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Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-11288

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ENERPAC TOOL GROUP CORP.

(Exact name of registrant as specified in its charter)

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Wisconsin		39-0168610
(State of incorporation)		(I.R.S. Employer Id. No.)

N86 W12500 WESTBROOK CROSSING

MENOMONEE FALLS, WISCONSIN 53051

Mailing address: P. O. Box 3241, Milwaukee, Wisconsin 53201

(Address of principal executive offices)

(262) 293-1500

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Ticker Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.20 par value per share	EPAC	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No ☒

The number of shares outstanding of the registrant’s Class A Common Stock as of June 26, 2020 was 59,768,998.

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TABLE OF CONTENTS



	Page No.

Part I—Financial Information

Item 1—Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations	3

Condensed Consolidated Statements of Comprehensive (Loss) Income	4

Condensed Consolidated Balance Sheets	5

Condensed Consolidated Statements of Cash Flows	6

Notes to the Condensed Consolidated Financial Statements	7

Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3—Quantitative and Qualitative Disclosures about Market Risk	28

Item 4—Controls and Procedures	28

Part II—Other Information

Item 1A.—Risk Factors	29

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 6—Exhibits	30

FORWARD LOOKING STATEMENTS AND CAUTIONARY FACTORS

This quarterly report on Form 10-Q contains certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include statements regarding expected financial results and other planned events, including, but not limited to, anticipated liquidity, anticipated restructuring costs and related savings, anticipated future charges and capital expenditures. Words such as “may,” “should,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “plan,” “project” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We disclaim any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements:


•	further deterioration of, or instability in, the domestic and international economy;


•	potential impact on our business from global pandemics, including continued impact from the COVID-19 pandemic;


•	decreased demand from customers in the oil & gas industry as a result of significant declines in oil prices resulting from the recent disruption in the oil markets;


•	challenging conditions in our various end markets;


•	our ability to execute restructuring actions and the realization of anticipated cost savings;


•	competition in the markets we serve;


•	failure to develop new products and market acceptance of existing and new products;


•	a material disruption at a significant manufacturing facility;


•	heavy reliance on suppliers for components used in the manufacture and sale of our products, including a supply chain interruption due to the COVID-19 pandemic;


•	operating margin risk due to competitive pricing, operating inefficiencies, production levels and increases in the costs of commodities and raw materials;


•	uncertainty over global tariffs, or the financial impact of tariffs;

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•	our international operations present special risks, including currency exchange rate fluctuations and export and import restrictions;


•	regulatory and legal developments, including changes to United States taxation rules;


•	our ability to successfully identify, consummate and integrate acquisitions and realize anticipated benefits/results from acquired companies as part of our portfolio management process;


•	the effects of divestitures and/or discontinued operations, including retained liabilities from, or indemnification obligations with respect to, businesses that we sell;


•	if the operating performance of our businesses were to fall significantly below normalized levels, the potential for a non-cash impairment charge of goodwill and/or other intangible assets, as they represent a substantial amount of our total assets;


•	a significant failure in information technology (IT) infrastructure, such as unauthorized access to financial and other sensitive data or cybersecurity threats;


•	litigation, including product liability and warranty claims;


•	our ability to attract, develop, and retain qualified employees;


•	inadequate intellectual property protection or if our products are deemed to infringe on the intellectual property of others;


•	our ability to comply with the covenants in our debt agreements and fluctuations in interest rates; and

•

numerous other matters including those of a political, economic, business, competitive and regulatory nature contained from time to time in U.S. Securities and Exchange Commission ("SEC") filings, including, but not limited to, those factors listed in the "Risk Factors" section within Item 1A of Part I of the Form 10-K filed with the SEC on October 28, 2019 and those factors contained within Part II, Item 1A herein.

When used herein, the terms “we,” “us,” “our” and the “Company” refer to Enerpac Tool Group Corp. and its subsidiaries. Enerpac Tool Group Corp. provides free-of-charge access to its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, through its website, www.enerpactoolgroup.com, as soon as reasonably practical after such reports are electronically filed with the SEC.

