Business Acquisitions

9 Months Ended

May 31, 2012

Business Combinations [Abstract]

BUSINESS ACQUISITIONS

BUSINESS ACQUISITIONS

Elian SAS

On January 31, 2012, the Company acquired all of the issued share capital of Elian SAS (“Elian”), a French portfolio company of British Vita plc, for approximately $66.5 million, which included the repayment of approximately $4.3 million in Elian debt. The results of Elian’s operations have been included in the consolidated financial statements since the date of acquisition, January 31, 2012.

Elian provides specialty formulated color concentrates to over 1,000 customers in end markets such as packaging, cosmetics, personal hygiene, healthcare, and pipes and tubing products that require demanding specifications. Elian offers superior quality, technology and responsiveness to its diversified customer base. The acquisition of Elian moves the Company into France’s color masterbatch market and improves the Company's product mix in the Europe, Middle East and Africa (“EMEA”) region.

The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of assets acquired and liabilities assumed which were determined with the assistance of independent valuations, quoted market prices and estimates made by management. The purchase price allocations are subject to further adjustment until all pertinent information regarding the property, plant and equipment, intangible assets, goodwill, other long-term liabilities and deferred income tax assets and liabilities acquired are fully evaluated by the Company and independent valuations are complete.

The following table presents the preliminary estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:

(In thousands)
Cash and cash equivalents	$	1,624
Accounts receivable	6,897
Inventories	3,427
Prepaid expenses and other current assets	434
Property, plant and equipment	5,111
Intangible assets	27,779
Other long-term assets	20
Total assets acquired	$	45,292
Accounts payable	$	4,907
Other accrued liabilities	2,940
Deferred income taxes	10,786
Pension plans	568
Other long-term liabilities	143
Total liabilities assumed	$	19,344
Net identifiable assets acquired	$	25,948
Goodwill	40,597
Net assets acquired	$	66,545

The Company preliminarily recorded acquired intangible assets of approximately $27.8 million. These intangible assets include customer related intangibles of approximately $18.3 million with estimated useful lives of 9 years, developed technology of approximately $8.6 million with estimated useful lives of 10 years, and trademarks and tradenames of approximately $0.9 million with estimated useful lives of 5 years. As noted earlier, the fair values and assigned useful lives of the acquired identifiable intangible assets are preliminary pending receipt of the final valuations for those assets.

Goodwill represents the excess of the purchase price over the estimated fair values of the assets acquired and the liabilities assumed in the acquisition. Goodwill associated with this transaction was included in the EMEA segment and none of the goodwill is deductible for income tax purposes.

The estimated fair value of accounts receivable acquired was approximately $6.9 million with the gross contractual amount being approximately $7.3 million.

Net sales, income before taxes and net income attributable to A. Schulman, Inc. from Elian included in the Company’s results since the January 31, 2012 acquisition are as follows:

	January 31, 2012 to May 31, 2012
	(In thousands)
Net sales	$	12,976
Income before taxes	$	264
Net income attributable to A. Schulman, Inc. common stockholders	$	118

Income before taxes for Elian from January 31, 2012 to May 31, 2012 includes pretax depreciation and amortization costs of approximately $1.3 million due to the increased value of fixed assets and intangibles, and approximately $0.7 million of pretax purchase accounting inventory step-up charges.

The following pro forma information represents the consolidated results of the Company as if the acquisition of Elian occurred as of September 1, 2010:

	Nine months ended
	May 31, 2012		May 31, 2011
	(In thousands, except per share data)
Net sales	$	1,598,079	$	1,645,751
Net income attributable to A. Schulman, Inc.	$	41,187	$	36,697
Net income per share of common stock attributable to common stockholders—diluted	$	1.39	$	1.17

The pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense on assets acquired from Elian resulting from the valuation of assets acquired, increased interest expense due to additional borrowings to fund the acquisition of Elian partially offset by the repayment of Elian debt, and decreased interest income from lower cash levels which were also used to fund the acquisition. The pro forma results do not include any anticipated cost synergies or other effects of the planned integration of Elian. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed as of September 1, 2010, nor are they indicative of the future operating results of the consolidated Company.

Fiscal 2011 Business Transactions

In fiscal 2011, the Company acquired a business in Brazil and entered into an agreement to become the majority equity holder of an Argentinean venture. The consolidated statements of operations include the results of these transactions from the dates of acquisition or formation. These transactions are summarized below:

Transaction Description	Date of Transaction	Purchase Consideration (In millions)		Segment
Mash Indústria e Comércio de Compostos Plásticos LTDA	November 3, 2010	$	15.2	Americas
A Brazilian masterbatch additive producer and engineered plastics compounder whose products are used in end markets such as film and packaging, automotive and appliances
Surplast S.A.	June 30, 2011	$	1.1	Americas
A 51% ownership interest in an Argentinean venture, further expanding the Company’s specialty powders presence in South America