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Acquisitions
 12 Months Ended
Dec. 31, 2011
Acquisitions  
Acquisitions

(19)              Acquisitions

 

On March 9, 2009, the Company acquired selected assets of the Hillsdale, Michigan, operations of Foamade Industries, Inc. (“Foamade”). The Hillsdale operations of Foamade specialized in the fabrication of technical urethane foams for a myriad of industries and bring to the Company further penetration into applications using this family of foams, as well as incremental sales to fold into its operations. The Company has transitioned the acquired assets to its Grand Rapids, Michigan, plant.

 

On July 7, 2009, the Company acquired substantially all of the assets of E.N. Murray Co. (“ENM”), a Denver, Colorado-based foam fabricator, for $2,750,000. ENM specialized in the fabrication of technical urethane foams primarily for the medical industry. This acquisition brings to the Company further access and expertise in fabricating technical urethane foams and a seasoned management team. The Company had leased the former ENM Denver facilities for a period of two years. The Company purchased these properties on December 22, 2010, for $1,200,000.

 

On August 24, 2009, the Company acquired selected assets of Advanced Materials, Inc. (“AMI”) for $620,000. Located in Rancho Dominguez, California, AMI specialized in the fabrication of technical urethane foams primarily for the medical industry and brings to the Company further penetration into this market. The Company assumed the lease of the 56,000-square-foot Rancho Dominguez location, which expires in November 2011.

 

The Company recorded gains of approximately $81,000, $558,000, and $201,000 on the acquisitions of selected assets of Foamade, ENM, and AMI, respectively, as it acquired the assets in bargain purchases. The Company believes the bargain purchase gains resulted from opportunities created by the overall weak economy.

 

The following table summarizes the consideration paid and the acquisition date fair value of the assets acquired and liabilities assumed relating to each transaction:

 

 

 

Foamade

 

ENM

 

AMI

 

 

 

9-Mar-2009

 

7-Jul-2009

 

24-Aug-2009

 

Consideration

 

 

 

 

 

 

 

Cash

 

$

375,000

 

$

2,750,000

 

$

620,000

 

Fair value of total consideration transferred

 

$

375,000

 

$

2,750,000

 

$

620,000

 

Acquisition costs (legal fees) included in SG&A

 

$

25,000

 

$

30,000

 

$

35,000

 

Recognized amounts of identifiable assets acquired:

 

 

 

 

 

 

 

Cash

 

$

—

 

$

1,309,466

 

$

—

 

Accounts receivable

 

—

 

832,054

 

289,540

 

Inventory

 

182,864

 

922,497

 

252,528

 

Other assets

 

—

 

37,708

 

—

 

Fixed assets

 

189,100

 

812,000

 

345,750

 

Non-compete

 

30,000

 

120,000

 

—

 

Customer list

 

103,000

 

490,000

 

56,000

 

Total identifiable net assets

 

$

504,964

 

$

4,523,725

 

$

943,818

 

Payables and accrued expenses

 

$

—

 

$

(830,341

)

$

—

 

Equipment loan

 

—

 

(42,827

)

—

 

Deferred tax liabilities

 

(49,386

)

(342,212

)

(123,051

)

Net assets acquired

 

$

455,578

 

$

3,308,345

 

$

820,767

 

 

With respect to the acquisition of selected assets of ENM, the Company acquired gross accounts receivable of $873,919, of which it deemed $41,865 to be uncollectible. It therefore recorded the accounts receivable at its fair market value of $832,054. With respect to the acquisition of selected assets of AMI, the Company acquired gross accounts receivable of $324,540, of which it deemed $35,000 to be uncollectible. It therefore recorded the accounts receivable at its fair market value of $289,540. With respect to the non-compete and customer list intangible assets acquired from Foamade, ENM, and AMI, the weighted average amortization period is five years. No residual balance is anticipated for any of the intangible assets.

 

The following table contains an unaudited pro forma condensed consolidated statement of operations for the years ended December 31, 2009, as if the ENM acquisition had occurred at the beginning of the period:

 

 

 

Year Ended
31-Dec-2009

 

Sales

 

$

105,228,869

 

Net income

 

6,070,518

 

 

 

 

 

Earnings Per Share:

 

 

 

Basic

 

$

1.04

 

Diluted

 

0.96

 

 

The above unaudited pro forma information is presented for illustrative purposes only, and may not be indicative of the results of operations that would have actually occurred had the ENM acquisition occurred as presented. In addition, future results may vary significantly from the results reflected in such pro forma information.