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Acquisitions | 6 Months Ended
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Jun. 30, 2011
Acquisitions |
Acquisitions |
3. | Acquisitions
On January 20, 2011, the Company acquired the membership interests of Advanced Thin Films, LLC ("AT Films"). AT Films specializes in optical components and coatings for applications in the fields of scientific research, defense, aerospace, telecommunications and electronics manufacturing. AT Films' core competence is the design and manufacture of filters, splitters, reflectors and mirrors with the precise physical properties required to support their customers' most challenging and cutting-edge optical applications. Headquartered in Boulder, Colorado, AT Films has annual revenues of approximately $9.0 million. AT Films operates within the Health & Science Technologies Segment as a part of the IDEX optics and photonics platform. The Company acquired AT Films for an aggregate purchase price of $34.5 million, consisting of $31.8 million in cash and contingent consideration valued at approximately $2.7 million. The potential undiscounted amount of all future payments that the Company could be required to pay under the contingent consideration arrangement is between $0 and $3.0 million. Goodwill and intangible assets recognized as part of this transaction were $16.7 million and $11.4 million, respectively. The $16.7 million of goodwill is deductible for tax purposes. On March 11, 2011, the Company completed the acquisition of Microfluidics International Corporation ("Microfluidics"). Microfluidics is a global leader in the design and manufacture of laboratory and commercial equipment used in the production of micro and nano scale materials for the pharmaceutical and chemical markets. Microfluidics is the exclusive producer of the Microfluidizer® family of high shear fluid processors for uniform particle size reduction, robust cell disruption and nanoparticle creation. Microfluidics operates within the Health & Science Technologies Segment as a part of the IDEX Pharma platform. The Company acquired Microfluidics for an aggregate purchase price of $18.5 million in cash. Headquartered in Newton, Massachusetts, Microfluidics has annual revenues of approximately $16.0 million. Goodwill and intangible assets recognized as part of this transaction were $4.4 million and $9.7 million, respectively. The $4.4 million of goodwill is not deductible for tax purposes. On June 10, 2011, the Company completed the acquisition of CVI Melles Griot ("CVI MG"). CVI MG is a global leader in the design and manufacture of precision photonic solutions used in the life sciences, research, semiconductor, security and defense markets. CVI MG's innovative products are focused on the generation, control and productive use of light for a variety of key science and industrial applications. Products include specialty lasers and light sources, electro-optical components, specialty shutters, opto-mechanical assemblies and components. In addition, CVI MG produces critical components for life science research, electronics manufacturing, military and other industrial applications including lenses, mirrors, filters and polarizers. These components are utilized in a number of important applications such as spectroscopy, cytometry (cell counting), guidance systems for target designation, remote sensing, menology and optical lithography. CVI MG operates within the Health and Science Technologies Segment as part of the IDEX optics and photonics platform. The Company acquired CVI MG for an aggregate purchase price of $397.1 million, consisting of $395.7 million in cash and the assumption of approximately $1.4 million of debt. Approximately $365.0 million of the cash payment was financed with borrowings under the Company's revolving credit facility. Headquartered in Albuquerque, New Mexico, with manufacturing sites located on three continents, CVI MG has annual revenues of approximately $185.0 million. Goodwill and intangible assets recognized as part of this transaction were $199.5 million and $114.3 million, respectively. Approximately $116.6 million of goodwill is deductible for tax purposes. The purchase price for CVI MG, AT Films and Microfluidics has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition. The Company is in the process of obtaining or finalizing appraisals of tangible and intangible assets and it is continuing to evaluate the initial purchase price allocations, as of the acquisition date, which will be adjusted as additional information relative to the fair values of the assets and liabilities of the businesses become known. Accordingly, management has used its best estimate in the initial purchase price allocation as of the date of the filing of these financial statements. The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values at June 30, 2011, is as follows:
|  | AT Films |  |  | Microfluidics |  |  | CVI MG |  |  | Total |
|  | (In thousands) |
Accounts receivable |  | $ | 947 |  |  | $ | 1,760 |  |  | $ | 24,571 |  |  | $ | 27,278 |
Inventory |  |  | 852 |  |  |  | 2,226 |  |  |  | 58,957 |  |  |  | 62,035 |
Other current assets, net of cash acquired |  |  | 73 |  |  |  | 1,129 |  |  |  | 5,546 |  |  |  | 6,748 |
Property, plant and equipment |  |  | 5,019 |  |  |  | 567 |  |  |  | 40,375 |  |  |  | 45,961 |
Goodwill |  |  | 16,687 |  |  |  | 4,420 |  |  |  | 199,458 |  |  |  | 220,565 |
Intangible assets |  |  | 11,435 |  |  |  | 9,717 |  |  |  | 114,274 |  |  |  | 135,426 |
Other assets |  |  | — |  |  |  | 1,915 |  |  |  | 1,974 |  |  |  | 3,889 |
Total assets acquired |  |  | 35,013 |  |  |  | 21,734 |  |  |  | 445,155 |  |  |  | 501,902 |
Total liabilities assumed |  |  | (527 | ) |  |  | (3,200 | ) |  |  | (49,404 | ) |  |  | (53,131 | )
Net assets acquired |  | $ | 34,486 |  |  | $ | 18,534 |  |  | $ | 395,751 |  |  | $ | 448,771 |
Of the $135.4 million of acquired intangible assets, $47.0 million was assigned to a trade name that is not subject to amortization. The remaining $88.4 million of acquired intangible assets consist of patents, trade names, customer relationships, non-compete and unpatented technology, which are being amortized over a life of 2-15 years. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses. The Company incurred $5.3 million of acquisition-related transaction costs in the first six months of 2011. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including certain transactions that ultimately were not completed. In accordance with ASU 2010-29, "Disclosure of Supplementary Pro Forma Information for Business Combinations," the following unaudited pro forma information illustrates the effect on the Company's net sales and net income for the three and six months ended June 30, 2011 and 2010, assuming that the 2011 acquisition had taken place at the beginning of 2010. As a result, the pro forma net income reflects adjustments for the three and six months ended June 30, 2010 to include $3.0 million and $16.4 million, respectively of pre-tax acquisition fair value inventory charges and adjustments for the three and six months ended June 30, 2011 to exclude $6.4 million and $11.2 million, respectively of pre-tax acquisition-related costs. The 2011 and 2010 supplemental pro forma net income are also adjusted to reflect the comparable impact of additional depreciation and amortization expense resulting from the fair value measurement of tangible and intangible assets and financing costs relating to the 2011 acquisitions.
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |
|  | (In thousands) |
Net sales |  | $ | 486,895 |  |  | $ | 426,364 |  |  | $ | 963,031 |  |  | $ | 827,526 |
Net income |  |  | 50,810 |  |  |  | 39,032 |  |  |  | 99,875 |  |  |  | 66,406 |
Diluted earnings per share |  | $ | 0.61 |  |  | $ | 0.48 |  |  | $ | 1.19 |  |  | $ | 0.81 |
These pro forma results of operations have been prepared for comparative purposes only. They do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the date indicated or that may result in the future.

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- Definition Description of a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. This element may be used as a single block of text to encapsulate the entire disclosure (including data and tables) regarding business combinations, including leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph F4 -Subparagraph e -Appendix F + Details
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