ACQUISITIONS AND DISCONTINUED OPERATIONS

9 Months Ended

Oct. 01, 2011

ACQUISITIONS AND DISCONTINUED OPERATIONS

ACQUISITIONS AND DISCONTINUED OPERATIONS

(3) ACQUISITIONS AND DISCONTINUED OPERATIONS

Acquisitions

In March 2011, our Flow Technology segment completed the acquisition of B.W. Murdoch Ltd. (“Murdoch”), an engineering company supplying processing solutions for the food and beverage industry, for a purchase price of $8.1, after payment of a working capital settlement of $0.7 during the third quarter of 2011. Murdoch had revenues of approximately $13.0 in the twelve months prior to the date of acquisition.

In March 2011, our Test and Measurement segment completed the acquisition of substantially all of the assets of Teradyne Inc.’s Diagnostic Solutions business (“DS”), a global supplier of diagnostic solutions for transportation OEMs and automotive dealerships, for a purchase price of $40.2. DS had revenues of approximately $42.0 in the twelve months prior to the date of acquisition.

In July 2010, our Flow Technology segment completed the acquisition of the Anhydro business (“Anhydro”), a global supplier of liquid concentration equipment, powder processing solutions, and dewatering plants and equipment, for a purchase price of $59.1, net of cash acquired of $10.9. Anhydro had revenues of approximately $71.0 in the twelve months prior to the date of acquisition.

In April 2010, our Industrial Products and Services segment completed the acquisition of Torque Tension Systems Ltd. (“TTS”), a global supplier of hydraulic torque wrench and tensioner tool products, for a purchase price of $15.7, net of cash acquired of $2.4. TTS had revenues of approximately $9.0 in the twelve months prior to the date of acquisition.

In February 2010, our Flow Technology segment completed the acquisition of Gerstenberg Schröder A/S (“Gerstenberg”), a designer, manufacturer, installer and servicer of processing systems and components serving the global food industry, for a purchase price of $30.9, net of cash acquired of $3.5 and including debt assumed of $3.9. Gerstenberg had revenues of approximately $57.0 in the twelve months prior to the date of acquisition.

The pro forma effects of the completed acquisitions were not material, individually or in the aggregate, to our results of operations.

The assets acquired and liabilities assumed were recorded at preliminary estimates of fair value as determined by management, based on information available at the acquisition date and on current assumptions as to future operations, and are subject to change during the measurement period upon the completion of acquisition accounting, including the finalization of asset valuations and any working capital settlements.

On August 24, 2011, we entered into an agreement to purchase Clyde Union (Holdings) S.A.R.L (“Clyde Union”), a global supplier of pump technologies that are utilized in oil and gas processing, power generation and other industrial applications.  On November 1, 2011, we executed an amendment to that agreement. Under the amended agreement, the purchase price (payable in cash) is equal to the sum of (i) an initial payment of 565.0 British Pounds (“GBP”) plus (ii) an earn-out payment equal to 11.8 times the amount by which the March 31, 2012 Group Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) for the trailing twelve months (Group EBITDA terms are as defined in the related share purchase agreement) is greater than 47.881 GBP, if any, and (iii) a separate earn-out payment equal to:

Annual 2012 Group EBITDA less Earn-Out Threshold
10.0 GBP	x	(185.0 GBP less any payment made under (ii) above).

The Earn-Out Threshold is 65.0 GBP unless March 31, 2012 Group EBITDA for the trailing twelve months is less than 47.881 GBP, in which case it is 112.881 GBP less the amount of the trailing twelve month March 31, 2012 Group EBITDA.

In no event shall either earn-out payment be less than zero nor shall the aggregate earn-out payments exceed 185.0 GBP.

Consummation of the transaction is subject to certain closing conditions, including the receipt of required regulatory approvals, with the closing targeted to occur by December 22, 2011.

Clyde Union has approximately 2,000 employees, is based in Glasgow, United Kingdom, and operates eight manufacturing facilities and 25 service centers around the world. We expect that the acquisition of Clyde Union will expand our market position within, and create a global power and energy platform for, our Flow Technology segment.

