Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.5.0.2
Acquisitions
 9 Months Ended
May 31, 2016
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
Acquisitions
During fiscal 2016 the Company completed two acquisitions which resulted in the recognition of goodwill in the condensed consolidated financial statements because their purchase price reflected the future earnings and cash flow potential of the acquired companies, as well as the complementary strategic fit and resulting synergies the acquisitions are expected to bring to existing operations. The Company makes an initial allocation of the purchase price at the date of acquisition, based upon its understanding of the fair value of the acquired assets and assumed liabilities. If additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), through asset appraisals and other sources, the Company will refine its estimates of fair value and adjust the initial purchase price allocation.
The Company acquired the stock of Larzep, S.A. ("Larzep") on February 17, 2016 for a purchase price of $15.9 million net of cash acquired. This Industrial segment tuck-in acquisition is headquartered in Mallabia, Spain and is a supplier of hydraulic tools and solutions. The preliminary purchase price allocation resulted in $9.7 million of goodwill (which is not deductible for tax purposes) and $4.8 million of intangible assets, including $3.6 million of customer relationships and $1.2 million of tradenames. During the third quarter of fiscal 2016, goodwill related to this acquisition increased by $2.5 million, the result of purchase accounting adjustments to reflect the fair value of acquired assets and liabilities.
The Company acquired the assets of the Middle East, Caspian and the North African business of FourQuest Energy Inc. for $64.3 million on March 30, 2016. This Hydratight tuck-in acquisition was funded with existing cash and expands the geographic presence and service offerings of the Energy segment, including pipeline pre-commissioning, engineering, chemical cleaning and leak testing. The preliminary purchase price resulted in $35.4 million of goodwill (which is not deductible for tax purposes) and $8.7 million of intangible assets, including $8.0 million of customer relationships and $0.7 million of non-compete agreements.
The two acquisitions generated combined sales of $7.3 million for the three months ended May 31, 2016. The Company incurred acquisition transaction costs of $1.3 million and $2.7 million, for three and nine months ended May 31, 2016, respectively, related to various business acquisition activities (compared to less than $0.1 million for the comparable prior year periods).
The following unaudited pro forma operating results of the Company for the three and nine months ended May 31, 2016 and 2015, give effect to these acquisitions as though the transactions and related financing activities occurred on September 1, 2014 (in thousands, expect per share amounts):
 
Three Months Ended May 31,
 
Nine Months Ended May 31,
 
2016
 
2015
 
2016
 
2015
Net sales
 
 
 
 
 
 
 
As reported
$
305,341

 
$
320,100

 
$
873,641

 
$
948,870

Pro forma
308,526

 
325,409

 
899,535

 
966,006

 
 
 
 
 
 
 
 
Net earnings (loss)
 
 
 
 
 
 
 
As reported
$
21,166

 
$
37,958

 
$
(122,576
)
 
$
(2,206
)
Pro forma
21,783

 
38,036

 
(118,520
)
 
(2,114
)
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
 
 
 
 
 
 
 
As reported
$
0.36

 
$
0.64

 
$
(2.08
)
 
$
(0.04
)
Pro forma
0.37

 
0.64

 
(2.01
)
 
(0.04
)
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share
 
 
 
 
 
 
 
As reported
$
0.36

 
$
0.63

 
$
(2.08
)
 
$
(0.04
)
Pro forma
0.37

 
0.63

 
(2.01
)
 
(0.04
)
Business Acquisition, Pro Forma Information [Table Text Block]
The following unaudited pro forma operating results of the Company for the three and nine months ended May 31, 2016 and 2015, give effect to these acquisitions as though the transactions and related financing activities occurred on September 1, 2014 (in thousands, expect per share amounts):
 
Three Months Ended May 31,
 
Nine Months Ended May 31,
 
2016
 
2015
 
2016
 
2015
Net sales
 
 
 
 
 
 
 
As reported
$
305,341

 
$
320,100

 
$
873,641

 
$
948,870

Pro forma
308,526

 
325,409

 
899,535

 
966,006

 
 
 
 
 
 
 
 
Net earnings (loss)
 
 
 
 
 
 
 
As reported
$
21,166

 
$
37,958

 
$
(122,576
)
 
$
(2,206
)
Pro forma
21,783

 
38,036

 
(118,520
)
 
(2,114
)
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
 
 
 
 
 
 
 
As reported
$
0.36

 
$
0.64

 
$
(2.08
)
 
$
(0.04
)
Pro forma
0.37

 
0.64

 
(2.01
)
 
(0.04
)
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share
 
 
 
 
 
 
 
As reported
$
0.36

 
$
0.63

 
$
(2.08
)
 
$
(0.04
)
Pro forma
0.37

 
0.63

 
(2.01
)
 
(0.04
)