4.	Acquisitions

In May 2015, we completed our 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. Net sales and operating income for this acquired business in the three months ended March 31, 2016 were approximately $89 million and $3 million (net of severance costs), respectively. The results of operations of Norcraft are included in the Cabinets segment from the date of acquisition. We incurred $15.2 million of Norcraft acquisition-related transaction costs. The goodwill expected to be deductible for income tax purposes is approximately $60.1 million.

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


(In millions)
Accounts receivable	$	31.0
Inventories		28.7
Property, plant and equipment		45.7
Goodwill		304.9
Identifiable intangible assets		360.0
Other assets		9.3

Total assets		779.6
Deferred tax liabilities		101.3
Other liabilities and accruals		29.7

Net assets acquired ^(a)	$	648.6

^(a)

Net assets exclude $15.5 million of cash transferred to the Company as the result of the Norcraft acquisition.

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 within the measurement period. Any change in the acquisition date fair value of the acquired assets and liabilities will change the amount of the purchase price allocable to goodwill.

Goodwill includes expected sales and cost synergies. Identifiable intangible assets consist of an indefinite-lived tradename of $150 million and customer relationships of $210 million. The useful life of the customer relationships identifiable intangible asset is 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:

•

the effect of certain transactions recorded in historical financial statements of Norcraft (reflected in pro forma 2014),

•

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

•

the estimated cost of the inventory adjustment to fair value (reflected in pro forma 2014),

•

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)	Three Months Ended March 31, 2015
Net sales	$	1,045.2
Income from continuing operations		44.8

Basic earnings per common share	$	0.28
Diluted earnings per common share	$	0.27

In March 2015, we acquired a company for approximately $6 million in cash. This acquisition did not have a material impact on our financial statements.