Business Acquisition

9 Months Ended

Jun. 30, 2011

Business Acquisition

Business Acquisition

10. Business Acquisition

On December 10, 2010, through its wholly-owned subsidiary, TWF Acquisition, LLC – now known as T&W Forge, LLC ("T&W Forge"), the Company completed the purchase of the forging business and substantially all related operating assets from T&W Forge, Inc. ("TWF"). T&W Forge operates in TWF's Alliance, Ohio facility under a long-term, below market lease arrangement, with an option to purchase the facility at a nominal price. T&W Forge engages in the production and sale of certain metal products and services produced primarily to the specific design requirements of its customers. The products include various forged components used principally in the power generation market. The purchase price for the business and related assets of TWF was approximately $22.6 million, after certain adjustments related principally to the final working capital level. In addition, T&W Forge assumed certain current operating liabilities of TWF.

The purchase transaction is accounted for under the purchase method of accounting. The allocation of the purchase price including amounts attributed to goodwill and intangible assets, all of which belong to the ACM Group, are as follows:

	December 10, 2010  (As Initially Reported)		Measurement Period Adjustments			December 10, 2010  (As Adjusted)
Assets acquired:
Accounts receivable	$	1,317	$	(39	)	$	1,278
Inventory		3,336		(501	)		2,835
Property and equipment		6,536		(314	)		6,222
Intangible assets		8,023		2,400			10,423
Goodwill		5,126		(1,633	)		3,493
Other		69		49			118
		24,407		(38	)		24,369
Liabilities assumed:
Accounts payable and accrued liabilities		1,733		70			1,803
Total purchase price	$	22,674	$	(108	)	$	22,566

The above fair values of assets acquired and liabilities assumed, as initially reported, were based upon appraisals, other studies and additional information available at the time of the acquisition of TWF. Measurement period adjustments reflect new information obtained about facts and circumstances that existed as of the acquisition date. The Company believes that such information provided a reasonable basis for determining the fair values of the assets acquired and liabilities assumed.

The Company's goodwill is not being amortized, but is subject to an annual impairment test. All of the goodwill is expected to be deductible for tax purposes. The following represents the Company's intangible assets by major asset class as of June 30, 2011, all of which are a result of the acquisition of TWF:

	Estimated Useful Life	Original Cost		Accumulated Amortization		Net Book Value
Intangible assets:
Trade name	10 years	$	900	$	50	$	850
Non-compete agreement	5 years		500		56		444
Below market lease	5 years		900		100		800
Customer relationships	10 years		6,800		378		6,422
Order backlog	1 year		1,300		722		578
Transition services agreement	< 1 year		23		23		0
Total intangible assets		$	10,423	$	1,329	$	9,094

Amortization expense associated with the indentified intangible assets is expected to be as follows:

	Amortization Expense
Fiscal year 2011	$	1,917
Fiscal year 2012		1,302
Fiscal year 2013		1,050
Fiscal year 2014		1,050
Fiscal year 2015		1,050

The results of operation of T&W Forge from the date of acquisition are included in the Company's unaudited consolidated condensed statements of operation and are reported in the ACM Group. The following unaudited pro forma information presents a summary of the results of operations for the Company including T&W Forge as if the acquisition had occurred on October 1, 2009:

	Three Months Ended June 30,		Nine Months Ended June  30,
	2010		2011		2010
Net sales	$	23,808	$	80,249	$	72,851
Net income		1,286		6,377		4,454
Net income per share (basic)		0.24		1.21		0.84
Net income per share (diluted)		0.24		1.20		0.83