On November 18, 2021, the Company entered into a membership interest purchase agreement (the “MIPA Agreement”) to acquire all of the issued and outstanding equity ownership of BasX, LLC, an Oregon limited liability company, doing business as BasX Solutions. We closed this transaction on December 10, 2021 for a purchase price of (i) $100.0 million payable in cash (not including working capital adjustments), and (ii) up to $80.0 million in the aggregate of contingent consideration payable in shares of the Company's common stock, par value $0.004 per share (the "Shares").

The $80.0 million of contingent consideration payable consists of $78.0 million payable to the former owners of BasX and $2.0 million payable to key employees of BasX whom are now employed by the Company. The potential future issuance of the Shares is contingent upon BasX meeting certain post-closing earn-out milestones during each of 2021, 2022, and 2023 under the terms of the MIPA Agreement. The Company funded the BasX acquisition cash portion of the purchase price and related transaction costs with cash on hand.

Additionally, as a condition to closing, the Company entered into a real estate purchase agreement with BasX Properties, LLC, an affiliate of BasX, to acquire the principal real property and improvements utilized by BasX for an additional $22.0 million, subject to customary closing conditions and adjustments. The Company closed this real estate transaction on May 31, 2022, which terminated the related lease (Note 4).

BasX specializes in the design, engineering and manufacturing of custom, energy efficient cooling solutions for the rapidly growing hyperscale data center market. BasX also designs and manufactures custom solutions for cleanroom environments for the bio-pharmaceutical, semiconductor, medical and agriculture markets, as well as custom, energy efficient air handlers and modular solutions for a vast array of markets. The acquisition of BasX brings the Company exposure to attractive end-markets

into which the Company has historically had minimal exposure. The products BasX manufactures are highly engineered, customized products, fully complimenting AAON's existing business.

We applied pushdown accounting, allowable under ASC 805 "Business Combinations," to "pushdown" our stepped-up basis in the assets acquired and liabilities assumed to BasX's subsidiary financial statements. The decision to apply pushdown accounting is irrevocable. Goodwill was calculated and recognized consistent with acquisition accounting, resulting in the pushdown of $78.7 million in goodwill.

The following table presents the final allocation of the consideration paid to the assets acquired and liabilities assumed in the acquisition of BasX described above, which was still preliminary at December 31, 2021. The revisions indicated below were recorded during the first quarter of 2022. The revisions were the results of updates to our preliminary estimates and third party valuation models. The impact of such revisions on net income were not significant.


	Final Allocation		Estimated Allocation as of December 31, 2021		Revisions
			(in thousands)
Accounts receivable	$	13,699	$	13,699	$	—
Inventories	2,725		2,725		—
Contract assets	7,635		7,635		—
Prepaid expenses and other	341		341		—
Property, plant and equipment	13,169		13,169		—
Right of use assets	15,611		15,611		—
Intangible assets	68,413		70,329		(1,916)
Goodwill	78,663		82,498		(3,835)
Accounts payable	(9,388)		(9,388)		—
Accrued liabilities	(3,807)		(3,807)		—
Contract liabilities	(7,771)		(7,771)		—
Lease liabilities	(15,611)		(15,611)		—
Contingent Consideration - shares of AAON, Inc.	(60,000)		(66,000)		6,000
Consideration paid	$	103,679	$	103,430	$	249


	Final Allocation		Estimated Allocation as of December 31, 2021		Revisions
			(in thousands)
Definite-lived intangible assets
Intellectual property	$	6,295	$	6,479	$	(184)
Customer relationships	47,547		48,684		(1,137)
	53,842		55,163		(1,321)

Indefinite-lived intangible assets
Trademarks	14,571		15,166		(595)
Total intangible assets acquired	$	68,413	$	70,329	$	(1,916)

Goodwill is the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents a premium paid to acquire the skilled workforce and expanded market opportunities. Goodwill of $47.1 million was tax deductible upon the completion of the final allocation of consideration paid to the assets acquired and liabilities assumed. Future additional amounts of goodwill related to the contingent consideration may become tax deductible in the future if the earn out provisions of the MIPA Agreement are achieved.

The operations of BasX have been included in our statements of income since the closing date on December 10, 2021. The following unaudited pro forma consolidated results of operations for the three and nine months ended September 30, 2021 are presented as if the combination had been made on January 1, 2021.


	(unaudited)
	Three months ended		Nine months ended
	September 30, 2021		September 30, 2021
	(in thousands, except per share data)
Revenues	$	159,636	$	452,635
Net income	$	17,257	$	55,751
Earnings per share:
Basic	$	0.33	$	1.06
Dilutive	$	0.32	$	1.04

The unaudited consolidated pro forma financial information was prepared in accordance with GAAP and is not necessarily indicative of the results of operations that would have occurred if the acquisition had been completed on the date indicated, nor is it indicative of the future operating results of the Company.

The unaudited pro forma results do not reflect events that either have occurred or may occur after the acquisition date, including, but not limited to, the anticipated realization of operating synergies in subsequent periods. These results also do not give effect to certain charges that the Company expects to incur in connection with the acquisition, including, but not limited to, additional professional fees and employee integration.