6) Business Acquisitions

APEX

On November 30, 2015, the Company completed the acquisition of 80% of the outstanding shares of Apex. Apex specializes in the design and manufacture of control valves for low and high pressure hot water and filtration systems. Apex also produces an extensive range of float and reservoir valves for the agricultural industry. The aggregate purchase price was approximately $20.4 million and the Company recorded a long-term liability of $5.5 million as the estimate of the acquisition date fair value on the contractual call option to purchase the remaining 20% within three years of closing.

The Company accounted for the transaction as a business combination. The Company completed a purchase price allocation that resulted in the recognition of $12.9 million in goodwill and $10.1 million in intangible assets. Intangible assets consist primarily of customer relationships with an estimated life of 10 years and a trade name with an estimated life of 15 years. The goodwill is not deductible for tax purposes. The results of Apex are not material to the Company's consolidated financial statements. The results of operations for Apex are included in the Company's Asia-Pacific segment since acquisition date.

AERCO

On December 1, 2014, the Company completed the acquisition of AERCO in a share purchase transaction. The aggregate purchase price was $271.5 million and was financed from a borrowing under the Company's Credit Agreement. The results of operations for AERCO are included in the Company's Americas segment since acquisition date.

AERCO is a leading provider of commercial high-efficiency boilers, water heaters and heating solutions in North America and is based in New York. Its products are distributed for commercial and municipal use primarily in North America. AERCO strengthens Watts' strategic vision to expand into heat source products and strengthens the Company's solutions and system offerings.

The Company accounted for the transaction as a business combination. The Company completed a purchase price allocation that resulted in the recognition of $173.3 million in goodwill and $102.4 million in intangible assets. Intangible assets consist primarily of customer relationships valued at $78.5 million with estimated lives of 16 years, developed technology valued at $15.8 million with estimated lives of 10 years and trade name valued at $7.4 million with a 20 year life. The goodwill is attributable to the workforce of AERCO and the strategic platform adjacency that will allow Watts to extend its product offerings as a result of the acquisition. Approximately $19.4 million of the goodwill is deductible for tax purposes. The following table summarizes the value of the assets and liabilities acquired (in millions):

Accounts receivable	$	17.2
Inventory		16.3
Fixed assets		7.7
Deferred tax assets		8.2
Other assets		7.6
Intangible assets		102.4
Goodwill		173.3
Accounts payable		(6.8	)
Accrued expenses and other		(18.4	)
Deferred tax liability		(36.0	)

Purchase price	$	271.5

The consolidated statement of operations for the year ended December 31, 2014 includes the results of AERCO since the acquisition date and includes $5.3 million of revenues and $(1.4) million of operating loss, which includes acquisition accounting charges of $0.8 million.

Supplemental pro-forma information (unaudited)

Had the Company completed the acquisition of AERCO at the beginning of 2013, net sales, net income from continuing operations and earnings per share from continuing operations would have been as follows:

	Years Ended
Amounts in millions (except per share information)	December 31, 2014		December 31, 2013
Net sales	$	1,610.1	$	1,562.8
Net income from continuing operations	$	59.7	$	63.4
Net income per share:
Basic EPS—continuing operations	$	1.69	$	1.79
Diluted EPS—continuing operations	$	1.69	$	1.78

Net income from continuing operations for the years ended December 31, 2014 and December 31, 2013 was adjusted to include $3.1 million and $3.3 million, respectively, of net interest expense related to the financing and $3.9 million and $4.3 million, respectively, of net amortization expense resulting from the estimated allocation of purchase price to amortizable tangible and intangible assets. Net income from continuing operations for the year ended December 31, 2014 was also adjusted to exclude $3.3 million of net acquisition-related charges and third-party costs.