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Acquisition
 3 Months Ended
Mar. 31, 2013
Acquisition [Abstract]  
Acquisition
15. Acquisition

On February 28, 2013, the Company acquired Aarding Thermal Acoustics B.V., a Netherlands company (“Aarding”), pursuant to the terms of a Share Purchase Agreement, (the “SPA”) dated February 28, 2013, among the Company, CECO Environmental Netherland B.V., N.F.J.A. Pieterse Beheer B.V., and W.M. Pranger Beheer B.V., and ATA Beheer B.V. Aarding is a global provider of natural gas turbine exhaust systems and silencer applications and will part of our Engineered Equipment Technology and Parts Group. The purchase price included cash of $24.4 million and 763,673 shares of restricted common stock. The preliminary fair value of the common stock issued has been determined to be $7.4 million which reflects the closing price of the Company’s common stock on the Closing Date and a discount related to the sale and transfer restrictions on the shares. The cash paid was funded by the Company’s cash reserves. Of the total consideration paid, €4 million ($5.3 million as of March 31, 2013) is contingent upon the future employment by the Sellers and, therefore, has been classified as prepaid compensation by the Company. Additionally, the former owners of Aarding are entitled to earn-out payments of up to €5.5 million ( $7.2 million as of March 31, 2013) upon the attainment of specified financial targets through December 31, 2017. Such earn out payments are contingent upon the continued employment of the Sellers. Accordingly, no value for the potential earn out consideration has been allocated to the purchase price of Aarding as any such payments will be reported as future compensation expense by the Company.

The following table summarizes the approximate fair values of the assets acquired and liabilities assumed at the date of closing. The acquisition accounting is dependent on certain valuations and other studies that have yet to progress to a stage where there is sufficient information for a definitive measurement. The approximate fair values of the assets acquired and liabilities assumed, and the related tax balances, are based on preliminary estimates and assumptions. These preliminary estimates and assumptions could change significantly during the purchase price measurement period as we finalize the valuations of the assets acquired and liabilities assumed, and the related tax balances. Such changes could result in material variances between the Company’s future financial results and the amounts presented in the unaudited pro forma information, including variances in the estimated purchase price, fair values recorded and expenses associated with these items.

 

 

         
$ in thousands      

Current assets

   $ 15,062  

Property and equipment

     959  

Goodwill

     16,572  

Intangible – finite life, net

     3,271  

Intangible – indefinite life

     1,963  
   

 

 

  

Total assets acquired

     37,827  

Current liabilities assumed

     (9,585 ) 
   

 

 

  

Net assets acquired

   $ 28,242  
   

 

 

  

The following unaudited pro forma information represents the Company’s results of operations as if the acquisition had occurred on the first day of each of the respective periods:

 

                 
    Three Months Ended
March 31,		  
(dollars in thousands, except per share amounts)   2013     2012  

Net sales

   $ 39,717     $ 40,151  

Net income

  $ 2,130     $ 2,457  

Earnings per share:

                

Basic

   $ 0.12     $ 0.16  

Diluted

   $ 0.12     $ 0.14  

The pro forma results have been prepared for informational purposes only and include adjustments to amortize acquired intangible assets with finite life eliminate intercompany balances and transactions between the Company and Aarding, record compensation expense related to the consideration paid that is contingent upon the continued employment of the Sellers, record compensation expense related to the estimated contingent cash earn out, which assumes the EBITDA targets, as defined in the SPA, are met, foregone interest income on cash paid for the acquisition, and the recognition of the income tax consequences of the pro forma adjustments tax effected at estimated statutory rates. These pro forma results do not purport to be indicative of the results of operations that would have occurred had the purchase been made as of the beginning of the periods presented or of the results of operations that may occur in the future.

Acquisition expenses on the Condensed Consolidated Statements of Income are related to acquisition activities, which include retention, earn-out arrangements, legal, accounting, banking, and other expenses.