3. ACQUISITIONS During the year ended September 30, 2018, the Company acquired two businesses, Versatex Holdings, LLC and its wholly owned subsidiary Versatex Building Products, LLC (collectively Versatex) and WES, LLC and its wholly owned subsidiary Ultralox Technology, LLC (collectively Ultralox), for an aggregate consideration of $297.9 million, including $3.2 million for cash acquired. The consideration consisted primarily of $292.6 million of cash, a contribution of 1,546.9 common interests of AOT Building Products, L.P., the indirect parent of the Company, fair valued at $2.5 million, used as consideration and contingent consideration with a fair value of $2.8 million based on achievement of a minimum adjusted EBITDA amount and a multiple of adjusted EBITDA for adjusted EBITDA exceeding a higher threshold for calendar 2018. Adjusted EBITDA is defined as net income (loss) before interest expense, net, income tax (benefit) expense and depreciation and amortization, and by adding thereto or subtracting therefrom certain items of expense and income specifically related to the acquisition. The change in fair value of the contingent consideration liability due to events arising after the acquisition date were recorded in the Statement of Comprehensive Income (Loss), thereby increasing pretax income by $1.8 million during the year ended September 30, 2018. Total transaction costs for the acquisitions amounted to $4.2 million and are presented as Other general expenses within Operating income (loss) in the Consolidated Statement of Comprehensive Income (Loss) for the year ended September 30, 2018. Acquisition Date Type Company/ Product Line Location Segment June 18, 2018 100% of Membership Interests Versatex Aliquippa, Pennsylvania Residential December 20, 2017 100% of Membership Interests Ultralox Eagan, Minnesota Residential Versatex is a leading producer of premium, low-maintenance material building products with a focus on trim and moulding products. Ultralox is a leader in the aluminum railing industry, which sells engineered railing systems and assembly machines. Each acquisition has been accounted for as a business combination. Tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their respective fair values. The excess of the consideration transferred over the fair value of the net assets received has been recorded as goodwill in the Residential segment. The factors that contributed to the recognition of goodwill primarily relate to future economic benefits arising from expected sales through the Companys existing distribution channels. The following represents the final purchase price allocation of the assets acquired and the liabilities assumed based on their values: (In thousands) Versatex Holdings, LLC Ultralox Total Cash and cash equivalents $ 2,623 $ 623 $ 3,246 Trade receivables 4,059 874 4,933 Inventories 9,826 3,166 12,992 Other current assets 6,518 138 6,656 Property, plant and equipment 21,969 366 22,335 Intangible assets 129,000 17,300 146,300 Other assets  7 7 Accounts payable (1,723 ) (1,582 ) (3,305 ) Accrued expenses and other liabilities (8,811 ) (771 ) (9,582 ) Total identifiable assets 163,461 20,121 183,582 Goodwill 110,355 3,935 114,290 Net assets acquired/total consideration 273,816 24,056 297,872 Less: cash acquired (2,623 ) (623 ) (3,246 ) Total consideration, net of cash acquired $ 271,193 $ 23,433 $ 294,626 Total intangibles and goodwill for the Versatex transaction amounted to $239.4 million, comprised of $93.0 million related to customer relationships, $23.0 million related to proprietary knowledge and $13.0 million related to trademarks, as well as $110.4 million in goodwill. It is expected that $110.4 million of the goodwill is deductible for tax purposes. The estimated useful life for customer relationships is 19 years and for proprietary knowledge and trademarks is 10 years. The weighted average useful life at the date of acquisition was 17.5 years. Total intangibles and goodwill for the Ultralox transaction amounted to $21.2 million, comprised of $8.5 million related to customer relationships, $7.0 million related to patents and $1.8 million related to trademarks, as well as $3.9 million in goodwill. It is expected that $3.9 million of the goodwill is deductible for tax purposes. The estimated useful life for customer relationships is 15 years, for patents is 10 years and for trademarks is 5 years. The weighted average useful life at the date of acquisition was 12.9 years. In addition to assets acquired and liabilities assumed in the Versatex and Ultralox acquisitions, the Company entered into non-compete agreements of $2.7 and $0.9 million, respectively, that are capitalized and accounted for as operating expense over the non-compete periods and are presented within Intangible assets, net in the Consolidated Balance Sheet as of September 30, 2018. In addition, the Company entered into certain contingent compensation arrangements with key executives of Ultralox. These arrangements are being expensed over the related service periods with changes in the fair value of the arrangement recorded as operating expenses as they occur. The following are the net sales and net income (loss) from Versatex included in the Companys results from the June 18, 2018 acquisition date through September 30, 2018: (In thousands) June 18, 2018 through September 30, 2018 Net sales $ 21,134 Net income (loss) $ (3,462 ) Included in the results of Versatex was a one-time increase in cost of sales of $1.8 million related to the revaluation of Versatexs inventories as of June 18, 2018. Also included in the results is additional amortization of $4.9 million resulting from the recognition of identified finite-lived intangible assets resulting from the purchase price allocation. The following are the net sales and net income (loss) from Ultralox included in the Companys results from December 20, 2017 acquisition date through September 30, 2018: (In thousands) December 20, 2017 through September 30, 2018 Net sales $ 13,717 Net income (loss) $ (541 ) Included in the results of Ultralox was a one-time increase in cost of sales of $0.6 million related to the revaluation of Ultraloxs inventories as of December 20, 2017. Also included in the results is additional amortization of $2.4 million resulting from the recognition of identified finite-lived intangible assets resulting from the purchase price allocation. Pro Forma Results (Unaudited) The following represents the pro forma consolidated operations for the fiscal years ended September 30, 2018 as if Versatex had been acquired on October 1, 2016, in which case the amount of combined entity revenues and earnings included in the Companys Consolidated Statement of Comprehensive Income (Loss) for the fiscal years ended September 30, 2018 would have been as follows: Year Ended September 30, 2018 (In thousands) (Unaudited) Net sales $ 730,858 Net income (loss) $ 5,775 The unaudited pro forma consolidated results do not purport to reflect what the combined companys results of operations would have been had the acquisition occurred on October 1, 2016, nor do they project the future results of operations of the combined company or reflect the expected realization of any operating efficiencies or cost savings associated with the acquisition. The actual results of operations of the combined company may differ significantly from the pro forma adjustments reflected here due to many factors. The unaudited supplemental pro forma financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed. The pre-tax adjustments increased expenses by a total of $1.1 million for the fiscal year ended September 30, 2018 and primarily relate to additional interest expense related to the acquisition financing, elimination of historical interest expense, intangible asset amortization expense for assets acquired, elimination of historical intangible amortization expense, a reduction in depreciation expense for fixed assets, adjustments for non-recurring costs directly attributable to the Versatex acquisition and adjustment to income tax expense for the impact of the pro forma adjustments at the statutory rate for each year. The unaudited pro forma consolidated results of operations are provided for illustrative purposes only and are not indicative of the Companys actual consolidated results of operations or consolidated financial position. Pro forma results for Ultralox are not provided as they are not material to the Consolidated Financial Statements.