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PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)



	Three Months Ended May 31,						Nine Months Ended May 31,
	2020			2019			2020			2019
Net sales	$	101,879		$	178,095		$	381,939		$	496,435
Cost of products sold	59,932			96,141			209,211			272,853
Gross profit	41,947			81,954			172,728			223,582

Selling, administrative and engineering expenses	40,766			52,810			142,842			159,364
Amortization of intangible assets	2,174			2,838			6,167			6,989
Restructuring charges	2,448			1,115			6,348			1,132
Impairment & divestiture (benefit) charges	(1,443		)	(12,988		)	(3,567		)	14,031
Operating (loss) profit	(1,998		)	38,179			20,938			42,066
Financing costs, net	4,552			7,146			15,911			21,601
Other (income) expense, net	(1,213		)	(787		)	(1,682		)	234
(Loss) earnings before income tax (benefit) expense	(5,337		)	31,820			6,709			20,231
Income tax (benefit) expense	(407		)	4,962			1,349			9,030
Net (loss) earnings from continuing operations	(4,930		)	26,858			5,360			11,201
(Loss) earnings from discontinued operations, net of income taxes	(69		)	5,560			(6,076		)	6,518
Net (loss) earnings	$	(4,999	)	$	32,418		$	(716	)	$	17,719

(Loss) earnings per share from continuing operations
Basic	$	(0.08	)	$	0.44		$	0.09		$	0.18
Diluted	$	(0.08	)	$	0.43		$	0.09		$	0.18

(Loss) earnings per share from discontinued operations
Basic	$	—		$	0.09		$	(0.10	)	$	0.11
Diluted	$	—		$	0.09		$	(0.10	)	$	0.11

(Loss) earnings per share
Basic	$	(0.08	)	$	0.53		$	(0.01	)	$	0.29
Diluted	$	(0.08	)	$	0.52		$	(0.01	)	$	0.29

Weighted average common shares outstanding
Basic	59,826			61,422			60,012			61,232
Diluted	59,826			61,840			60,358			61,701

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(Unaudited)



	Three Months Ended May 31,						Nine Months Ended May 31,
	2020			2019			2020			2019
Net (loss) earnings	$	(4,999	)	$	32,418		$	(716	)	$	17,719
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	(6,779		)	(14,000		)	(1,533		)	(14,744		)
Recognition of foreign currency translation losses from divested businesses	—			—			51,994			34,910
Pension and other postretirement benefit plans	193			200			828			527
Total other comprehensive (loss) income, net of tax	(6,586		)	(13,800		)	51,289			20,693
Comprehensive (loss) income	$	(11,585	)	$	18,618		$	50,573		$	38,412

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)



	May 31, 2020			August 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	163,603		$	211,151
Accounts receivable, net	93,796			125,883
Inventories, net	78,914			77,187
Assets from discontinued operations	—			285,578
Other current assets	43,515			30,526
Total current assets	379,828			730,325
Property, plant and equipment, net	60,671			56,729
Goodwill	271,169			260,415
Other intangible assets, net	62,833			52,375
Other long-term assets	77,034			24,430
Total assets	$	851,535		$	1,124,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	52,091		$	76,914
Accrued compensation and benefits	14,896			26,421
Current maturities of debt	—			7,500
Income taxes payable	6,027			4,838
Liabilities from discontinued operations	—			143,763
Other current liabilities	49,525			40,965
Total current liabilities	122,539			300,401
Long-term debt, net	286,497			452,945
Deferred income taxes	2,466			1,564
Pension and postretirement benefit liabilities	19,649			20,213
Other long-term liabilities	84,102			47,972
Total liabilities	515,253			823,095
Commitments and contingencies (Note 14)
Shareholders’ equity
Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 82,562,731 and 81,920,679 shares, respectively	16,513			16,384
Additional paid-in capital	192,928			181,213
Treasury stock, at cost, 22,799,230 and 21,455,568 shares, respectively	(667,732		)	(640,212		)
Retained earnings	918,623			915,466
Accumulated other comprehensive loss	(124,050		)	(171,672		)
Stock held in trust	(2,517		)	(3,070		)
Deferred compensation liability	2,517			3,070
Total shareholders' equity	336,282			301,179
Total liabilities and shareholders’ equity	$	851,535		$	1,124,274

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Nine Months Ended May 31,
	2020			2019
Operating Activities
Net (loss) earnings	$	(716	)	$	17,719
Less: Net (loss) earnings from discontinued operations	(6,076		)	6,518
Net earnings from continuing operations	5,360			11,201
Adjustments to reconcile net earnings to net cash provided by operating activities - continuing operations:
Impairment & divestiture (benefit) charges, net of tax effect	(2,717		)	14,018
Depreciation and amortization	15,373			15,470
Stock-based compensation expense	9,129			8,003
Provision (benefit) for deferred income taxes	1,218			(2,096		)
Amortization of debt issuance costs	1,367			884
Other non-cash charges	1,169			295
Changes in components of working capital and other, excluding acquisitions and divestitures:
Accounts receivable	32,745			(16,390		)
Inventories	(4,166		)	(13,175		)
Trade accounts payable	(24,246		)	2,163
Prepaid expenses and other assets	1,605			(4,212		)
Income tax accounts	(13,986		)	5,731
Accrued compensation and benefits	(12,342		)	(8,683		)
Other accrued liabilities	(5,148		)	(16,424		)
Cash provided by (used in) operating activities - continuing operations	5,361			(3,215		)
Cash (used in) provided by operating activities - discontinued operations	(21,064		)	4,406
Cash (used in) provided by operating activities	(15,703		)	1,191

