Note Q – Acquisitions

On September 30, 2014, the Company acquired 100 percent of the voting interest of Northern Technical, a Limited Liability Corporation that manufactures gas turbine inlet air filtration systems and replacement filters. Total consideration for the transaction was approximately $98.1 million. Based upon a preliminary acquisition valuation, the Company acquired $8.3 million of intangible assets that had estimated useful lives ranging from six months to 7 years at the time of acquisition, $32.2 million of net tangible assets, and $59.2 million of goodwill. Acquired goodwill is not deductible for tax purposes. The Company is currently in the process of finalizing the valuation of the assets acquired and liabilities assumed. The actual allocation of the final purchase price and the resulting effect on income from operations may differ from the unaudited amounts included herein. The Company expects to finalize the purchase price allocation within one year of the purchase date. Northern Technical’s results of operations are reported as part of the Gas Turbine Products operating segment in the Industrial Products reporting segment.

The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed at the date of acquisition of Northern Technical:


(Thousands of dollars)
Cash and cash equivalents	$ 431
Accounts receivable	1,083
Inventories	7,775
Other current assets	934
Property, plant, and equipment, net	21,829
Goodwill	59,177
Intangible assets, net	8,257
Other assets and deferred taxes	221
Total assets acquired	99,707

Trade accounts payable	149
Other current liabilities	1,508
Total liabilities assumed	1,657
Net assets acquired	$ 98,050

Subsequent to October 31, 2014, the Company recorded a $1.0 million working capital adjustment in accordance with the share purchase agreement. The Company received cash for this adjustment, which reduced the purchase price and goodwill. The adjustment was recorded in the second quarter. The Company anticipates potential additional adjustments pending completion of the intangible assets valuation and finalization of the acquisition accounting. These adjustments are not expected to have a material impact on the Company’s consolidated financial statements.

Pro forma results associated with the acquisition of Northern Technical are not provided as the Company has concluded this acquisition is not material.