ACQUISITIONS

TMB

On November 4, 2013, the Company completed its transaction to acquire TMB from ATI which included all of the assets of TDY Industries, LLC, a wholly owned subsidiary of ATI, used or held for use by TDY in connection with the business; and all of the shares of TDY Limited and ATI Holdings SAS, both wholly-owned subsidiaries of ATI, for a purchase price of $607.0 million, net of cash acquired. We funded the acquisition primarily through a combination of cash from operations and available borrowings under our existing credit facility. TMB is a leading producer of tungsten metallurgical powders, as well as tooling technologies and components. When acquired, the business had approximately 1,175 employees in 12 locations primarily in the United States of America, and 6 other countries.

As part of the acquisition of TMB, Kennametal incurred $8.7 million for the year ended June 30, 2014 of acquisition-related costs, which are included in operating expense and cost of goods sold.

Purchase Price Allocation

In accordance with the accounting guidance for business combinations, the TMB acquisition was accounted for under the acquisition method of accounting and accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of acquisition. The consolidated balance sheet as of June 30, 2014 reflects the allocation of the purchase price.

The allocation of the total purchase price to the fair values of the assets acquired and liabilities assumed as of June 30, 2014 is as follows:



(in thousands)	Total
ASSETS
Current assets:
Cash and cash equivalents	$	1,294
Accounts receivable	41,164
Inventories	100,453
Other current assets	4,014
Total current assets	146,925
Property, plant and equipment	127,838
Goodwill	243,577
Other intangible assets	127,300
Deferred income taxes	6,978
Other	603
Total assets	$	653,221

LIABILITIES
Current liabilities:
Accounts payable	$	22,790
Accrued payroll	3,401
Accrued expenses	5,434
Total current liabilities	31,625
Deferred income taxes	4,585
Other long-term liabilities	8,781
Total liabilities	44,991
Net assets acquired	$	608,230

In connection with this acquisition, we identified and valued certain intangible assets, including existing customer relationships, technologies, trademarks and contract-based intangibles, as discussed in Note 2. The goodwill recorded of $243.6 million is attributable to the operating synergies associated with the acquisition that we expected to realize, as discussed in Note 2.

The accompanying consolidated balance sheet as of June 30, 2015 reflects the final allocation of the purchase price. We recorded an additional $3.0 million of goodwill in 2015 based on finalization of the purchase price allocation. See Note 2.

The operating results for the year ended June 30, 2014 include net sales of $194.9 million and net loss attributable to Kennametal of $10.5 million related to TMB.

Unaudited Pro Forma Financial Information

The following unaudited pro forma summary of operating results presents the consolidated results of operations as if the TMB acquisition had occurred on July 1, 2012. These amounts were calculated after applying our accounting policies and adjusting TMB’s results to reflect increased depreciation and amortization expense resulting from recording fixed assets and intangible assets at fair value, as well as increased cost of sales resulting from recording inventory at fair value. The pro forma results for the year ended June 30, 2014 excludes $8.7 million of acquisition-related and includes $19.1 million of restructuring-related pre-tax costs. The pro forma results for the year ended June 30, 2013 includes $8.7 million of integration-related pre-tax costs. The pro forma results have been presented for comparative purposes only, include no expected sales or cost synergies and are not indicative of future results of operations or what would have occurred had the acquisition been made on July 1, 2012.

Unaudited pro forma summary of operating results of Kennametal, assuming the acquisition had occurred as of July 1, 2012, are as follows:



Year ended June 30 (in thousands)	2014		2013
Pro forma (unaudited):
Net Sales	$	2,941,005	$	2,902,160
Net income attributable to Kennametal	$	175,804	$	190,863

Per share data attributable to Kennametal Shareholders :
Basic earnings per share	$	2.23	$	2.40
Diluted earnings per share	$	2.21	$	2.37

Emura

On August 1, 2013, the Company acquired the operating assets of Emura, based in La Paz, Bolivia, and secured related material sourcing agreements for a purchase price of $40.1 million, of which $25.6 million was paid in fiscal year 2014 and $0.5 million was paid in fiscal year 2013, and $14.0 million of contingent consideration, as discussed in Note 5. Emura's principal operations are engaged in collecting, testing, processing and exporting tungsten ore material, and was a long-standing supplier to Kennametal. The addition of Emura enhances the Company's strategic tungsten sourcing capabilities to serve growth globally.

Other

On September 30, 2013, the Company completed a small acquisition in the Infrastructure segment for $2.0 million.