cash flows from TCI attributable to our minority partner's ownership percentage of TCI. The allocation of the purchase price to assets acquired and liabilities assumed, is set forth in the table below:

(In millions)	Amounts Recognized as of the Acquisition Date			Measurement Period Adjustments (1)			Final Allocation as of December 31, 2013
Cash and cash equivalents	$	26.7		$	-		$	26.7
Receivables		236.7			(2.4	)		234.3
Inventories		72.0			5.1			77.1
Prepaid expenses and other		11.9			(4.3	)		7.6
Property, plant and equipment		957.3			(30.4)	(2)		926.9
Goodwill		1,454.3			118.4			1,572.7
Intangible assets		1,224.2			(18.4)	(3)		1,205.8
Other assets		42.5			(0.3	)		42.2
Accounts payable		(97.8	)		1.2			(96.6	)
Income taxes payable		(4.7	)		-			(4.7	)
Accrued compensation		(20.6	)		-			(20.6	)
Other accrued taxes		(12.1	)		11.9			(0.2	)
Other accrued liabilities		(58.0	)		(4.5	)		(62.5	)
Deferred income taxes		(614.9	)		(66.5)	(4)		(681.4	)
Pensions and other postretirement benefits		(279.0	)		26.7	(5)		(252.3	)
Other non-current liabilities		(67.9	)		(10.6	)		(78.5	)
Debt assumed		(967.0	)		-			(967.0	)
Noncontrolling interest		(130.3	)		0.3			(130.0	)
Total net assets acquired	$	1,773.3		$	26.2	(6)	$	1,799.5	(7)

(1)	The measurement period adjustments did not have a significant impact on our consolidated net income for the quarters within the year ended December 31, 2013. Therefore, we did not retrospectively adjust those prior periods.
(2)	Primarily consists of the adjustments to the fair value of location-specific property, plant and equipment.
(3)	Primarily consists of the fair value of supply contracts, offset by adjustments to customer relationship intangible assets.
(4)	Deferred income taxes resulting from the revaluation of acquired assets and liabilities.
(5)	Primarily relates to the fair value of pension related assets that were transferred with the Merger and the resulting impact on the funded status of the pension liability.

(6)

Primarily relates to additional consideration based on the final funding status of certain pension plans, partly offset by a favorable net working capital settlement.

(7)

During the year ended December 31, 2014, the Company recorded an immaterial correction of an error related to the overstatement of certain assets and deferred tax liabilities recorded in connection with the acquisition accounting for the Merged Business that were outside of the measurement period. The Company recognized a $0.7 million decrease in the fair value of acquired net assets and a $0.7 million increase to goodwill on the consolidated balance sheet subsequent to the final purchase price allocation as of December 31, 2013. See Note 6 of the Notes to the Consolidated Financial Statements.

Summary Pro Forma Information.    The following unaudited pro forma financial information reflects our consolidated results of operations as if the Merger had taken place on January 1, 2012. The pro forma information includes primarily adjustments for depreciation based on the estimated fair value of the property, plant and equipment acquired in the Merger, amortization of acquired intangible assets and interest expense on the debt we incurred to finance the Transactions. The pro forma information is not necessarily indicative of the results of operations that we would have reported had the Transactions actually closed on January 1, 2012, nor is it necessarily indicative of future results.

	Year Ended December 31,
(In millions, except per share data)	2013			2012
Net sales	$	4,773.7		$	4,977.4
Net income attributable to Axiall	$	162.7	(1)	$	271.8	(2)
Net income per share attributable to Axiall:
Basic	$	2.33		$	3.88
Diluted	$	2.31		$	3.87

(1)	In addition to the normal pro forma adjustments associated with the Merger, this amount excludes: (i) the $25.9 million gain on acquisition of controlling interest in PHH; (ii) $13.4 million related to the inventory fair value acquisition accounting adjustment; and (iii) $11.0 million related to the expensing of financing fees related to a $688.0 million bridge loan used in the Transactions.
(2)	In addition to the normal pro forma adjustments associated with the Merger, this amount includes: (i) the $25.9 million gain on acquisition of controlling interest in PHH; (ii) $13.4 million related to the inventory fair value acquisition accounting adjustment; and (iii) $11.0 million related to the expensing of financing fees related to a $688.0 million bridge loan used in the Transactions.

Disclosure of revenues and earnings of the Merged Business since January 28, 2013 on a stand-alone basis is not practicable as the Merged Business is not being operated as a stand-alone business.