2. Business Combinations and Segment Information

Business Combinations

On September 1, 2015 BTD-Illinois, a wholly owned subsidiary of BTD, acquired the assets of Impulse of Dawsonville, Georgia for $30.8 million in cash. A post-closing reduction in the purchase price of $1.5 million was agreed to in June 2016 resulting in an adjusted purchase price of $29.3 million. The acquired business, operating under the name BTD-Georgia, is a full-service metal fabricator located 30 miles north of Atlanta, Georgia, which offers a wide range of metal fabrication services ranging from simple laser cutting services and high volume stamping to complex weldments and assemblies for metal fabrication buyers and original equipment manufacturers. In addition to serving some of BTD’s existing customers from a location closer to the customers’ manufacturing facilities, this acquisition provides opportunities for growth in new and existing markets for BTD with complementing production capabilities that expand the capacity of services offered by BTD. Pro forma results of operations have not been presented for this acquisition because the effect of the acquisition was not material to the Company.

Below is condensed balance sheet information disclosing the final allocation of the purchase price assigned to each major asset and liability category of BTD-Georgia:

(in thousands)
Assets:
Current Assets	$	4,906
Goodwill		6,083
Other Intangible Assets		6,270
Other Amortizable Assets		1,380
Fixed Assets		13,649
Total Assets	$	32,288
Liabilities:
Current Liabilities	$	2,971
Lease Obligation		11
Total Liabilities	$	2,982
Cash Paid	$	29,306

The assignment of asset values is based on the final purchase price. In the fourth quarter of 2015, the Company elected to early adopt ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which requires that an acquirer in a business combination recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The purchase price adjustment agreed to in June 2016 resulted in a $2.2 million reduction to the value of acquired goodwill, a $0.8 million increase in the fair value of acquired customer relationships and a $0.1 million increase in acquired liabilities. The changes in the value of customer relationships had an insignificant impact on the Company’s consolidated net income in 2016 related to a change in amortization expense that would have been recorded in 2015 had the adjusted asset values been established on acquisition in 2015.

Segment Information

The Company's businesses have been classified into three segments to be consistent with its business strategy and the reporting and review process used by the Company’s chief operating decision makers. These businesses sell products and provide services to customers primarily in the United States. The three segments are: Electric, Manufacturing and Plastics.

Electric includes the production, transmission, distribution and sale of electric energy in Minnesota, North Dakota and South Dakota by OTP. In addition, OTP is a participant in the Midcontinent Independent System Operator, Inc. (MISO) markets. OTP’s operations have been the Company’s primary business since 1907.

Manufacturing consists of businesses in the following manufacturing activities: contract machining, metal parts stamping, fabrication and painting, and production of material and handling trays and horticultural containers. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States.

Plastics consists of businesses producing polyvinyl chloride (PVC) pipe at plants in North Dakota and Arizona. The PVC pipe is sold primarily in the upper Midwest and Southwest regions of the United States.

OTP is a wholly owned subsidiary of the Company. All of the Company’s other businesses are owned by its wholly owned subsidiary, Varistar Corporation (Varistar). The Company’s corporate operating costs include items such as corporate staff and overhead costs, the results of the Company’s captive insurance company and other items excluded from the measurement of operating segment performance. Corporate assets consist primarily of cash, prepaid expenses, investments and fixed assets. Corporate is not an operating segment. Rather, it is added to operating segment totals to reconcile to totals on the Company’s consolidated financial statements.

No single customer accounted for over 10% of the Company’s consolidated revenues in 2015. All of the Company’s long-lived assets are within the United States and sales within the United States accounted for 98.5% and 98.2% of its operating revenues for the respective three-month periods ended September 30, 2016 and 2015, and 98.6% and 97.2% of its operating revenues for the respective nine-month periods ended September 30, 2016 and 2015.

The Company evaluates the performance of its business segments and allocates resources to them based on earnings contribution and return on total invested capital. Information for the business segments for the three- and nine-month periods ended September 30, 2016 and 2015 and total assets by business segment as of September 30, 2016 and December 31, 2015 are presented in the following tables:

Operating Revenue

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2016			2015			2016			2015
Electric	$	102,723		$	100,567		$	313,642		$	305,078
Manufacturing		52,171			52,460			170,443			160,492
Plastics		42,292			47,025			122,841			125,531
Intersegment Eliminations		(11	)		(29	)		(27	)		(84	)
Total	$	197,175		$	200,023		$	606,899		$	591,017

Interest Charges

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2016		2015		2016		2015
Electric	$	6,304	$	6,069	$	18,744	$	18,273
Manufacturing		974		900		2,972		2,578
Plastics		273		257		796		782
Corporate and Intersegment Eliminations		475		504		1,484		1,542
Total	$	8,026	$	7,730	$	23,996	$	23,175

Income Tax Expense—Continuing Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2016			2015			2016			2015
Electric	$	4,730		$	4,761		$	11,262		$	9,995
Manufacturing		182			855			2,992			2,516
Plastics		1,577			2,206			5,206			6,159
Corporate		(1,326	)		(1,301	)		(3,722	)		(4,068	)
Total	$	5,163		$	6,521		$	15,738		$	14,602

Net Income (Loss)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2016			2015			2016			2015
Electric	$	12,513		$	12,921		$	34,199		$	34,351
Manufacturing		1,246			1,714			6,108			4,810
Plastics		2,346			3,534			7,983			9,919
Corporate		(1,511	)		(2,460	)		(3,650	)		(5,933	)
Discontinued Operations		22			(317	)		171			1,616
Total	$	14,616		$	15,392		$	44,811		$	44,763

Identifiable Assets

	September 30,		December 31,
(in thousands)	2016		2015
Electric	$	1,575,790	$	1,520,887
Manufacturing		168,705		173,860
Plastics		86,731		81,624
Corporate		37,432		42,312
Discontinued Operations		249		—
Total	$	1,868,907	$	1,818,683