Business Combinations

12 Months Ended

Jan. 31, 2017

Business Combinations

Business Combinations

2. BUSINESS COMBINATIONS

On May 17, 2016, the Company acquired Herndon Aerospace & Defense LLC (“Herndon”), an aftermarket aerospace supply chain management and consumables hardware distributor servicing principally aftermarket military depots as well as the commercial aerospace aftermarket for an aggregate purchase price of $220.8 (net of cash acquired). The Company adjusted the allocation of the Herndon purchase price to increase goodwill, deferred taxes and liabilities by $6.1,  $2.6 and $9.0, respectively, related to the Company’s preliminary purchase price allocation. The impact of the purchase price adjustment to the Company’s consolidated statement of earnings from the date of acquisition was not material.

Based on the Company’s preliminary purchase price allocation, the excess of the purchase price over the fair value of the identifiable assets acquired approximated $119.7, of which $68.9 was allocated to identifiable intangible assets consisting of customer contracts and relationships and covenants not to compete, and $50.8 is included in goodwill. The useful life assigned to the customer contracts and relationships is 20 years, and the covenants not to compete are being amortized over their contractual periods of five years.

The Herndon acquisition was accounted for as a purchase under FASB ASC 805, Business Combinations (“ASC 805”). The assets purchased and liabilities assumed have been reflected in the accompanying consolidated balance sheet as of January 31, 2017. The results of operations for the Herndon acquisition are included in the accompanying consolidated and combined statements of earnings from the date of acquisition. The valuation of certain assets, principally inventories and tax-related items, related to the acquisition is not yet complete, and as such, the Company has not yet finalized its allocation of the purchase price for the acquisition.

The following table summarizes the current estimates of fair values of assets acquired and liabilities assumed in the Herndon acquisition in accordance with ASC 805, which are currently recorded based on management’s estimates as follows:

Accounts receivable-trade	$	12.3
Inventories		103.7
Other current and non-current assets		3.7
Property and equipment		2.1
Goodwill		50.8
Identified intangibles		68.9
Accounts payable		(9.7)
Other current and non-current liabilities		(11.0)
Total consideration paid	$	220.8

Goodwill and intangible assets of $114.3 are expected to be deductible for tax purposes.

The Company has begun integrating Herndon into its ASG segment systems. As a result, it is not practicable to report stand-alone revenues and operating earnings of the acquired business since the acquisition date.

On a pro forma basis to give effect to the Herndon acquisition, as if it occurred on February 1, 2015, revenues and net earnings for the years ended January 31, 2017 and 2016 would have been as follows:

	UNAUDITED
	YEAR ENDED
	January 31, 2017		January 31, 2016
	Pro forma		Pro forma
Revenues	$	1,544.3	$	1,699.8
Net earnings		51.7		(376.7)
Earnings (loss) per diluted share		0.99		(7.21)