ACQUISITIONS

2013 Acquisition

In September 2013, the Company purchased the assets of a domestic designer and distributor of solar-powered roof and attic ventilation products. The results of this acquisition have been included in the Company’s consolidated financial results since the date of acquisition (included in the Company’s Residential Products segment). The fair value of the aggregate purchase consideration for the assets acquired was $7,454,000. As part of the purchase agreement, the Company is required to pay additional consideration, or an earn-out provision, based on the acquired business’s EBITDA through the last day of the twenty-fourth month following the closing date of the acquisition. The Company expects to make payments of additional consideration through the end of 2015. The purchase agreement does not provide for a limit of the amount of additional consideration. The Company recorded a payable of $2,322,000 to reflect the fair value of the Company’s obligation at the date of the acquisition. Adjustments to this payable are and will be reflected in the Company’s Statement of Operations. The fair value of the Company’s obligation was $328,000 and $1,864,000 as of December 31, 2014 and 2013, respectively. The change in fair value resulted in gains recorded to SG&A of $1,611,000 and $236,000 during the years ended December 31, 2014 and 2013, respectively. The Company also recorded $75,000 and $36,000 to interest expense for this obligation during the years ended December 31, 2014 and 2013, respectively.

The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill and totaled $2,466,000, all of which is deductible for tax purposes. Goodwill represents future economic benefits arising from other assets acquired that could not be individually identified including growth opportunities and increased presence in the building products markets.

The allocation of purchase consideration to the assets acquired and liabilities assumed during 2013 are as follows (in thousands):



Working capital	$	2,665
Property, plant, and equipment	153
Acquired intangible assets	2,170
Goodwill	2,466
Fair value of purchase consideration	$	7,454

The intangible assets acquired in this acquisition consisted of the following (in thousands):



	Fair Value		Estimated Useful Life
Trademarks	$	640	Indefinite
Technology	260		15 Years
Customer relationships	1,130		15 Years
Non-compete agreements	140		5 Years
Total	$	2,170

2012 Acquisitions

During 2012, Gibraltar purchased the assets of four businesses in separate transactions, three of which were acquired in November and December 2012. The acquired product lines complement and expand the Company’s product portfolio and customer base in four key U.S. and Canadian markets:


•	Metal grating products for the oil sands region of Western Canada;


•	Function-critical components for public infrastructure construction and maintenance;


•	Perforated metal products for industrial applications; and


•	Sun protection products for new residential construction and home remodeling.

The results of the above acquisitions have been included in the Company’s consolidated financial results since the respective dates of acquisition (all of which were included in the Company’s Industrial and Infrastructure Products segment with the exception of the assets acquired relating to sun protection products, which was included in the Company’s Residential Products segment). The Company funded the investment from cash on hand including a $146,000 payment during 2013 for working capital settlements for acquisitions closed in 2012. The purchase price for each 2012 acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded in goodwill and totaled $15,263,000, all of which is deductible for tax purposes.

The allocation of purchase consideration to the assets acquired and liabilities assumed during 2012 are as follows (in thousands):



Working capital	$	8,868
Property, plant, and equipment	9,682
Intangible assets	10,183
Other liabilities	(733		)
Goodwill	15,263
Fair value of purchase consideration	$	43,263

The acquired intangible assets consisted of the following for the four acquisitions completed during the year ended December 31, 2012 (in thousands):



	Fair Value		Estimated Useful Life
Customer relationships	$	4,470	5-15 Years
Unpatented technology and patents	2,313		15 Years
Trademarks	2,130		Indefinite
Amortizable trademarks	800		5 Years
Non-compete agreements	340		5-10 Years
Backlog	130		0.5 years
Total	$	10,183

The 2012 and 2013 acquisitions were financed through cash on hand. The Company incurred certain acquisition-related costs composed of legal and consulting fees, and these costs were recognized as a component of selling, general, and administrative expenses in the consolidated statement of operations. The Company also recognized costs related to the sale of inventory at fair value as a result of allocating the purchase price of recent acquisitions.

All acquisition related costs (including the gains recognized as a result of the change in fair value of the earn-out obligation) consisted of the following for the years ended December 31 (in thousands):



	2014			2013		2012
Selling, general and administrative costs	$	(1,594	)	(34	)	456
Cost of sales	206			685		244
Total acquisition related costs	$	(1,388	)	651		700