ACQUISITIONS

Current Year Acquisitions

Acquisitions are recorded using the acquisition method of accounting and accordingly, results of their operations are included in the Company’s consolidated financial statements from the effective date of each respective acquisition. The Company negotiates the respective purchase prices of acquired 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. Management estimates the fair values of acquired intangible assets other than goodwill using the income approach (i.e. discounted cash flows), and plant and equipment using either the cost or market approach, depending on the type of fixed asset.

During the six months ended September 30, 2015, the Company acquired twelve businesses with aggregate historical annual sales of approximately $80 million. Transaction and other integration costs incurred during the six months ended September 30, 2015 were $1.9 million and were included in selling, distribution and administrative expenses in the Company’s consolidated statement of earnings. These acquisitions contributed approximately $17 million in net sales during the six months ended September 30, 2015.

Purchase price allocations for certain businesses most recently acquired during the six months ended September 30, 2015 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 consideration transferred and the estimated fair values of the assets acquired and liabilities assumed for fiscal 2016 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
Consideration
Cash ^(a)	$	53,227		$	44,917		$	98,144

Recognized amounts of identifiable assets acquired and liabilities assumed
Current assets, net	$	7,957		$	2,182		$	10,139
Plant and equipment	11,035			13,240			24,275
Other intangible assets	21,585			13,569			35,154
Current liabilities	(7,732		)	(4,282		)	(12,014		)
Non-current liabilities	(3,350		)	(1,597		)	(4,947		)
Total identifiable net assets	29,495			23,112			52,607

Goodwill	23,732			21,805			45,537
	$	53,227		$	44,917		$	98,144

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^(a)	Includes cash paid, net of cash acquired, for current year acquisitions as well as payments for the settlement of holdback liabilities associated with prior year acquisitions.

The fair value of trade receivables acquired with fiscal 2016 acquisitions was $6.1 million, with gross contractual amounts receivable of $6.7 million. Goodwill associated with fiscal 2016 acquisitions was $45.4 million, of which $41.0 million is deductible for income tax purposes. Goodwill largely consists of expected synergies resulting from the acquisitions. These synergies include increased distribution density that will facilitate the sale of industrial, medical and specialty gases, and related supplies, the addition of businesses that offer products and services complementary to the Company’s existing portfolio, and enhanced geographical coverage abroad to strengthen the Company’s welder and generator rental business. Other intangible assets related to fiscal 2016 acquisitions represent customer relationships and non-competition agreements, and amounted to $28.0 million and $7.1 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 six months ended September 30, 2015 and 2014, as if fiscal 2016 acquisitions had occurred on April 1, 2014. The pro forma results were prepared from financial information obtained from the sellers of the businesses and as part of 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, 2014 or of results that may occur in the future.



	Six Months Ended
	September 30,
(In thousands, except per share amounts)	2015		2014
Net sales	$	2,742,947	$	2,710,701
Net earnings	186,897		189,532
Diluted earnings per share	$	2.48	$	2.51

Prior Year Acquisitions

During the six months ended September 30, 2014, the Company acquired eight businesses, all of which were in the Distribution business segment. A total of $34 million in consideration was transferred for the eight businesses, the settlement of holdback liabilities and the settlement of a contingent consideration arrangement associated with a prior year acquisition. Of the consideration transferred, $30 million was paid in net cash and $4 million represented shares of Airgas, Inc. common stock issued as part of the consideration for a single acquisition. Transaction and other integration costs incurred during the six months ended September 30, 2014 were $1 million. The acquired businesses had aggregate historical annual sales of approximately $36 million. These acquisitions contributed approximately $10 million in net sales for the six months ended September 30, 2014. The Company acquired these businesses in order to increase its distribution density and enhance its capabilities to facilitate the sale of industrial, medical and specialty gases, and related supplies.