We plan to finance the acquisition with available cash and committed senior secured financing. See Note 10 for further

details on the senior secured financing.

On October 31, 2011, our Flow Technology segment completed the acquisition of e&e Verfahrenstechnik GmbH, a supplier of extraction, evaporation, vacuum and freeze drying technologies to the global food and beverage, pharmaceutical and bioenergy industries for a purchase price of approximately 12.3 Euros, net of cash assumed of 2.2 Euros, with an additional potential earn-out of 3.5 Euros.

Discontinued Operations

As part of our operating strategy, we regularly review and negotiate potential divestitures, some of which are or may be material. As a result of this continual review, we determined that certain of our businesses would be better strategic fits with other companies or investors.

We report businesses or asset groups as discontinued operations when, among other things, we commit to a plan to divest the business or asset group, actively begin marketing the business or asset group, and when the sale of the business or asset group is deemed probable within the next twelve months. The following businesses, which have been sold, met these requirements, and therefore have been reported as discontinued operations for the periods presented:

Business	Quarter Discontinued	Quarter Sale Closed
Cooling Spain Packaging business (“Cooling Spain”)	Q4 2010	Q4 2010
P.S.D., Inc. (“PSD”)	Q2 2009	Q1 2010

Cooling Spain — Sold for cash consideration of one Euro (exclusive of cash transferred with the business of $2.3), resulting in a loss, net of taxes, of $1.9 during the fourth quarter of 2010. During the first quarter of 2011, we recorded a net charge of $0.1 to “Gain (loss) on disposition of discontinued operations, net of tax” within our condensed consolidated statements of operations in connection with adjustments to certain liabilities that we retained.

PSD — Sold for cash consideration of $3.0, resulting in a gain, net of taxes, of $3.6 during the first quarter of 2010.

In addition to the businesses discussed above, we recognized a net gain of $0.4 and $1.3 during the three and nine months ended October 1, 2011, respectively, a net loss of $0.1 and a net gain of $1.2 during the three and nine months ended October 2, 2010, respectively, resulting from adjustments to gains/losses on sales from previously discontinued businesses. Refer to the consolidated financial statements contained in our 2010 Annual Report on Form 10-K for the disclosure of all discontinued businesses during the 2008 through 2010 period.

During the second quarter of 2010, the field examinations of our 2006 and 2007 federal income tax returns were completed by the Internal Revenue Service (“IRS”). In connection with the completion of these examinations, we reduced our liability for uncertain tax positions and recognized an income tax benefit of $7.3 to “Gain (loss) on disposition of discontinued operations, net of tax” associated with a business previously disposed of and reported as a discontinued operation.

The final sales price for certain of the divested businesses is subject to adjustment based on working capital existing at the respective closing dates. The working capital figures are subject to agreement with the buyers, or if we cannot come to agreement, an arbitration process. Final agreement of the working capital figures for certain of these transactions has yet to occur. In addition, changes in estimates associated with liabilities retained in connection with a business divestiture (e.g., income taxes) may occur. It is possible that the sales price and resulting gains/losses on these, and other previous divestitures, will be materially adjusted in subsequent periods.

For the three and nine months ended October 1, 2011 and October 2, 2010, income (loss) from discontinued operations and the related income taxes are shown below:

	Three months ended						Nine months ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Income (loss) from discontinued operations	$	0.7		$	(0.1	)	$	(2.0	)	$	1.9
Income tax (provision) benefit	(0.3		)	0.1			3.2			9.9
Income from discontinued operations, net	$	0.4		$	—		$	1.2		$	11.8

For the three and nine months ended October 1, 2011 and October 2, 2010, results of operations for our businesses reported as discontinued operations were as follows:

	Three months ended				Nine months ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Revenues	$	—	$	1.4	$	—	$	5.2
Pre-tax income (loss)	—		0.1		—		(0.3		)

There were no assets or liabilities attributable to discontinued operations at October 1, 2011 and December 31, 2010.