ACQUISITION OF WALKER GROUP HOLDINGS LLC

12 Months Ended

Dec. 31, 2012

Acquisition Of Walker Group Holdings Llc [Abstract]

ACQUISITION OF WALKER GROUP HOLDINGS LLC

3. ACQUISITION OF WALKER GROUP HOLDINGS LLC

On May 8, 2012, the Company completed the acquisition (the “Walker Acquisition”) of all the equity interests of Walker Group Holdings LLC (“Walker”) from Walker Group Resources LLC, the parent of Walker (“Seller”), pursuant to the Purchase and Sale Agreement, dated March 26, 2012, by and among the Company, Walker and Seller (the “Purchase and Sale Agreement”). The aggregate consideration paid by the Company for the Walker Acquisition was $375.0 million in cash, subject to post-closing purchase price adjustments related to the acquired working capital. The Company financed the Walker Acquisition and related fees and expenses using the proceeds of the Company’s offering of 3.375% Convertible Senior Notes due 2018 and the Company’s borrowings under the Term Loan Credit Agreement (as described in further detail in Note 6).

Walker is a manufacturer of liquid-transportation systems and engineered products based in New Lisbon, Wisconsin. Walker manufacturing operations are integrated into the Company’s Diversified Products Segment while Walker retail operations are integrated into the Retail Segment in a manner that is consistent with its focus to leverage operational and market synergies. Walker has manufacturing facilities for its liquid-transportation products in New Lisbon, Wisconsin; Fond du Lac, Wisconsin; Kansas City, Missouri; and Queretaro, Mexico with parts and service centers in Houston, Texas; Baton Rouge, Louisiana; Findlay, Ohio; Chicago, Illinois; Mauston, Wisconsin; West Memphis, Arkansas; and Ashland, Kentucky. Manufacturing facilities for Walker’s engineered products are located in New Lisbon, Wisconsin; Elroy, Wisconsin; and Huddersfield, United Kingdom with parts and service centers in Tavares, Florida; Dallas, Texas; and Philadelphia, Pennsylvania.

The Company incurred various costs related to the Walker Acquisition including fees paid to an investment banker for acquisition services and the related bridge financing commitment as well as professional fees for diligence, legal and accounting totaling $14.1 million. These costs have been recorded as Acquisition Expenses in the Condensed Consolidated Statements of Operations.

The aggregate purchase price of $375.0 million was allocated to the opening balance sheet of Walker at May 8, 2012, the date of acquisition, which is still preliminary and subject to adjustment as, follows (in thousands):

Cash	$	10,982
Current assets		93,409
Property, plant and equipment		32,541
Intangibles		162,800
Deferred income taxes		4,640
Goodwill		146,444
Total assets	$	450,816
Current liabilities	$	(74,722	)
Deferred income taxes		(1,100	)
Total liabilities	$	(75,822	)
	$	374,994
Acquisition, net of cash acquired	$	364,012

Intangible assets of $162.8 million were recorded as a result of the acquisition. The intangible assets preliminarily consist of the following (in thousands):

	Amount		Useful Life
Backlog	$	900		Less than 1 year
Tradenames and Trademarks		27,600		20 years
Technology		15,300		12 years
Customer relationships		119,000		10 years
	$	162,800

Goodwill of $146.4 million was preliminarily recorded as a result of the Walker Acquisition in the Diversified Products and Retail segments. Goodwill is comprised of operational synergies that are expected to be realized in both the short and long-term and the opportunity to enter new market sectors with higher margin potential which will enable us to deliver greater value to our customers and shareholders. The Company expects the amount recorded as goodwill for the Walker Acquisition to be fully deductible for tax purposes.

Unaudited Pro forma Results

The results of Walker are included in the Consolidated Statements of Operations from the date of acquisition, including $270.1 million and $34.3 million of revenue and net income, respectively, for the year ended December 31, 2012. The following unaudited pro forma information is shown below as if the acquisition of Walker had been completed as of the beginning of the earliest period presented (in thousands, except per share amounts):

	Year Ended December 31,
	2012		2011
Sales	$	1,597,920	$	1,530,922
Operating income	$	98,019	$	52,213
Net income	$	123,030	$	17,428
Basic net income per share	$	1.79	$	0.25
Diluted net income per share	$	1.78	$	0.25

The information presented above is for informational purposes only and is not necessarily indicative of the actual results that would have occurred had the acquisition been consummated at January 1, 2011, nor is it necessarily indicative of future operating results of the combined companies under the ownership and management of the Company.