Annual report pursuant to Section 13 and 15(d)

Acquisitions

v2.4.0.8
Acquisitions
 12 Months Ended
Aug. 31, 2013
Business Combinations [Abstract]  
Acquisitions
Acquisitions
The Company completed several business acquisitions during the last three years. All of the acquisitions resulted in the recognition of goodwill in the Company’s consolidated financial statements because the purchase prices reflect 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 $3.7 million, $1.4 million and $1.9 million in fiscal 2013, 2012 and 2011, respectively, related to various business acquisition activities.
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. 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), through asset appraisals and learning more about the newly acquired business, the Company will refine its estimates of fair value and adjust the purchase price allocation. During fiscal 2013, goodwill related to prior year acquisitions increased by less than $0.1 million, the net result of purchase accounting adjustments to the fair value of acquired assets and assumed liabilities.
Fiscal 2013
The Company acquired Viking SeaTech (“Viking”) for $235.4 million on August 27, 2013. Viking expands the Energy segment's geographic presence, technologies and services provided to the global energy market. Headquartered in Aberdeen, Scotland, Viking is a support specialist providing a comprehensive range of equipment and services to the offshore oil & gas industry. Viking serves customers globally with primary markets in the North Sea (U.K. and Norway) and Australia. The majority of Viking's revenue is derived from offshore vessel mooring solutions which include design, rental, installation and inspection. Viking also provides survey, manpower and other marine services to offshore operators, drillers and energy asset owners. The purchase price allocation for this acquisition resulted in the recognition of $87.7 million of goodwill (which is not deductible for tax purposes) and $65.4 million of intangible assets, including $40.5 million of customer relationships and $24.9 million of tradenames.
The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the Viking acquisition (in thousands):
 
 
Total
 
 
Accounts receivable, net
$
17,225

 
 
Inventories
1,582

 
 
Property, plant & equipment
99,776

 
 
Goodwill
87,734

 
 
Other intangible assets
65,360

 
 
Other assets
1,755

 
 
Trade accounts payable
(7,664
)
 
 
Deferred income taxes
(25,923
)
 
 
Other liabilities
(4,439
)
 
 
   Cash paid, net of cash acquired
$
235,406

 

Fiscal 2012
During fiscal 2012, the Company completed two maximatecc tuck-in acquisitions that further expand the geographic presence, product offerings and technologies of the Engineered Solutions segment. On July 20, 2012 the Company completed the acquisition of the stock of CrossControl AB (“CrossControl”) for $40.6 million of cash, plus potential contingent consideration. CrossControl, headquartered in Sweden, provides advanced electronic solutions for human-machine interaction, vehicle control and mobile connectivity in critical environments. On March 28, 2012 the Company acquired the stock of Turotest Medidores Ltda (“Turotest”) for $8.1 million of cash and $5.3 million of deferred purchase price. Turotest, headquartered in Brazil, designs and manufactures instrument panels and gauges serving the Brazilian agriculture and industrial markets.
In addition, on February 10, 2012 the Company completed the acquisition of the stock of Jeyco Pty Ltd (“Jeyco”) for $20.7 million of cash. This Cortland (Energy segment) tuck-in acquisition, designs and provides specialized mooring, rigging and towing systems and services to the offshore oil & gas industry in Australia and other international markets. Additionally, Jeyco’s products are used in a variety of applications for other markets including cyclone mooring and marine, defense and mining tow systems.
The combined purchase price allocation for all three fiscal 2012 acquisitions resulted in the recognition of $40.1 million of goodwill (which is not deductible for tax purposes) and $32.8 million of intangible assets, including $24.2 million of customer relationships, $5.7 million of tradenames, $2.2 million of technologies and $0.7 million of non-compete agreements.
Fiscal 2011
On June 2, 2011, the Company completed the acquisition of the stock of Weasler Engineering, Inc. (“Weasler”) for $153.2 million of cash. The purchase consideration was funded through the Company’s existing cash balances and borrowings under the revolving credit facility. Weasler, which is headquartered in Wisconsin, is a global designer and manufacturer of highly engineered drive train components and systems for agriculture, lawn & turf and industrial equipment. Weasler also supplies a variety of torque limiters, high-end gear boxes, clutches and torsional dampers.
On December 10, 2010, the Company completed the acquisition of the stock of Mastervolt International Holding B.V. (“Mastervolt”) for $158.2 million of cash. Mastervolt, which is headquartered in The Netherlands, is a designer, developer and global supplier of highly innovative, branded power electronics, primarily for the solar and marine markets.
The combined purchase price allocations for the two fiscal 2011 acquisitions resulted in the recognition of $152.4 million of goodwill (which is not deductible for tax purposes) and $157.5 million of intangible assets, including $81.5 million of customer relationships, $69.9 million of tradenames, $5.5 million of patents and technologies and $0.6 million of non-compete agreements.
The following unaudited pro forma results of operations of the Company give effect to all acquisitions completed in the last three years as though the transactions and related financing activities had occurred on September 1, 2010 (in thousands, except per share amounts).
 
 
 
Year Ended August 31,
 
 
 
 
2013
 
2012
 
2011
 
 
Net sales
 
 
 
 
 
 
 
 
As reported
 
$
1,279,742

 
$
1,276,521

 
$
1,159,310

 
 
Pro forma
 
1,365,115

 
1,419,173

 
1,393,061

 
 
Earnings from continuing operations
 
 
 
 
 
 
 
 
As reported
 
$
147,577

 
$
125,276

 
$
110,188

 
 
Pro forma
 
153,946

 
134,581

 
125,785

 
 
Basic earnings per share from continuing operations
 
 
 
 
 
 
 
 
As reported
 
$
2.02

 
$
1.79

 
$
1.61

 
 
Pro forma
 
2.11

 
1.92

 
1.84

 
 
Diluted earnings per share from continuing operations
 
 
 
 
 
 
 
 
As reported
 
$
1.98

 
$
1.68

 
$
1.49

 
 
Pro forma
 
2.06

 
1.81

 
1.69