Acquisitions and Divestiture

Acquisitions - During 2017, the Company completed three acquisitions whose aggregate sales for their most recent fiscal year prior to acquisition were approximately $1,522 million. Total purchase price for the three acquisitions was approximately $4,227 million in cash and $316 million in assumed debt.

During 2016, the Company completed two acquisitions whose aggregate sales for their most recent fiscal year prior to acquisition were approximately $48 million. Total purchase price for the two acquisitions was approximately $71 million in cash and $2 million in assumed debt.

During 2015, the Company completed four acquisitions whose aggregate sales for their most recent fiscal year prior to acquisition were approximately $27 million. Total purchase price for the four acquisitions was approximately $27 million in cash.

The results of operations for all acquisitions are included as of the respective dates of acquisition. Assets acquired and liabilities assumed were recognized at their respective fair values as of the acquisition date. The process of estimating the fair values of certain tangible assets, identifiable intangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. The assets acquired and liabilities assumed presented in the table below are based on available information and may be revised during the measurement period, not to exceed 12 months, as valuations are finalized, additional information becomes available and as additional analysis is performed. Such revisions may have a material impact on the Company's results of operations and financial position. The initial purchase price allocation and subsequent purchase price adjustments for acquisitions in 2017, 2016 and 2015 are as follows.



	2017		2016		2015
Assets:
Accounts receivable	$	263,616	$	6,793	$	7,656
Inventories	302,422		12,041		3,099
Prepaid expenses	18,342		1,350		91
Deferred income taxes	4,658		—		5
Plant and equipment	376,826		5,647		1,123
Intangible and other assets	1,526,909		26,849		7,794
Goodwill	2,677,489		31,134		10,430
	5,170,262		83,814		30,198
Liabilities:
Notes payable	20,162		720		—
Accounts payable, trade	84,753		2,536		2,689
Accrued payrolls and other compensation	45,942		1,310		243
Accrued domestic and foreign taxes	5,435		604		777
Other accrued liabilities	80,515		1,804		5,267
Long-term debt	296,240		1,743		—
Pensions and other postretirement benefits	33,929		—		—
Deferred income taxes	520,389		7,545		2,604
Other liabilities	11,878		—		—
Noncontrolling interests	1,822		—		—
	1,101,065		16,262		11,580
Net assets acquired	$	4,069,197	$	67,552	$	18,618

Goodwill is calculated as the excess of the purchase price over the net assets acquired, primarily all of which is not deductible for tax purposes. With respect to the Clarcor acquisition, goodwill represents cost synergies and enhancements to the Company's existing filtration technologies. See Note 7 for additional information about intangible assets.

The remaining disclosures in Note 2 pertain only to the Clarcor acquisition as the other two acquisitions completed during 2017 were immaterial.

Clarcor is a major manufacturer of filtration products under more than a dozen respected brands, including CLARCOR, Baldwin, Fuel Manager, PECOFacet, Airguard, Altair, BHA, Clearcurrent, Clark Filter, Hastings, United Air Specialists, Keddeg and Purolator. Clarcor had annual sales of approximately $1,400 million for its fiscal 2016. For segment reporting purposes, Clarcor is part of the Diversified Industrial Segment.

The Company believes that Clarcor is a highly complementary acquisition that provides the Company with additional proprietary media, industrial and process filtration products and technologies, as well as a broad portfolio of replacement filters. The acquisition of Clarcor also offers significant expected operating synergies.

The Company's results of operations for 2017 include Clarcor's results of operations from the date of acquisition, February 28, 2017, through June 30, 2017. Net sales and segment operating (loss) attributable to Clarcor during this period was $487,388 and $(16,164), respectively.

The following unaudited pro forma information gives effect to the Company's acquisition of Clarcor as if the acquisition had occurred on July 1, 2015, and Clarcor had been included in the Company's results of operations for 2017 and 2016.



	2017		2016
Net sales	$	12,935,834	$	12,772,097
Net income attributable to common shareholders	1,027,693		748,634
Diluted earnings per share	7.58		5.47

The unaudited pro forma financial information in the table above includes adjustments related to amortization expense, depreciation, interest expense and transaction costs incurred as well as adjustments to cost of sales for the step-up in inventory to estimated acquisition-date fair value and related income tax effects and is based on a preliminary purchase price allocation using currently available information. Transaction costs incurred (which are reflected in the selling, general and administrative expenses caption in the Consolidated Statement of Income) and the adjustment to cost of sales for the step-up in inventory to estimated acquisition-date fair value are considered to be non-recurring. Adjustments for non-recurring items increased pro forma net income attributable to common shareholders by $108,078 for 2017 and decreased pro forma net income attributable to common shareholders by $39,121 for 2016. The unaudited pro forma financial information does not give effect to any synergies, operating efficiencies or cost savings that may result from the Clarcor acquisition.

Divestiture - During 2017, the Company divested its Autoline product line, which was part of the Diversified Industrial Segment. The operating results and net assets of the Autoline product line were immaterial to the Company's consolidated results of operations and financial position. The Company recorded a net pre-tax gain in 2017 of approximately $45 million related to the divestiture. The gain is reflected in the other (income), net caption in the Consolidated Statement of Income and the other expense caption in the Business Segment Information.