
2.	Acquisitions

The Company’s acquisitions have been accounted for using the purchase method of accounting and the acquired companies’ results have been included in the accompanying financial statements from the dates of the acquisitions. The Company incurred acquisition transaction costs of approximately $326,000 and $1,802,000 in 2014 and 2013, respectively, which are included in selling, general, and administrative expenses. The Company's acquisitions have historically been made at prices above the fair value of the acquired net assets, resulting in goodwill, due to expectations of synergies from combining the businesses. The Company anticipates several synergies in connection with these acquisitions, including the use of the Company's existing distribution channels to expand sales of the products of the acquired businesses.

2014

On October 31, 2014, the Company acquired certain assets of the screen cylinder business of a U.S.-based company for approximately $9,174,000 in cash. This technology-based acquisition enhances the Company’s stock-preparation equipment product offerings to pulp and paper mills worldwide.

On December 30, 2013, the Company acquired all the outstanding shares of a European producer of creping and coating blades for approximately $2,666,000 in cash, including $674,000 of cash acquired. An additional 1,000,000 euros, or approximately $1,210,000 as of January 3, 2015, of contingent consideration is due to the sellers within two years after the closing date if certain conditions specified in the purchase agreement are met. The fair value of this contingent consideration was $1,133,000 as of January 3, 2015.

The following table summarizes the purchase method of accounting for the acquisitions made in 2014 and the estimated fair values of assets acquired and liabilities assumed:



2014 Acquisitions (In thousands)	Total

Net Assets Acquired:
Cash and cash equivalents	$	674
Inventories	1,064
Other current assets	324
Property, plant & equipment	847
Intangibles
Customer relationships	4,700
Intellectual property	2,600
Other	360
Goodwill	3,463
Total assets acquired	14,032

Total liabilities assumed	1,001
Net assets acquired	$	13,031

Purchase Price:
Cash	$	11,840
Contingent consideration	1,191
Total purchase price	$	13,031

The weighted-average amortization period for intangibles acquired in 2014 is 9 years. The excess of the purchase price for the acquisitions made in 2014 over the tangible and identifiable intangible assets was recorded as goodwill and amounted to approximately $3,463,000, of which $2,004,000 is deductible for tax purposes.

During 2014, the Company made post-closing adjustment payments of $818,000 related to acquisitions completed prior to 2014.

2013

On April 12, 2013, the Company acquired all the outstanding stock of Companhia Brasileira de Tecnologia Industrial (CBTI) for approximately $8,140,000 in cash and $484,000 in assumed liabilities owed to Kadant. CBTI was a long-time licensee of the Company's doctoring, cleaning, filtration, and stock preparation products and is also a supplier of industrial drying systems. This acquisition furthers the Company's strategy of expanding its presence in emerging markets. At the closing date, approximately $3,550,000 of the purchase price was deposited into an escrow fund to secure certain indemnification obligations of the sellers. Approximately $1,248,000 of the escrow fund was released to the sellers in February 2014, and the balance will be released on various dates ending on the fifth anniversary of the closing date, less the amount of any claims.

On May 3, 2013, the Company acquired certain assets of the Noss Group (Noss), a Sweden-based developer and supplier of high-efficiency cleaners and approach flow systems, for approximately $7,196,000 in cash, including $101,000 of additional consideration paid as a post-closing adjustment in 2014. This acquisition expands the Company's product offerings in its Stock-Preparation product line, particularly for virgin pulp and approach flow applications. In addition, Noss has a large installed base and a high proportion of its revenues are parts and consumables products. At the closing date, approximately $1,970,000 of the purchase price was deposited into an escrow fund to secure certain indemnification obligations of the sellers. The escrow fund will be released to the sellers by the second anniversary of the closing date, less any claims made.

On November 6, 2013, the Company acquired all the outstanding shares of Carmanah Design and Manufacturing Inc. (Carmanah) for approximately $52,281,000 in cash, including $717,000 of additional consideration paid as a post-closing adjustment in 2014, and $171,000 of assumed liabilities owed to Kadant. Carmanah is a designer and manufacturer of stranders and related equipment used in the production of OSB. At the closing date, $6,705,000 of the purchase price was deposited into an escrow fund to secure certain tax, environmental, and other indemnification obligations of the sellers. Half of the escrow fund was released to the sellers in November 2014 and the balance will be released to the sellers on the 18-month anniversary of the closing, less any claims made. The acquisition of Carmanah extended Kadant's presence into the forest products industry and advanced the Company's strategy of increasing its parts and consumables business.

The components of the purchase price and net assets acquired for 2013 acquisitions, as revised for the finalization of the valuation process and amounts paid in 2014, are as follows:



2013 Acquisitions (In thousands)	Total

Net Assets Acquired:
Cash and cash equivalents	$	1,966
Accounts receivable	8,523
Inventories	17,757
Other assets	3,237
Property, plant & equipment	5,891
Intangibles
Intellectual property	18,786
Customer relationships	5,340
Other	2,893
Goodwill	24,744
Total assets acquired	89,137

Long-term deferred tax liabilities	6,032
Other liabilities	14,834
Total liabilities assumed	20,866
Net assets acquired	$	68,271

Purchase Price:
Cash	$	68,271

Pro forma disclosures of the results of operations are not required, as the acquisitions are not considered material business combinations.