NOTE 2. ACQUISITIONS

NESTLÉ PURINA PETCARE

On September 1, 2011, we acquired the metal container self-manufacturing assets of Nestlé Purina PetCare Company, or Purina Steel Can, for a purchase price of $25.0 million which we funded with cash on hand. We applied the acquisition method of accounting and recognized assets acquired and liabilities assumed at fair value as of the acquisition date. For this acquisition, we recognized goodwill of $6.3 million and a customer relationship intangible asset of $6.0 million. Purina Steel Can’s results of operations have been included in our metal container business since the acquisition date and were not significant since such date.

GRAHAM PACKAGING

In June 2011, Graham Packaging Company Inc., or Graham Packaging, terminated our definitive merger agreement and paid us a termination fee of $39.5 million in accordance with the terms of such merger agreement. The proceeds from the termination fee and costs associated with corporate development activities have been recorded in selling, general and administrative expenses in the Consolidated Statement of Income for the year ended December 31, 2011.

VOGEL & NOOT

On March 1, 2011, we acquired the metal container operations of Vogel & Noot Holding AG, or VN, which is headquartered in Vienna, Austria. VN manufactures metal food and general line containers, with manufacturing facilities in Central and Eastern Europe and Asia which includes several new facilities in developing Eastern countries scheduled to become operational in the near term. We acquired these operations for a total purchase price of €212.4 million ($292.7 million translated at the U.S. dollar exchange rate at the date of acquisition), net of cash acquired. A portion of the purchase price, with an acquisition date fair value of €35.6 million ($49.0 million translated at the U.S. dollar exchange rate at the date of acquisition), is payable in March 2012 and included in our Consolidated Balance Sheet as accrued liabilities as of December 31, 2011. We funded the purchase price for this acquisition from Euro denominated revolving loan borrowings under our previous senior secured credit facility.

The VN acquisition represents a strategically important acquisition for us, providing us with an opportunity to expand our metal container franchise as we partner with our global customers to support their growth in the Central and Eastern European markets and in other Eastern countries. VN, which employs approximately 1,400 employees, had annual net sales of approximately $310 million for the year ended December 31, 2010. The acquired VN operations have been combined with our pre-existing U.S. metal food container operations to form our metal containers business segment (see Note 16).

The initial purchase price has been allocated to assets acquired and liabilities assumed based on estimated fair values at the date of acquisition using valuation techniques including the income, cost and market approaches. The purchase price allocation is preliminary and subject to change pending a final valuation of the assets and liabilities, including property, plant and equipment and intangible assets, and the related tax impact of any adjustments to such valuations. Based on revised estimates of fair value of certain assets and liabilities from our preliminary purchase price allocation presented in our Quarterly Report on Form 10-Q for the period ended March 31, 2011, we increased goodwill by $4.9 million.

The allocated fair value of assets acquired and liabilities assumed are summarized as follows (in thousands):


Trade accounts receivable	$	73,234
Inventories		92,800
Property, plant and equipment		210,322
Other intangible assets		22,732
Other assets		11,044
Trade accounts payable and accrued liabilities		(105,533	)
Debt		(77,238	)
Other liabilities		(40,250	)

Total identifiable net assets		187,111
Goodwill		56,577

Cash paid at closing, net of cash acquired	$	243,688

Goodwill of $56.6 million consists largely of our increased capacity to serve our global customers and achieve operational synergies and has been assigned to our metal containers segment. None of the goodwill is expected to be deductible for tax purposes. Other intangible assets consist of customer relationships of $19.3 million with an estimated remaining life of 20 years and a trade name of $3.4 million with an estimated remaining life of 10 years. Acquired property, plant and equipment are being depreciated on a straight-line basis with estimated remaining lives of up to 35 years.

Our consolidated results of operations for the year ended December 31, 2011 included the results for VN since the acquisition date. Net sales from the VN operations of $269.4 million were included in our Consolidated Statement of Income for the year ended December 31, 2011. VN’s results of operations since the acquisition date, which were not significant, included the pre-tax negative impact of $5.5 million of expense related to the inventory write-up for VN as a result of purchase accounting in connection with the acquisition.

PRO FORMA INFORMATION

The following unaudited pro forma financial information includes our historical results of operations for the year ended December 31, 2011 and 2010 and gives pro forma effect to the VN acquisition as if it had been completed as of January 1, 2010. The pro forma results of operations include interest expense related to incremental borrowings used to finance the VN acquisition and adjustments to depreciation and amortization expense for the valuation of property, plant and equipment and intangible assets. In addition, net income for the year ended December 31, 2010 includes the impact of the initial inventory write-up and acquisition costs. The pro forma results of operations do not give effect to potential synergies or additional costs resulting from the integration of VN with our existing operations.

The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations or financial condition that would have been reported had the VN acquisition been completed as of the beginning of the periods presented, nor should it be taken as indicative of our future consolidated results of operations or financial condition.

Unaudited pro forma financial information for the years ended December 31:


	2011		2010
	(Dollars in thousands, except per share data)
Net sales	$	3,554,747	$	3,381,471
Net income	$	198,824	$	161,023
Earnings per share:
Basic net income per share	$	2.84	$	2.12
Diluted net income per share	$	2.83	$	2.10

DGS

On March 1, 2011, we acquired the twist-off metal closure business of DGS S.A. in Poland, or DGS. The purchase price of $20.7 million, net of cash acquired, was primarily funded with foreign bank revolving loan borrowings. We applied the acquisition method of accounting and recognized assets acquired and liabilities assumed at fair value as of the acquisition date. For this acquisition, we recognized goodwill of $8.1 million and a customer relationship intangible asset of $2.9 million. DGS’s results of operations have been included in our closures business since the acquisition date and were not significant since such date.

IPEC GLOBAL, INC.

In November 2010, we acquired all of the outstanding common stock and other equity interests of IPEC Global, Inc., or IPEC, a leading plastic closure manufacturer serving primarily the North American dairy and juice markets. The purchase price of $52.3 million, net of cash acquired, was primarily funded with cash on hand. Contingent consideration of $3.0 million is payable in 2012 as determined under certain performance criteria for the year ended December 31, 2011. We applied the acquisition method of accounting and recognized assets acquired and liabilities assumed at fair value as of the acquisition date. We recognized goodwill of $27.1 million and a customer relationship intangible asset of $19.0 million. IPEC’s results of operations have been included in our closures business since the acquisition date.