3. Acquisitions

2013 Activity

On October 3, 2013, the Company acquired Yankee Candle Investments LLC (“Yankee Candle”), a leading specialty-branded premium scented candle company for a purchase price of approximately $542 (the “YCC Acquisition”). The total value of the YCC Acquisition, including debt assumed and/or repaid, was approximately $1.8 billion, subject to adjustment. In addition to the initial cash purchase price payment, as of December 31, 2013, contingent purchase price payments of up to $30.0 may be paid based on the future financial performance of the acquired business. The purchase price includes $27.0 for the estimated fair value of this contingent consideration. The YCC Acquisition is expected to extend the Company’s portfolio of market-leading, consumer brands in niche, seasonal staple categories, while creating opportunities in cross-selling and broadening the global distribution platform. Yankee Candle is reported in the Company’s Branded Consumables segment and is included in the Company’s results of operations from October 3, 2013. The Company’s 2013 consolidated statement of operations includes approximately $344 of net sales and approximately $28 of operating earnings related to Yankee Candle.

The excess of the cost of the YCC Acquisition over the net of amounts assigned to the fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company’s preliminary fair valuation of assets acquired and liabilities assumed, which is subject to further refinement primarily related to the fair valuation of certain income tax amounts, is based on all available information, including, in part, certain valuations and other analyses. Based on this preliminary fair valuation, the purchase price is allocated as follows:


Preliminary Purchase Price Allocation (in millions):
Preliminary value assigned:
Accounts receivable	$	89.2
Inventories		205.5
Current deferred tax asset		13.0
Other current assets		16.3
Property, plant and equipment		129.9
Intangible assets		1,151.0
Goodwill		798.7
Other assets		10.9
Accounts payable		(49.0	)
Other current liabilities		(56.0	)
Long-term debt		(1,291.4	)
Non-current deferred tax liability		(456.6	)
Other liabilities		(20.0	)

Total purchase price, net of cash acquired	$	541.5

Pro forma financial information (unaudited)

The following unaudited pro forma financial information presents the combined results of operations of the Company and Yankee Candle as if the YCC Acquisition had occurred on January 1, 2012. The pro forma results presented below for 2013 and 2012 combine the historical results of the Company and Yankee Candle for 2013 and 2012. The unaudited pro forma financial information is not intended to represent or be indicative of the Company’s consolidated results of operations or financial condition that would have been reported had the YCC Acquisition been completed as of January 1, 2012 and should not be taken as indicative of the Company’s future consolidated results of operations or financial condition. Pro forma adjustments are tax-effected at the Company’s estimated statutory tax rate of 38%.


(in millions, except per share data)	2013		2012
Net sales	$	7,893.4	$	7,540.3
Net income		274.4		276.3
Earnings per share:
Basic	$	2.19	$	2.06
Diluted	$	2.17	$	2.05

The unaudited pro forma financial information for 2013 and 2012 include $4.4 for the amortization of purchased intangibles from the YCC Acquisition based on the preliminary purchase price allocation. The unaudited pro forma financial information for 2012 also includes $82.6 of non-recurring charges related to the YCC Acquisition, which are comprised of charges for the fair market value adjustment for manufacturer’s profit in inventory and other transaction costs.

Other

For 2013 and 2012, cost of sales includes charges of $89.8 and $6.0, respectively, for the purchase accounting adjustment for the elimination of manufacturer’s profit in inventory related to acquisitions.

For 2013 and 2012, SG&A includes $2.8 and $3.5, respectively, in transaction costs related to acquisitions.