Annual report pursuant to Section 13 and 15(d)

Acquisitions

v3.5.0.2
Acquisitions
 12 Months Ended
Aug. 31, 2016
Business Combinations [Abstract]  
Acquisitions
Note 2.    Acquisitions
The Company completed three business acquisitions during the last three years. These acquisitions resulted in the recognition of goodwill in the Company’s consolidated financial statements because the purchase prices reflected the future earnings and cash flow potential of these companies, as well as the complementary strategic fit and resulting synergies these businesses bring to existing operations. The Company incurred acquisition transaction costs of $2.7 million, $0.1 million and $0.5 million in fiscal 2016, 2015 and 2014, respectively (included in selling, administrative and engineering expenses in the consolidated statement of operations).
The Company makes an initial allocation of the purchase price, at the date of acquisition, based upon the fair value of the acquired assets and assumed liabilities. The Company obtains this information during due diligence and through other sources. If additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), the Company will refine its estimates of fair value and adjust the purchase price allocation.
Fiscal 2016 Acquisitions:
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.
The Company also acquired the assets of the Middle East, Caspian and the North African business of FourQuest Energy Inc. ("Pipeline and Process Services") for $65.5 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 $36.2 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.
Total sales in fiscal 2016 for these two acquired business were $19.1 million. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed, at the date of acquisition, for these businesses (in thousands):
 
Total
Accounts receivable, net
$
20,439

Inventories
1,997

Other assets
505

Property, plant & equipment
12,315

Goodwill
45,967

Other intangible assets
13,517

Trade accounts payable
(8,938
)
Other liabilities
(1,225
)
Deferred income tax liability
(2,661
)
Cash paid, net of cash acquired
$
81,916



Fiscal 2014 Acquisition:
The Company acquired Hayes Industries Ltd. ("Hayes") on May 23, 2014 for $30.5 million. This Industrial segment acquisition is headquartered in Sugar Land, Texas and maintains a leading position in the concrete tensioning market. Its products include patented encapsulated anchor systems, wedges and customized extruded cables. The purchase price allocation resulted in the recognition of $14.3 million of goodwill (which is deductible for tax purposes) and $10.6 million of intangible assets, including $5.0 million of patents, $3.3 million of customer relationships, $2.0 million of tradenames and $0.3 million for non-compete agreements.
The following unaudited pro forma operating results give effect to these three acquisitions as though the transactions and related financing activities had occurred on September 1, 2013 (in thousands, except per share amounts).
 
 
 
 
 
 
 
2016
 
2015
 
2014
Net Sales
 
 
 
 
 
 
As reported
 
$
1,149,410

 
$
1,249,254

 
$
1,399,862

Pro forma
 
1,175,304

 
1,275,965

 
1,450,014

Earnings (loss) from continuing operations
 
 
 
 
 
 
As reported
 
$
(105,174
)
 
$
19,872

 
$
141,453

Pro forma
 
(100,927
)
 
20,553

 
142,124

Basic earnings (loss) per share from continuing operations
 
 
 
 
 
 
As reported
 
$
(1.78
)
 
$
0.32

 
$
1.99

Pro forma
 
(1.71
)
 
0.34

 
2.00

Diluted earnings (loss) per share from continuing operations
 
 
 
 
 
 
As reported
 
$
(1.78
)
 
$
0.32

 
$
1.95

Pro forma
 
(1.71
)
 
0.33

 
1.96