Acquisitions

9 Months Ended

Oct. 01, 2011

Acquisitions [Abstract]

Acquisitions

3. ACQUISITIONS

The results of operations for acquired businesses are included in the Condensed Consolidated Financial Statements from the dates of acquisition. Acquisition-related expenses were $5.6 million and $16.0 million for the three and nine months ended October 1, 2011, respectively.

EPC Acquisition

On August 22, 2011, the Company completed its acquisition of the Electrical Products Company ("EPC") of A.O. Smith Corporation (NYSE: AOS). EPC manufactures and sells a full line of motors for hermetic, pump, distribution, HVAC, and general industrial applications. EPC is based in Tipp City, Ohio and has operations in the United States, Mexico, China, and the United Kingdom. The acquisition added technology and global capacity that will bring value to our customers with energy saving products, broader product offerings and better operating efficiencies. The purchase price included $748.7 million paid in cash and 2,834,026 shares of Company common stock. EPC is reported as part of the Company's Electrical segment.

The following summarizes the allocation of the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition. The allocation of the purchase price is preliminary and differences between the preliminary and final purchase price allocation could be material. The Company has not completed its analysis estimating the fair value of inventory, property, plant, and equipment, intangible assets, income tax liabilities and certain contingent liabilities.

As of August 22, 2011 (in thousands):

Current assets	$	369,850
Property, plant and equipment		154,720
Intangible assets subject to amortization		122,500
Goodwill		357,233
Other assets		292
Total assets acquired	$	1,004,595
Current liabilities assumed	$	(106,543	)
Long-term liabilities assumed		(11,897	)
Net assets acquired	$	886,155

The intangible assets of $122.5 million acquired are primarily customer relationship and technology, with useful lives ranging from eight to fifteen years. Substantially all of the $357.2 million of goodwill is estimated to be deductible for tax purposes.

EPC had sales of $84.8 million and income from operations was not material primarily due to the impact of purchase accounting inventory adjustments in the period from August 22, 2011 to October 1, 2011.

Pro Forma Financial Information

The following pro forma financial information shows the results of continuing operations for the three and nine months ended October 1, 2011, and October 2, 2010, respectively, as though the acquisition of EPC occurred at the beginning of each respective fiscal year. The pro forma financial information includes, where applicable, adjustments for: (i) the amortization of acquired intangible assets, (ii) additional interest expense on acquisition related borrowings and (iii) the income tax effect on the pro forma adjustments. The pro forma adjustments related to the acquisition of EPC are based on a preliminary purchase price allocation. Differences between the preliminary and final purchase price allocation could have an impact on the pro forma financial information presented and such impact could be material. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the acquisition been completed as of the date indicated above or the results that may be obtained in the future, (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	October 1, 2011		October 2, 2010		October 1, 2011		October 2, 2010
Pro forma net sales	$	847,034	$	774,054	$	2,615,652	$	2,221,667
Pro forma net income	$	58,475	$	54,588	$	164,917	$	148,262
Basic earnings per share as reported	$	1.14	$	1.16	$	3.04	$	3.26
Pro forma basic earnings per share	$	1.41	$	1.32	$	3.97	$	3.62
Diluted earnings per share as reported	$	1.13	$	1.14	$	3.00	$	3.19
Pro forma diluted earnings per share	$	1.39	$	1.30	$	3.92	$	3.55

Other Acquisitions

On June 1, 2011, the Company acquired Australian Fan and Motor Company ("AFMC") located in Melbourne, Australia. AFMC manufactures and distributes a wide range of direct drive blowers, fan decks, axial fans and sub fractional motors for sales in Australia and New Zealand. The preliminary purchase price of $5.7 million was paid in cash, net of acquired debt and cash. AFMC is reported as part of the Company's Electrical segment.

On April 5, 2011, the Company acquired Ramu, Inc. ("Ramu") located in Blacksburg, Virginia. Ramu is a motor and control technology company with a research and development team dedicated to the development of switched reluctance motor technology. The purchase price included $5.3 million paid in cash, net of acquired debt and cash and an additional amount should certain future performance expectations be met. At October 1, 2011, the Company has recorded a liability of $16.7 million for this deferred contingent purchase price. Ramu is reported as part of the Company's Electrical segment.

On March 7, 2011, the Company acquired Hargil Dynamics Pty. Ltd. ("Hargil") located in Sydney, Australia. Hargil is a distributor of mechanical power transmission components and solutions. Hargil is reported as part of the Company's Mechanical segment.

On December 23, 2010, the Company acquired Unico, Inc. ("Unico"), located in Franksville, Wisconsin. Unico manufactures a full range of AC and DC drives, motor controllers and other accessories for most industrial and commercial applications. Unico has developed proprietary technology in the fields of oil and gas recovery technology, commercial HVAC technology, test stand automation and other applications. The purchase price of $107.3 million was paid in cash, net of acquired debt and cash. In addition to the cash paid, the Company agreed to pay an additional amount should certain performance thresholds be met. At October 1, 2011, the Company has a liability recorded of $9.2 million for this deferred contingent purchase price. Unico is reported as part of the Company's Electrical segment.

On December 1, 2010, the Company acquired South Pacific Rewinders ("SPR"), located in Auckland, New Zealand. SPR operates as a motor rewinder and distributor in the Pacific region. SPR is reported as part of the Company's Electrical segment.

On November 1, 2010, the Company acquired 55% of Elco Group B.V. ("Elco"), located in Milan, Italy. Elco manufactures and sells motors, fans and blowers and has manufacturing facilities in Italy, China and Brazil. The purchase price was $27.3 million, net of acquired debt and cash. The purchase price includes $4.6 million in cash, paid at closing, $11.1 million paid during the first nine months of 2011, and $10.7 million, which will be paid in two semi-annual payments ending in 2012. Elco is reported as part of the Company's Electrical segment.

On September 1, 2010, the Company acquired Rotor B.V. ("Rotor"), located in Eibergen, the Netherlands. Rotor sells standard and special electric motors to a variety of industries including the marine industry, ship building and offshore oil and gas. In addition to the Netherlands, Rotor also sells throughout Europe, the United Kingdom and Japan. The purchase price of $36.4 million was paid in cash, net of acquired debt and cash. Rotor is reported as part of the Company's Electrical segment.

On May 4, 2010, the Company acquired Air-Con Technology ("Air-Con"), located in Mississauga, Ontario, Canada. Air-Con is a distributor of HVACR electric motors. Air-Con is reported as part of the Company's Electrical segment.

On April 6, 2010, the Company acquired CMG Engineering Group Pty, Ltd. ("CMG"), located in Melbourne, Australia. CMG manufactures and sells fractional horsepower industrial motors, blower systems, and industrial metal products with operations in Australia, New Zealand, South Africa, Malaysia, Singapore, the United Kingdom and the Middle East. The business also distributes integral horsepower industrial motors, mechanical power transmission products, material handling equipment, electrical insulation materials, magnet wire and specialty conductors in Australia and New Zealand. The purchase price was $82.6 million, net of acquired debt and cash. The purchase price was paid $76.5 million in cash and 100,000 shares of Company common stock valued at $6.1 million. CMG is reported as part of our Electrical and Mechanical segments.