Business Acquisition and Disposition

9 Months Ended

Sep. 30, 2011

Business Acquisition and Disposition [Abstract]

BUSINESS ACQUISITION AND DISPOSITION

NOTE 2. BUSINESS ACQUISITION AND DISPOSITION

Acquisition

On May 3, 2010, we acquired all of the outstanding common stock of PV Powered, Inc. (“PV Powered”), a privately-held Oregon corporation based in Bend, Oregon, for approximately $90.3 million consisting of 1.0 million shares of our common stock with a market value of approximately $14.7 million and cash payments totaling $75.6 million, net of cash acquired.

PV Powered is a leading manufacturer of grid-tied PV inverters in the residential, commercial and utility-scale markets. PV Powered manufactures high-reliability transformer-based PV inverters utilized in residential, commercial roof top and ground mount systems for the North American market. Its inverters range in size from 30 kilowatts (“kW”) to two megawatts for the commercial market and 1kW to 5kW for the residential market, with market leading efficiency ratings. PV Powered is included in our Solar Energy SBU.

We recorded the acquisition of PV Powered using the acquisition method of accounting and the purchase price was allocated to the tangible assets, intangible assets, and liabilities acquired based on estimated fair values as of the date of acquisition. The excess of the purchase price (consideration transferred) over the respective fair values of identifiable assets and liabilities acquired was recorded as goodwill. The goodwill resulting from the acquisition is not tax deductible. Our purchase price allocation is final as of June 30, 2011.

The components of the fair value of the total consideration transferred for the PV Powered acquisition are as follows (in thousands):

Cash paid to owners	$	76,301
Cash acquired		(724	)
Common stock issued - 997,966 shares		14,690
Total fair value of consideration transferred	$	90,267

The following table summarizes the final fair values of the assets acquired and liabilities assumed in the acquisition (in thousands):

Accounts receivable	$	4,777
Inventories		8,363
Other current assets		277
Deferred tax assets		4,591
Property and equipment		4,065
Deposits and other noncurrent assets		67
Accounts payable		(5,480	)
Accrued liabilities		(2,744	)
Deferred tax liabilities		(18,711	)
Other long-term liabilities		(2,739	)
		(7,534	)
Other intangible assets:
Trademarks		5,277
Technology		28,208
In process research and development		14,868
Customer relationships		2,213
Backlog		720
Total other intangible assets		51,286
Total identifiable net assets		43,752
Goodwill		46,515
Total fair value of consideration transferred	$	90,267

A summary of the intangible assets acquired, amortization method and estimated useful lives follows (in thousands):

			Amortization
	Amount		Method	Useful Life
Trademarks	$	5,277	Accelerated	10 years
Technology		28,208	Accelerated	7 years
In process research and development		14,868
Customer relationships		2,213	Accelerated	7 years
Backlog		720	Straight-line	6 months
	$	51,286

Our amortization of in process research and development does not begin until the specific project is complete and put into production.

Disposition

On October 15, 2010, we completed the sale of our gas flow control business, which includes our Aera^® mass flow control and related product lines, to Hitachi Metals, Ltd. for approximately $43.3 million.

In connection with the closing of this asset disposition, we entered into a Master Services Agreement and a Supplemental Transition Service Agreement (“Transition Services Agreement”) pursuant to which we agreed to provide certain transition services until October 11, 2011. The Transition Services Agreement has been extended through March 2012.

In accordance with authoritative accounting guidance for reporting discontinued operations, the revenues and costs associated with our gas flow control business are excluded from income from continuing operations and are presented as income from discontinued operations, net of taxes, in our Condensed Consolidated Statements of Operations.

Operating results from discontinued operations are as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2011			2010		2011			2010
Sales	$	10,726		$	15,722	$	21,280		$	42,671
Cost of sales		10,288			11,488		20,948			29,206
Gross profit		438			4,234		332			13,465
Operating expenses:
Research and development		1			922		6			1,814
Selling, general and administrative		56			480		196			2,692
Amortization of intangible assets		—			—		—			246
Total operating expenses		57			1,402		202			4,752
Operating income (loss) from discontinued operations		381			2,832		130			8,713
Other income (loss)		(885	)		—		(117	)		—
Income (loss) from discontinued operations before income taxes		(504	)		2,832		13			8,713
Income taxes on income from discontinued operations		75			440		378			2,792
Income (loss) from discontinued operations, net of income taxes	$	(579	)	$	2,392	$	(365	)	$	5,921