4.	Acquisitions

On May 12, 2015, the Company completed its tender offer to purchase all of the outstanding shares of common stock of Norcraft, a leading publicly-owned manufacturer of kitchen and bathroom cabinetry, for a total purchase price of $648.6 million in cash. We financed the transaction using cash on hand and borrowings under our existing credit facilities. This transaction is expected to strengthen our overall product offering, round out our regional market penetration and enhance our frameless cabinetry capabilities. Net sales in both the six and three months ended June 30, 2015 were approximately $46 million, and operating income was not material to the Company. The results of operations of Norcraft are included in the Cabinets segment. We incurred $14.9 million and $13.8 million of Norcraft acquisition-related transaction costs in the six and three months ended June 30, 2015, respectively. The goodwill expected to be deductible for income tax purposes is in the process of being determined.

The following table summarizes the preliminary allocation of the purchase price to fair values of assets acquired and liabilities assumed as of the date of the acquisition.


(In millions)
Accounts receivable	$	31.0
Inventories		28.4
Property, plant and equipment		28.9
Goodwill		450.5
Identifiable intangible assets		200.0
Other assets		18.7

Total assets		757.5
Deferred tax liabilities		80.2
Other liabilities and accruals		28.7

Net assets acquired	$	648.6

The preceding purchase price allocation has been determined provisionally and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The Company is in the process of finalizing valuations of certain tangible and intangible assets, including tradenames. The provisional measurement of property and equipment, intangible assets, goodwill, deferred income taxes, and other assets and liabilities is subject to change. Any change in the acquisition date fair value of the acquired net assets will change the amount of the purchase price allocable to goodwill.

Goodwill includes expected sales and cost synergies. Identifiable intangible assets primarily consist of customer relationships (estimated to be $200 million). The useful life of this identifiable intangible assets was estimated to be 20 years.

The following unaudited pro forma summary presents consolidated financial information as if Norcraft had been acquired on January 1, 2014. The unaudited pro forma financial information is based on historical results of operations and financial position of the Company and Norcraft. The pro forma results include:

•

estimated amortization of a definite-lived customer relationship intangible asset,

•

the estimated cost of the inventory step-up to fair value,

•

interest expense associated with debt that would have been incurred in connection with the acquisition,

•

the reclassification of Norcraft transaction costs from 2015 to the first quarter of 2014, and

•

adjustments to conform accounting policies.

The unaudited pro forma financial information does not necessarily represent the results that would have occurred had the acquisition occurred on January 1, 2014. In addition, the unaudited pro forma information should not be deemed to be indicative of future results.


(In millions, except per share amounts)	Six Months Ended June 30,				Three Months Ended June 30,
	2015		2014		2015		2014
Net sales	$	2,258.3	$	2,096.8	$	1,213.1	$	1,124.2
Income from continuing operations		134.9		126.2		90.1		91.6

Basic earnings per common share	$	0.85	$	0.76	$	0.57	$	0.56
Diluted earnings per common share	$	0.83	$	0.74	$	0.56	$	0.54

In March 2015, we acquired a cabinets component company for approximately $6 million in cash. A preliminary allocation of the purchase price has been reflected in the financial statements and will be updated as asset and liability valuations are finalized. Final adjustments will reflect the fair value assigned to the assets, including intangible assets, and assumed liabilities.

In December 2014, we acquired all of the issued and outstanding shares of capital stock of Anafree Holdings, Inc., the sole owner of Anaheim Manufacturing Company (“Anaheim”), which markets and sells garbage disposals, for $28.9 million in cash. We paid the purchase price using a combination of cash on hand and borrowings under our existing credit facilities. Net sales in the six and three months ended June 30, 2015 were approximately $15 million and $7 million, respectively, and operating income was not material to the Company. The results of operations of Anaheim are included in the Plumbing segment.

In July 2014, we acquired all of the voting equity of John D. Brush & Co., Inc. (“SentrySafe”) for a purchase price of $116.7 million in cash. The purchase price was funded from our existing credit facilities. This acquisition broadened our product offering of security products. Net sales in the six and three months ended June 30, 2015 were approximately $68 million and $32 million, respectively, and operating income was not material to the Company. The results of operations of SentrySafe are included in the Security segment.

The 2014 completed acquisitions were not material for the purposes of supplemental disclosure and did not have a material impact on our consolidated financial statements.