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Acquisitions
 12 Months Ended
Dec. 31, 2011
Acquisitions  
Acquisitions

Note 2. Acquisitions

2012 Acquisition

        Effective February 1, 2012, the Company, through its wholly-owned subsidiary Diamond Manufacturing Company, acquired McKey Perforating Co., Inc. ("McKey"), headquartered in New Berlin, Wisconsin and its subsidiary, McKey Perforated Products Co., Inc., located in Manchester, Tennessee. McKey was founded in 1867 and is a contract manufacturer that provides a full range of metal perforating and fabrication services to customers located primarily in the U.S. For the year ended December 31, 2011, McKey's unaudited net sales were approximately $18 million. The acquisition was funded with borrowings on our credit facility.

2011 Acquisition

        Effective August 1, 2011, the Company acquired all the outstanding capital securities of Continental Alloys & Services, Inc. ("Continental"), headquartered in Houston, Texas, and certain affiliated companies. Continental is a leading global materials management company focused on high-end steel and alloy pipe, tube and bar products and precision manufacturing of various tools designed for well completion programs of global energy service companies and has 12 locations in seven countries including Canada, Malaysia, Mexico, Singapore, the U.A.E., the United Kingdom, and the United States. This acquisition aligns well with the Company's diversification strategy by increasing its exposure to the fast growing energy market, including the addition of Oil Country Tubular Goods ("OCTG") products, new processing capabilities and entry into new international markets. Continental and its affiliates had combined net sales of approximately $204.8 million in the five-month period from August 1, 2011 through December 31, 2011. The preliminary allocation of the total purchase price of Continental to the fair values of the assets acquired and liabilities assumed is as follows:

 
   (in millions)  

Cash

   $ 22.8  

Accounts receivable

     55.7  

Inventories

     125.9  

Property, plant and equipment

     28.8  

Goodwill

     138.5  

Intangible assets subject to amortization

     103.7  

Intangible assets not subject to amortization

     70.6  

Other current and long-term assets

     1.8  
       

Total assets acquired

     547.8  
       

Current and long-term debt

     104.7  

Deferred taxes

     56.9  

Other current and long-term liabilities

     50.1  
       

Total liabilities assumed

     211.7  
       

Net assets acquired

   $ 336.1  
       

2010 Acquisitions

        On December 1, 2010, through its subsidiary American Metals Corporation, the Company acquired all of the outstanding capital stock of Lampros Steel, Inc. ("LSI") and a related interest in Lampros Steel Plate Distribution, LLC ("LSPD"). LSI specializes in structural steel shapes with a facility located in Portland, Oregon. LSPD owns a 50% interest in an unconsolidated partnership, LSI Plate that is a distributor of carbon steel plate with locations in California and Oregon. Net sales of LSI for the year ended December 31, 2011 were approximately $42.4 million. Effective February 2011, the business conducted by LSI Plate was moved to LSI in order to achieve certain operational efficiencies.

        On October 1, 2010, the Company acquired all of the outstanding capital stock of Diamond Consolidated Industries, Inc. and affiliated companies ("Diamond"), which now operate under the corporate name Diamond Manufacturing Company. The operating divisions consist of Diamond Manufacturing Company located in Wyoming, Pennsylvania and Diamond Manufacturing Midwest in Michigan City, Indiana both of which specialize in the manufacture and sale of specialty engineered perforated materials; Perforated Metals Plus, a distributor of perforated metals located in Charlotte, North Carolina; and Dependable Punch, a manufacturer of custom punches for tools and dies also located in Wyoming, Pennsylvania. This acquisition expanded our product and processing offerings with the addition of perforated metals. Net sales of Diamond for the year ended December 31, 2011 were approximately $98.4 million. An operating division of Diamond was opened near Dallas, Texas in early 2011 to expand Diamond's geographic reach.

        We funded our 2010 acquisitions with borrowings of approximately $100.3 million on our $1.1 billion revolving credit facility. The allocation of the total purchase price of LSI and Diamond to the fair values of the assets acquired and liabilities assumed is as follows:

 
   (in millions)  

Cash

   $ 3.6  

Accounts receivable

     14.9  

Inventories

     17.4  

Property, plant and equipment

     19.9  

Goodwill

     26.4  

Intangible assets subject to amortization

     31.7  

Intangible assets not subject to amortization

     22.7  

Other current and long-term assets

     3.7  
       

Total assets acquired

     140.3  
       

Current and long-term debt

     22.6  

Other current and long-term liabilities

     13.8  
       

Total liabilities assumed

     36.4  
       

Net assets acquired

   $ 103.9  
       

Summary purchase price allocation information for all acquisitions

        All of the acquisitions discussed in this note have been accounted for under the acquisition method of accounting and, accordingly, each purchase price has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of each acquisition. The accompanying consolidated statements of income include the revenues and expenses of each acquisition since its respective acquisition date. The consolidated balance sheets reflect the allocations of each acquisition's purchase price as of December 31, 2011 or 2010, as applicable. The purchase price allocation for Continental is preliminary and is pending the completion of various pre- and post-acquisition period income tax returns.

        As part of the purchase price allocations of the 2011 and 2010 acquisitions, $70.6 million and $22.7 million, respectively, were allocated to the trade names acquired, none of which is subject to amortization. The Company determined that the trade names acquired in connection with these acquisitions had indefinite lives since their economic lives are expected to approximate the life of each company acquired. Additionally, the Company recorded other identifiable intangible assets related to customer relationships for 2011 and 2010 acquisitions of $101.8 million and $31.5 million, respectively, with weighted average lives of 10.0 and 12.3 years, respectively. The goodwill amount from the Continental acquisition is not expected to be deducted for tax purposes in future years while the goodwill amounts from the 2010 acquisitions are expected to be deducted for income tax purposes. Total tax deductible goodwill amounted to approximately $406.0 million as of December 31, 2011.