Acquisitions and Divestitures

In August 2012, the Company sold all of its assets of Precision Converting, LLC, doing business as Brady Medical, in Mesquite, Texas. Brady Medical specialized in manufacturing and converting die-cut products for the medical and diagnostic industry. Brady Medical had operations in the Company’s Americas segment. The Company received proceeds of $3,378 for this business, of which $3,018 was in cash and $360 was in non-cash consideration. The non-cash consideration consisted of an escrow account to be released upon the terms of the agreement, which is classified within “Other Long Term Assets” on the Condensed Consolidated Balance Sheets. The transaction resulted in a pre-tax loss of ($3,675), which was accounted for during the three month period ended October 31, 2012.

In October 2012, the Company sold certain assets of its Varitronics business, an education technology solutions business. Varitronics had operations in the Company’s Americas segment. The Company received proceeds of $8,410 for this business, of which $7,160 was in cash and $1,250 was in the form of a promissory note. The promissory note is classified within “Other Long Term Assets” on the Condensed Consolidated Balance Sheets. The transaction resulted in a pre-tax gain of $237, which was accounted for during the three month period ended October 31, 2012.

The Brady Medical and Varitronics divestitures are part of the Company’s continued long-term strategy to focus resources on businesses with a clear path to sustainable organic growth and profitability.

On December 28, 2012, the Company acquired all of the outstanding shares of Precision Dynamics Corporation ("PDC"), a manufacturer of identification products primarily for the healthcare sector headquartered in Valencia, California. PDC is being reported within the Company's Americas segment. Net sales and the net loss attributable to PDC from the acquisition date through January 31, 2013 were approximately $16,068 and ($1,239), respectively. The net loss attributable to PDC is primarily due to $1,530 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. Initial financing for this acquisition consisted of $220,000 from the Company's revolving loan agreement with a group of six banks, and the balance from cash on hand. Prior to January 31, 2013, the Company repaid $112,472 of the borrowing on the credit facility with cash on hand. The Company incurred $3,600 in acquisition-related expenses during the six months ended January 31, 2013.

The Company acquired PDC to create an anchor position in the healthcare sector, consistent with the Company's mission to identify and protect premises, products and people. PDC's large customer base, strong channels to market, and broad product offering provide a strong foundation to build upon PDC's market position.

The table below details a preliminary allocation of the PDC purchase price:



Fair values:
	Cash and cash equivalents	$	12,904
	Accounts receivable — net	21,178
	Total inventories	16,788
	Prepaid expenses and other current assets	3,915
	Goodwill	189,942
	Other intangible assets	108,300
	Other assets	483
	Property, plant and equipment	18,010
	Accounts payable	(10,386		)
	Wages and amounts withheld from employees	(4,234		)
	Taxes, other than income taxes	(600		)
	Accrued income taxes	(57		)
	Other current liabilities	(4,704		)
	Other long-term liabilities	(37,878		)
		313,661
	Less: cash acquired	(12,904		)
	Fair value of total consideration transferred	$	300,757

The final purchase price allocation is subject to post-closing adjustments pursuant to the terms of the merger agreement with PDC and to completion of final valuation of the assets acquired and liabilities assumed. The final valuation is expected to be completed as soon as is practicable but no later than 12 months after the closing date of the acquisition. The intangible assets consist of a customer relationship of $101,500, which is being amortized over a life of 10 years, and a definite-lived trademark of $6,800, which is being amortized over a life of 3 years. The goodwill acquired of $189,942 is not tax deductible.

The following table reflects the unaudited pro forma operating results of the Company for the three and six months ended January 31, 2013 and 2012, which give effect to the acquisition of PDC as if it had occurred at the beginning of fiscal 2012, after giving effect to certain adjustments, including amortization of intangible assets, interest expense on acquisition debt, and income tax effects. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations which may occur in the future or that would have occurred had the acquisitions been effected on the date indicated, nor are they necessarily indicative of the Company's future results of operations.



	Three months ended January 31,						Six Months Ended January 31,
	2013			2012			2013		2012
Net sales, as reported	$	324,182		$	320,584		$	661,828	$	670,092
Net sales, pro forma	350,558			360,074			730,253		751,603
Net (loss) income, as reported	(8,684		)	(89,954		)	18,504		(57,222		)
Net (loss) income, pro forma	(4,695		)	(90,070		)	23,414		(60,101		)
Basic net (loss) income per Class A Common Share, as reported	(0.17		)	(1.72		)	0.36		(1.09		)
Basic net (loss) income per Class A Common Share, pro forma	(0.09		)	(1.72		)	0.46		(1.15		)
Diluted net (loss) income per Class A Common Share, as reported	(0.17		)	(1.72		)	0.36		(1.09		)
Diluted net (loss) income per Class A Common Share, pro forma	(0.09		)	(1.72		)	0.45		(1.15		)

Pro forma results for the three months ended January 31, 2012, were adjusted to include $3,600 of acquisition-related expenses, $1,530 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory, $357 in interest expense on acquisition debt, and ($71) in income tax benefit. Pro forma results for the six months ended January 31, 2012, were adjusted to include $3,600 of acquisition-related expenses, $1,530 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory, $720 in interest expense on acquisition debt, and ($827) in income tax benefit.

Pro forma results for the three months ended January 31, 2013, were adjusted to exclude $3,600 of acquisition-related expenses and $1,530 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory, and were adjusted to include $320 in interest expense on acquisition debt and $564 of income tax expense. Pro forma results for the six months ended January 31, 2013, were adjusted to exclude $3,600 of acquisition-related expenses and $1,530 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory, and were adjusted to include $529 in interest expense on acquisition debt and ($135) in income tax benefit.

Pro forma results for each of the three and six months ended January 31, 2013 and 2012 include $3,104 and $6,208 of pretax amortization expense related to intangible assets, respectively.