Annual report pursuant to Section 13 and 15(d)

Acquisitions

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Acquisitions
 12 Months Ended
Dec. 31, 2011
Acquisitions [Abstract]  
ACQUISITIONS

NOTE 19—ACQUISITIONS

In 2011, we completed one business combination. On November 30, 2011 we acquired Ballard Technology, Inc. (“Ballard”) a manufacturer of avionics interface solutions. The Ballard business is included in our aerospace reporting segment. The addition of Ballard diversifies the products and technologies that Astronics offers. We purchased 100% of the outstanding stock of Ballard for approximately $23.9 million in cash plus an additional purchase consideration of a maximum of $5.5 million subject to meeting certain revenue growth targets over the next five years. The additional purchase consideration was recorded at its estimated fair value of approximately $0.7 million at the date of acquisition based upon the Company’s assessment of the probability of Ballard achieving the revenue growth targets. There was no change in the fair value estimate of the contingent consideration, from the date of acquisition to December 31, 2011.

The allocation of the purchase price paid for Ballard is based on fair values of the acquired assets and liabilities assumed of Ballard as of November 30, 2011.

The allocation of purchase price based on appraised fair values was as follows:

 

         
(In thousands)      

Current Assets

   $ 4,173  

Fixed Assets

     106  

Purchased Intangible Assets

     9,600  

Goodwill

     12,023  

Current Liabilities

     (1,256 ) 
   

 

 

  

Total Purchase Price

   $ 24,646  
   

 

 

  

 

The amounts allocated to the purchased intangible assets consist of the following:

 

             
(In thousands)  

Weighted

Average Life

   Acquisition
Fair Value		  

Trade Names

   10 Years   $ 900  

Technology

   10 Years     2,100  

Backlog and Customer Relationships

   1-14 Years     6,600  
       

 

 

  
        $ 9,600  
       

 

 

  

Substantially all of the goodwill and purchased intangible assets are expected to be deductible for tax purposes over 15 years. The goodwill of $12.0 million is all attributable to the Aerospace segment at the acquisition date. The goodwill recognized is comprised primarily of intangible assets that do not require separate recognition. The goodwill balance has remained unchanged at December 31, 2011 from the date of acquisition.

The following is a summary of the results of operations of Ballard included in the consolidated financial statements, in the Aerospace segment from the date of acquisition to December 31, 2011:

 

         
(in thousands)   2011  

Sales

   $ 412  
   

 

 

  

Operating Loss

   $ (390 ) 
   

 

 

  

The following summary combines the consolidated results of operations of the Company with those of the acquired business for the year ended December 31, 2011 and 2010 as if the acquisition took place at the beginning of 2010. The pro forma consolidated results include the impact of certain adjustments, including increased interest expense on acquisition debt, amortization of purchased intangible assets and income taxes.

 

                 
(in thousands, except earnings per share)   2011     2010  

Sales

   $ 239,223     $ 204,637  

Net income (loss)

     24,067       15,993  

Basic earnings (loss) per share

     1.98       1.34  

Diluted earnings (loss) per share

     1.86       1.29  

The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been in effect for the year ended December 31, 2011 and 2010. In addition, they are not intended to be a projection of future results.