NOTE 4 – GOODWILL

The following table summarizes the goodwill movement year on year:


(in millions)	Nine Months Ended September 30
	2013			2012

At January 1:
Gross cost ⁽¹⁾	$	384.2		$	375.5
Accumulated impairment losses		(235.2	)		(234.0	)

Net book amount		149.0			141.5


Exchange effect		(0.1	)		(0.1	)
Acquisitions		17.0			0.0
Adjustments to purchase price allocation		0.4			0.0
Impairment losses		(1.0	)		(0.9	)


At September 30:
Gross cost ⁽¹⁾		401.5			375.4
Accumulated impairment losses		(236.2	)		(234.9	)

Net book amount	$	165.3		$	140.5

⁽¹⁾	Gross cost for 2013 and 2012 is net of $298.5 million of historical accumulated amortization.

Acquisitions

On August 30, 2013, the Company acquired 100% of the voting equity interests in Chemsil Silicones, Inc. (“Chemsil”) and Chemtec Chemical Co. (“Chemtec”), both of which are based at Chatsworth in Los Angeles, California. Chemsil develops and markets silicone-based formulations to the personal care industry and Chemtec distributes a wide range of personal care ingredients. We acquired these businesses in order to add to both the technology base and the geographical footprint of our Personal Care business within our Performance Chemicals segment. The companies have combined annual sales of approximately $40 million.

The purchase price for Chemsil and Chemtec, net of cash acquired, comprised $51.2 million in cash and $6.2 million of Innospec Inc. common stock transferred to the previous owner on the acquisition date.

Included in the consolidated income statement of the Company since the acquisition date, are the following revenue and earnings for Chemsil and Chemtec combined:


(in millions)	Chemsil & Chemtec
Net sales	$	3.1
Net income	$	0.2

For illustrative purposes only pro forma information of the enlarged group is provided below but is not necessarily indicative of what the financial position or results of operations would have been had the Chemsil and Chemtec acquisitions been completed as of January 1, 2012. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the future financial position of operating results of the enlarged group.


(in millions, except per share data)	2013		2012
Net sales	$	604.7	$	604.6
Net income	$	50.2	$	59.0
Earnings per share – basic	$	2.13	$	2.55
– diluted	$	2.08	$	2.47

Included in the 2012 comparative above, in addition to Chemsil and Chemtec, is unaudited pro forma information for Strata Control Services, Inc. (“Strata”), which the Company acquired on December 24, 2012 as if the acquisition had been completed as of January 1, 2012. Adjustments to the unaudited pro forma financial information include amortization in respect of the acquired other intangible assets for the Chemsil, Chemtec and Strata acquisitions, and the acquisition-related costs incurred in respect of all these transactions.

The following tables summarize the calculations of the total purchase price and the estimated allocation of the purchase price to the assets acquired and liabilities assumed for Chemsil and Chemtec. The purchase price allocation is not yet complete as we are in the process of finalising the valuation of the assets acquired. Final determination of the fair values may result in adjustments to the amounts presented below:


(in millions)	Chemsil & Chemtec
Other intangible assets	$	33.7
Goodwill		17.0
Other net assets		6.7

Purchase price, net of cash acquired	$	57.4

Chemsil and Chemtec, and the associated goodwill, are included within our Performance Chemicals segment for management and reporting purposes (see Note 5 for further information on the other intangible assets).

Adjustments to Strata purchase price allocation

During the three months ended June 30, 2013, we finalized our calculations of the fair values of assets acquired and liabilities assumed in the acquisition of Strata, resulting in a $0.4 million reduction in other net assets acquired and a corresponding increase in goodwill.