ACQUISITIONS

On January 16, 2015, NCI Group, Inc., a wholly-owned subsidiary of the Company, and Steelbuilding.com, LLC, a wholly owned subsidiary of NCI Group, Inc., completed the acquisition of CENTRIA (the “CENTRIA Acquisition”), a Pennsylvania general partnership (“CENTRIA”), pursuant to the terms of the Interest Purchase Agreement, dated November 7, 2014 (“Interest Purchase Agreement”) with SMST Management Corp., a Pennsylvania corporation, Riverfront Capital Fund, a Pennsylvania limited partnership, and CENTRIA. NCI acquired all of the general partnership interests of CENTRIA in exchange for $255.8 million in cash, including cash acquired of $8.7 million. The purchase price is subject to a post-closing adjustment to net working capital as provided in the Interest Purchase Agreement. The purchase price was funded through the issuance of $250.0 million of new indebtedness. See “Note 12 — Long-Term Debt and Note Payable.” CENTRIA is now an indirect, wholly-owned subsidiary of NCI.

Accordingly, the results of CENTRIA’s operations from January 16, 2015 are included in our consolidated financial statements. For the period from January 16, 2015 to November 1, 2015, CENTRIA contributed revenue of $179.4 million and had an operating loss of $4.3 million. The CENTRIA Acquisition enhances our capabilities in the design, engineering and manufacturing of architectural insulated metal panel (“IMP”) wall and roof systems and integrated coil coating services for the nonresidential construction industry. CENTRIA operates four production facilities in the United States and a manufacturing facility in China.

We report on a fiscal year that ends on the Sunday closest to October 31. CENTRIA previously reported on a calendar year that ended December 31. In accordance with ASC Topic 805, Business Combinations, the unaudited pro forma financial information for fiscal years 2015 and 2014 assumes the acquisition was completed on November 4, 2013, the first day of fiscal year 2014.

This unaudited pro forma financial information does not necessarily represent what would have occurred if the transaction had taken place on the dates presented and should not be taken as representative of our future consolidated results of operations. The unaudited pro forma financial information includes adjustments for interest expense to match the new capital structure and amortization expense for identified intangibles. In addition, acquisition related costs and $16.1 million of transaction costs incurred by the seller are excluded from the unaudited pro forma financial information. The pro forma information does not reflect any expected synergies or expense reductions that we believe will result from the acquisition.



	Unaudited Pro Forma
	Fiscal year ended
(In thousands, except per share amounts)	November 1, 2015		November 2, 2014
Sales	$	1,608,179	$	1,605,707
Net income (loss) applicable to common shares	22,266		(106		)
Income (loss) per common share
Basic	$	0.31	$	—
Diluted	$	0.30	$	—

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as part of the CENTRIA Acquisition as of January 16, 2015 as determined in accordance with ASC Topic 805. The fair value of all assets acquired and liabilities assumed are preliminary and the final determination of any required acquisition method adjustments will be made upon the completion of the determination of the post-closing adjustment in the Interest Purchase Agreement and the finalization of certain contingent assets and liabilities.



(In thousands)	January 16, 2015
Cash	$	8,718
Current assets, excluding cash	$	74,725
Property, plant and equipment	34,127
Intangible assets	128,280
Assets acquired	$	245,850
Current liabilities	$	63,797
Other long-term liabilities	8,893
Liabilities assumed	$	72,690
Fair value of net assets acquired	$	173,160
Total consideration paid	255,841
Goodwill	$	82,681

The amount allocated to intangible assets was attributed to the following categories (in thousands):



			Useful Lives
Backlog	$	8,400	9 months
Trade names	13,980		15 years
Customer lists and relationships	105,900		20 years
	$	128,280

These intangible assets are amortized on a straight-line basis, which is presented in Intangible asset amortization on our consolidated statements of operations. We also recorded a step-up in inventory fair value of approximately $2.4 million, which was subsequently recognized as an expense in “Fair value adjustment of acquired inventory” on our consolidated statements of operations upon the sale of the related inventory.

The excess of the purchase price over the fair values of assets acquired and liabilities assumed was allocated to goodwill. The intention of this transaction was to strengthen our position as a fully integrated supplier to the nonresidential building products industry, by enhancing our existing portfolio of cold storage and commercial and industrial solutions, expanding our capabilities into high-end insulated metal panels and contributing specialty continuous metal coil coating capabilities. We believe the transaction will result in revenue synergies to our existing businesses, as well as improvements in supply chain efficiency, including alignment of purchase terms and pricing optimization. We include the results of the CENTRIA Acquisition in the metal components segment. Goodwill of $73.6 million and $9.1 million was recorded in our metal components segment and engineered building systems segment based on expected synergies pertaining to the respective segments from the acquisition. Additionally, because the entity acquired was treated as a partnership for tax purposes, the tax basis of the acquired assets and liabilities has been adjusted to their fair value and goodwill will be deductible for tax purposes.

Beginning in the fourth quarter of fiscal 2015, the Company elected to record measurement period adjustments in the period in which they are determined, rather than retrospectively, as permitted under new accounting guidance issued in September 2015. See “Note 3 — Accounting Pronouncements.” The adoption of this guidance did not have a material impact on our consolidated financial statements.