Acquisitions | 4. Acquisitions Pinturas On June 1, 2016, the Company acquired 100% of the equity of privately held Pinturas Benicarló, S.L. (“Pinturas”) for €16.2 million in cash (approximately $18.0 million). The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of June 30, 2016, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $8.5 million of amortizable intangible assets, $3.8 million of goodwill, $0.7 million of personal and real property, $2.6 million of a deferred tax liability related to the amortizable intangible assets, and $7.6 million of net working capital on the condensed consolidated balance sheet. Ferer On January 5 , 2016 , the Company completed the purchase of 100% of the equity of privately held Istanbul-based Ferer Dis Ticaret Ve Kimyasallar Anonim Sirketi A.S. (“Ferer”) on a cash-free and debt-free basis for approximately $9. 4 million in cash, subject to customary working capital and other adjustments. The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of June 30, 2016, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $3. 3 million of amortizable intangible assets, $4. 5 million of goodwill, $0. 6 million of personal and real property, $0. 7 million of a deferred tax liability related to the amortizable intangible assets, and $1. 7 million of net working capital on the condensed consolidated balance sheet. Al Salomi On November 17, 2015, the Company acquired 100% of the equity of Egypt-based tile coatings manufacturer Al Salomi for Frits and Glazes (“Al Salomi”) for EGP 307 million (approximately $38.2 million), including the assumption of debt. The acquired business contributed net sales of $6.4 million and $12.0 million for the three and six months ended June 30, 2016 and net income attributable to Ferro Corporation of $1.6 million and $2.2 million for the three and six months ended June 30 , 2016. The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of June 30, 2016, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $15.0 million of amortizable intangible assets, $14.3 million of goodwill, $10.7 million of personal and real property, $4.8 million of a deferred tax liability related to the amortizable intangible assets, and $3.0 million of net working capital on the condensed consolidated balance sheet. Nubiola On July 7, 2015, the Company acquired the entire share capital of Corporación Química Vhem, S.L., Dibon USA, LLC and Ivory Corporation, S .A. (together with their direct and indirect subsidiaries, “Nubiola”) on a cash-free and debt-free basis for €167 million (approximately $184.2 million ). The acquisition was funded with excess cash and borrowings under the Company’s existing revolving credit facility. See Note 8 for additional detail on the revolving credit f acility. During the second quarter of 2016, the Company had a purchase price adjustment due to the settlement of an escrow that reduced the fair value of net assets acquired to $168.1 million. As a result of the purchase price adjustment, the carrying amount of goodwill decreased by $11.7 million, intangibles decreased $6.4 million and the related deferred tax liability decreased $1.9 million. The impact of the change on the condensed consolidated statements of operations was not material. Nubiola is a worldwide producer of specialty inorganic pigments and the world’s largest producer of Ultramarine Blue. Nubiola also produces specialty Iron Oxides, Chrome Oxide Greens and Corrosion Inhibitors. Nubiola has production facilities in Spain, Colombia, Romania, and India and a joint venture in China. The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of June 30, 2016 , the purchase pri ce allocation is subject to further adjustment until all information is fully evaluated by the Company. The following table summarizes the preliminary purchase price allocations: June 30, 2016 (Dollars in thousands) Net working capital (1) $ 46,642 Cash and equivalents 19,966 Personal property 39,444 Real property 28,510 Intangible assets 26,757 Other assets and liabilities (20,733) Goodwill 27,498 Net assets acquired $ 168,084 (1) Net working capital is defined as current assets, less cash, less current liabilities, and includes an estimate of potential transactional adjustments. The acquired business contributed net sales of $30.8 million and $64.2 million for the three and six months ended June 30, 2016 and net income attributable to Ferro Corporation of $9.0 million and $14.2 million for the three and six months ended June 30, 2016. The estimated fair value of the receivables acquired is $24.5 million , with a gross contractual amount of $25.2 million. The Company preliminarily recorded acquired intangible assets subject to amortization of $21.1 million, which is comprised of $5.4 million of customer relationships and $15.7 million of technology/know-how, which will be amortized over 20 years and 15 years, respectively. The Company preliminarily recorded acquired indefinite-lived intangible assets of $5.6 million related to trade names and trademarks. Goodwill is calculated as the excess of the purchase price over the estimated fair values of the assets acquired and the liabilities assumed in the acquisition and is a result of anticipated synergies. Goodwill is not expected to be deductible for tax purposes. The following unaudited pro froma information represents the consolidated results of the Company as if the Nubiola acquisition occurred as of January 1, 2014: Three months ended June 30, 2015 Six months ended June 30, 2015 (unaudited) (In thousands, except per share amounts) Net sales $ 326,905 $ 622,727 Net income attributable to Ferro Corporation common shareholders $ 14,666 $ 30,927 Net earnings per share attributable to Ferro Corporation common shareholders - Basic $ 0.17 $ 0.35 Net earnings per share attributable to Ferro Corporation common shareholders - Diluted $ 0.17 $ 0.35 The unaudited pro forma information has been adjusted with the respect to certain aspects of the acquisition to reflect the following: · Additional depreciation and amortization expenses that would have been recognized assuming fair value adjustments to the existing Nubiola assets acquired, including intangible assets and fixed assets. · Elimination of revenue and cost of goods sold for sales from Nubiola to the Company, which would be eliminated as intercompany transactions for Nubiola and the Company on a consolidated basis. · Increased interest expense due to additional borrowings to fund the acquisition. · Acquisition-related costs, which were included in the Company’s results. · Adjustments for the income tax effect of the pro forma adjustments related to the acquisition. Thermark In February 2015, the Company acquired TherMark Holdings, Inc., a leader in laser marking technology, for a cash purchase price of $5.5 million. The Company recorded $4.6 million of amortizable intangible assets, $2.5 million of goodwill, $1.7 million of a deferred tax liability related to the amortizable intangible assets, and $0.1 million of net working capital on the condensed co nsolidated balance sheet . |