Acquisition

On December 14, 2016, we acquired substantially all the assets of Sotawall, Inc. (now operating under the name Sotawall Limited or "Sotawall") a privately-held company based in the Toronto, Canada area, for approximately $138 million, funded by existing cash and short-term investments of approximately $73 million and by approximately $65 million from our committed revolving line of credit. Sotawall specializes in the design, engineering, fabrication, assembly and installation of unitized curtainwall systems for industrial, commercial and institutional buildings, primarily serving the Canadian and northeastern U.S. geographic regions. Sotawall's results of operations have been included in the consolidated financial statements and within the Architectural Framing Systems segment since the date of acquisition. Those results include $17.8 million of sales, $0.7 million of operating income and de minimis net earnings.

The assets and liabilities of Sotawall were recorded in the consolidated balance sheet and within the Architectural Framing Systems segment as of the acquisition date, at their respective fair values. Fair value is estimated based on one or a combination of income, cost and/or market approaches, as determined based on the nature of the asset or liability, and the level of inputs available. With respect to assets and liabilities, the determination of fair value requires management to make subjective judgments as to projections of future operating performance, the appropriate discount rate to apply, long-term growth rates, etc. (i.e. - unobservable inputs classified as Level 3 inputs under the fair value hierarchy described in Note 5) which affect the amounts recorded in the purchase price allocation. The excess of the consideration transferred over the fair value of the identifiable assets, net of liabilities, is recorded as goodwill, which is indicative of the expected continued growth and development of Sotawall. The purchase price allocation is based on these estimated fair value of assets acquired and liabilities assumed, as follows:



(In thousands)	December 14, 2016
Net working capital	$	10,682
Property, plant and equipment	7,993
Goodwill	27,444
Other intangible assets	91,813
Net assets acquired	$	137,932

Other intangible assets reflect the following:



(In thousands)	Estimated fair value		Estimated useful life (in years)
Technology	$	6,319	10.0
Tradename	12,333		Indefinite
Backlog	12,638		1.5
Customer relationships	60,523		17.0
Total other intangible assets	$	91,813

These fair values are based on preliminary estimates and are subject to change based on finalization of net working capital values, intangible asset valuation and other purchase price adjustments expected to be completed in the first quarter of fiscal 2018. Up to 75 percent of the goodwill is tax deductible. Refer to Note 7 for more information on goodwill and intangible assets.

The following unaudited pro forma information provides the results of operations for the fiscal years ended March 4, 2017 and February 27, 2016, as if the acquisition had been completed at the beginning of fiscal year 2016:



	Pro Forma
(In thousands, except per share data)	2017		2016
Net sales	$	1,196,504	$	1,054,281
Net earnings	100,124		66,203
Earnings per share
Basic	$	3.48	$	2.28
Diluted	$	3.47	$	2.25

Unaudited pro forma information has been provided for comparative purposes only and the information does not necessarily reflect what the combined company's results of operations would have been had the acquisition occurred at the beginning of fiscal year 2016. It also may not be useful in predicting the future results of operations of the combined company. The pro forma information includes the impact of intangible asset amortization of approximately $12.7 million in 2016 and $8.2 million in 2017 (based on historical average exchange rates), which is expected to be recognized in Apogee's results for fiscal 2018 and fiscal 2019, respectively. The information also reflects the pro forma cost of required debt financing but does not reflect the effect of any synergies or integration costs that may result from the acquisition.