ACQUISITIONS AND DIVESTITURES

Current Year Acquisitions

Acquisitions have been recorded using the acquisition method of accounting and accordingly, results of their operations have been included in the Company’s consolidated financial statements since the effective date of each respective acquisition.

During the nine months ended December 31, 2013, the Company paid net cash consideration of $181.1 million for the purchase of nine businesses and the settlement of holdback liabilities and payments related to contingent consideration arrangements associated with prior year acquisitions. The nine businesses acquired during the nine months ended December 31, 2013 had historical annual sales of approximately $70 million. The largest of these businesses was The Encompass Gas Group, Inc. (“Encompass”), headquartered in Rockford, Illinois. With eleven locations in Illinois, Wisconsin, and Iowa, Encompass was one of the largest privately-owned suppliers of industrial, medical, and specialty gases and related hardgoods in the United States, generating approximately $55 million in annual sales in calendar 2012. Transaction and other integration costs incurred during the nine months ended December 31, 2013 were $1 million and were included in selling, distribution and administrative expenses in the Company’s Consolidated Statement of Earnings. These acquisitions contributed approximately $14 million in net sales for the nine months ended December 31, 2013.

The Company negotiated the respective purchase prices of the businesses based on the expected cash flows to be derived from their operations after integration into the Company’s existing distribution, production and service networks. The acquisition purchase price for each business is allocated based on the fair values of the assets acquired and liabilities assumed, which are based on management estimates and third-party appraisals. Purchase price allocations for the businesses acquired during the nine months ended December 31, 2013 are primarily based on provisional fair values and are subject to revision as the Company finalizes appraisals and other analyses. Final determination of the fair values may result in further adjustments to the values presented below. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed related to fiscal 2014 acquisitions, as well as adjustments to finalize the valuations of certain prior year acquisitions. Valuation adjustments related to prior year acquisitions were not significant.



(In thousands)	Distribution Business Segment			All Other Operations Business Segment			Total
Current assets, net	$	12,485		$	9		$	12,494
Plant and equipment	41,249			(746		)	40,503
Goodwill	82,369			(216		)	82,153
Other intangible assets	56,439			—			56,439
Current liabilities	(8,707		)	1,367			(7,340		)
Non-current liabilities	(3,118		)	—			(3,118		)
Net assets acquired	$	180,717		$	414		$	181,131

The fair value of trade receivables acquired with fiscal 2014 acquisitions was $7.7 million, with gross contractual amounts receivable of $8.1 million. Goodwill associated with fiscal 2014 acquisitions was $80.1 million of which $76.5 million is deductible for income tax purposes. Goodwill largely consists of expected synergies resulting from the acquisitions, including the expansion of geographical coverage that will facilitate the sale of industrial, medical and specialty gases, and related supplies. Other intangible assets related to fiscal 2014 acquisitions represent customer relationships and non-competition agreements, and amounted to $53.5 million and $2.8 million, respectively. See Note 5 for further information on goodwill and other intangible assets.

The following table provides unaudited pro forma results of operations for the nine months ended December 31, 2013 and 2012, as if fiscal 2014 acquisitions had occurred on April 1, 2012. The pro forma results were prepared from financial information obtained from the sellers of the businesses, as well as information obtained during the due diligence process associated with the acquisitions. The unaudited pro forma results reflect certain adjustments related to the acquisitions, such as increased depreciation and amortization expense resulting from the stepped-up basis to fair value of assets acquired and adjustments to reflect the Company’s borrowing and tax rates. The pro forma operating results do not include any anticipated synergies related to combining the businesses. Accordingly, such pro forma operating results were prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of April 1, 2012 or of results that may occur in the future.



	Nine Months Ended
	December 31,
(In thousands, except per share amounts)	2013		2012
Net sales	$	3,844,583	$	3,745,623
Net earnings	264,250		256,964
Diluted earnings per share	$	3.53	$	3.26

Prior Year Acquisitions

During the nine months ended December 31, 2012, the Company purchased fifteen businesses. A total of $94.6 million in net cash was paid for the fifteen businesses, the settlement of holdback liabilities and the settlement of a contingent consideration arrangement associated with a prior year acquisition. Transaction and other integration costs incurred during the nine months ended December 31, 2012 were $1 million. The acquired businesses had aggregate historical annual sales of approximately $94 million. These acquisitions contributed approximately $10 million in net sales for the nine months ended December 31, 2012. The Company acquired these businesses in order to expand its geographic coverage and strengthen its national network of branch-store locations.

Divestitures

On June 1, 2012, the Company divested the assets and operations of five branch locations in western Canada. The Company realized a gain on the sale of $6.8 million ($5.5 million after tax) recorded in “Other income, net” in its Consolidated Statement of Earnings. The operations were included in the Distribution business segment and contributed net sales that were not material to the Company’s Consolidated Statement of Earnings.