Annual report pursuant to Section 13 and 15(d)

Acquisitions

v3.8.0.1
Acquisitions
 12 Months Ended
Aug. 31, 2017
Business Combinations [Abstract]  
Acquisitions
Note 4.    Acquisitions
During the fourth quarter of fiscal 2017, the Company signed a definitive agreement to purchase Mirage, a manufacturer of industrial and energy maintenance tools, for approximately $16 million, plus potential future performance-based consideration. The acquisition is expected to close in the first half of fiscal 2018, pending pre-close conditions.
The Company completed two 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 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 accordingly.
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 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 purchase price resulted in $37.4 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. During fiscal 2017, goodwill related to this acquisition increased by $1.1 million as a result of adjustments to reflect the fair value of acquired accounts receivable and accounts payable.
Total sales in fiscal 2017 and 2016 for these two acquired business were $32.8 million and $19.1 million, respectively. The Company incurred acquisition transaction costs of $2.1 million in fiscal 2016 (included in selling, administrative and engineering expenses in the consolidated statement of operations), related to these two acquisitions.
The following unaudited pro forma operating results give effect to these two acquisitions as though the transactions and related financing activities had occurred on September 1, 2014 (in thousands, except per share amounts).
 
 
 
 
 
2016
 
2015
Net Sales
 
 
 
 
As reported
 
$
1,149,410

 
$
1,249,254

Pro Forma
 
1,175,304

 
1,275,965

Net (loss) earnings
 
 
 
 
As reported
 
$
(105,174
)
 
$
19,872

Pro Forma
 
(100,927
)
 
20,361

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

Pro Forma
 
(1.71
)
 
0.33

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

Pro Forma
 
(1.71
)
 
0.33