3. Acquisitions

On October 3, 2011, a subsidiary of the Company acquired substantially all of the assets and assumed certain liabilities of Magnum Products, LLC and certain of its affiliates (collectively, Magnum) for a purchase price, net of cash acquired and inclusive of estimated earn-out payments, of approximately $85,490,000. The acquisition was funded solely by cash on the balance sheet.

Magnum is a supplier of powerful, high quality generator powered light towers, mobile generators and combination power units for a variety of industries and specialties including construction, energy, mining, government, military, and special events. Its products are distributed through international, national and regional equipment rental companies, equipment dealers and construction companies. The Magnum business is a strategic fit for the Company as it provides diversification within the existing business, with the introduction of new engine powered products and distribution channels, while also providing opportunities for future revenue and cost synergies. The 2011 consolidated financial statements include the results of Magnum from October 3, 2011 through December 31, 2011.

The purchase price of $85,490,000 consisted of $83,907,000 paid in cash at closing and $1,583,000 recorded as an estimated liability to the sellers for contingent consideration based upon future performance of a particular product line currently in development, as described below. The cash paid at closing included an estimate of acquired working capital. This estimate will be finalized in early 2012 to reflect actual working capital acquired, which could result in a change in the total purchase price at that time.

The Company has recorded a purchase price allocation based on a fair value appraisal by a third party valuation firm. The goodwill ascribed to this acquisition is deductible for tax purposes. A summary of the fair values assigned to the acquired assets is as follows (dollars in thousands):

Accounts receivable	$	24,309
Inventory		23,763
Prepaid expenses and other current assets		280
Property and equipment		5,164
Goodwill		20,337
Trade name		17,740
Customer relationships		14,740
Patents		1,070
Other intangible assets		2,220
Trade accounts payable		(20,727	)
Accrued expenses		(2,746	)
Other long term liabilities		(2,243	)
Total cash paid, net of $30 cash acquired	$	83,907

Under the acquisition agreement, the purchase price may be increased based upon the performance of a particular product line for the years 2012 through the second quarter of 2017. Based on performance projections available at the date of the acquisition, the Company has recorded estimated contingent consideration of $1,583,000 which is the net present value of the earn-out. The contingent consideration is payable periodically during 2012 through 2017, based upon actual future performance. As of December 31, 2011, there have been no changes to our original estimates.

The acquisition has contributed $38,817,000 and $3,353,000 of net sales and net income, respectively, for the period from October 3, 2011 to December 31, 2011. Transaction costs of approximately $876,000 are included in other expense in the consolidated statement of operations for the year ended December 31, 2011.

The following unaudited pro forma information has been prepared as if the Magnum acquisition had been consummated at January 1, 2010. This information is presented for informational purposes only, and is not necessarily indicative of the operating results that would have occurred if the acquisitions had been consummated as of that date. This information should not be used as a predictive measure of our future financial position, results of operations, or liquidity.

	Year ended December 31,
	2011		2010
Net sales	$	897,892	$	681,278
Net income		334,076		68,369