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Acquisitions | 6 Months Ended
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Jun. 28, 2015
Acquisitions |
Acquisitions | 3.Acquisitions On December 1, 2014, the Company completed the acquisition of AERCO in a share purchase transaction. The aggregate purchase price was $271.5 million and was financed from a borrowing under the Company’s Credit Agreement. During the second quarter of 2015, the working capital adjustment was finalized resulting in a $0.7 million reduction in the final purchase price. The Company accounted for the transaction as a business combination. The Company completed a purchase price allocation that resulted in the recognition of $173.3 million in goodwill and $102.4 million in intangible assets. The goodwill balance was reduced during the second quarter of 2015 primarily related to the finalization of the working capital adjustment. Intangible assets consist primarily of customer relationships valued at $78.5 million with estimated lives of 16 years, developed technology valued at $15.8 million with estimated lives of 10 years and trade name valued at $7.4 million with a 20 year life. The goodwill is attributable to the workforce of AERCO and the strategic platform adjacency that will allow Watts to extend its product offerings as a result of the acquisition. Approximately $19.4 million of the goodwill is deductible for tax purposes. The following table summarizes the value of the assets and liabilities acquired (in millions):
Accounts receivable |  | $ | 17.2 |
Inventory |  | 16.3 |
Fixed assets |  | 7.7 |
Deferred tax assets |  | 8.2 |
Other assets |  | 7.6 |
Intangible assets |  | 102.4 |
Goodwill |  | 173.3 |
Accounts payable |  | (6.8 | )
Accrued expenses and other |  | (18.4 | )
Deferred tax liability |  | (36.0 | )
Purchase price |  | $ | 271.5 |
The consolidated statement of operations for the second quarter and the six months ended June 28, 2015 includes the results of AERCO. The second quarter and the six months ended June 28, 2015 results include $32.4 million and $54.6 million of revenues, respectively, and $6.1 million and $7.3 million of operating income, respectively, attributable to AERCO. The six months ended June 28, 2015 operating income of AERCO includes $0.9 million of purchase accounting charges. Supplemental pro-forma information Had the acquisition of AERCO been completed at the beginning of 2014, the Company’s consolidated net sales, net income from continuing operations and earnings per share from continuing operations would have been as follows:
|  | Second Quarter Ended |  | Six Months Ended |
Amounts in millions (except per share information) |  | June 28, 2015 |  | June 29, 2014 |  | June 28, 2015 |  | June 29, 2014 |
Net sales |  | $ | 386.9 |  | $ | 426.1 |  | $ | 743.1 |  | $ | 809.8 |
Net income from continuing operations |  | $ | 19.3 |  | $ | 24.4 |  | $ | 31.6 |  | $ | 37.7 |
Net income per share: |  |  |  |  |  |  |  |  |
Basic EPS—continuing operations |  | $ | 0.55 |  | $ | 0.69 |  | $ | 0.90 |  | $ | 1.07 |
Diluted EPS—continuing operations |  | $ | 0.55 |  | $ | 0.69 |  | $ | 0.90 |  | $ | 1.07 |
Net income from continuing operations for the second quarter and six months ended June 29, 2014 was adjusted to include $0.9 million and $1.6 million, respectively, of net interest expense related to the financing of the acquisition and $1.1 million and $2.2 million, respectively, of net amortization expense resulting from the estimated allocation of purchase price to amortizable tangible and intangible assets. Net income from continuing operations for the six months ended June 28, 2015 was also adjusted to exclude $0.7 million of net acquisition-related charges.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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