Investing Activities
Capital expenditures	(9,308		)	(12,615		)
Proceeds from sale of property, plant and equipment	635			1,220
Lease buyout for divested business	(575		)	—
Proceeds from sale of business/product line	10,226			—
Cash paid for business acquisitions, net of cash acquired	(33,434		)	—
Cash used in investing activities - continuing operations	(32,456		)	(11,395		)
Cash provided by investing activities - discontinued operations	208,391			25,184
Cash provided by investing activities	175,935			13,789

Financing Activities
Principal repayment on term loan	(175,000		)	(57,500		)
Payment for redemption of term loan	—			(200,000		)
Proceeds from issuance of term loan	—			200,000
Borrowings on revolving credit facility	100,000			—
Principal repayments on revolving credit facility	(100,000		)	—
Purchase of treasury shares	(27,520		)	—
Taxes paid related to the net share settlement of equity awards	(4,210		)	(1,811		)
Stock option exercises & other	2,985			1,352
Payment of cash dividend	(2,419		)	(2,439		)
Payment of debt issuance costs	(234		)	(2,125		)
Cash used in financing activities - continuing operations	(206,398		)	(62,523		)
Cash used in financing activities - discontinued operations	—			—
Cash used in financing activities	(206,398		)	(62,523		)

Effect of exchange rate changes on cash	(1,382		)	(1,613		)
Net decrease in cash and cash equivalents	(47,548		)	(49,156		)
Cash and cash equivalents - beginning of period	211,151			250,490
Cash and cash equivalents - end of period	$	163,603		$	201,334

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements of Enerpac Tool Group Corp. (“Company,” "we," or "us"), formerly known as Actuant Corporation, have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet data as of August 31, 2019 was derived from the Company’s audited financial statements, but does not include all disclosures required by GAAP. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Company’s fiscal 2019 Annual Report on Form 10-K.

In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the three and nine months ended May 31, 2020 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2020.

The COVID-19 Pandemic - impact on estimates and financial results: The preparation of our condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. The Company regularly evaluates the estimates and assumptions related to the allowance for doubtful accounts, inventory valuation, warranty reserves, fair value of stock-based awards, goodwill, intangible and long-lived asset valuations, employee benefit plan liabilities, over-time revenue recognition, income tax liabilities, deferred tax assets and related valuation allowances, uncertain tax positions, restructuring reserves, and litigation and other loss contingencies. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning the COVID-19 pandemic and the additional actions taken to contain it or treat it, as well as the severity and duration of the economic impact on local, regional, national and international customers, suppliers and markets. As such, there could be a material adverse impact on the Company's financial condition or results of operations. Management has made estimates of the impact of the COVID-19 pandemic on affected account balances within our financial statements and there may be changes to those estimates in future periods as new information becomes available. Actual results may differ from these estimates.

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (and subsequently ASU 2018-01 and ASU 2019-01), to increase transparency and comparability among organizations by recognizing all lease transactions on the balance sheet as a lease liability and a right-of-use (“ROU”) asset. The amendments also expanded disclosure requirements for key information about leasing arrangements. On September 1, 2019, the Company adopted the standard using a modified retrospective approach and elected the package of practical expedients allowing us to not reassess whether any expired or existing contracts contain leases, the lease classification for any expired or existing leases, and initial direct costs for leases that commenced prior to September 1, 2019. In addition, we elected not to recognize ROU assets or lease liabilities for leases containing terms of 12 months or less and not separate lease components from non-lease components for all asset classes. The Company updated its standard lease accounting policy to address the new standard, revised the Company’s business processes and controls to align to the updated policy and new standard and completed the implementation of and data input into the Company’s lease accounting software solution. The most significant impact of the standard on the Company was the recognition of a $60.8 million ROU asset and operating lease liability on the Condensed Consolidated Balance Sheets at adoption. The standard did not have a significant impact on our Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows. In addition, as a result of sale leaseback transactions in previous years for which gains were deferred and under the new standard would have been recognized, the Company recorded an increase to retained earnings of $0.2 million in the first quarter of fiscal 2020, which represents the recognition of these previously deferred gains. See Note 15, “Leases” for further discussion of the Company’s operating leases.

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows companies to reclassify stranded income tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings in their consolidated financial statements. The Company adopted the guidance on September 1, 2019 and recorded an increase to retained earnings with an offsetting increase in accumulated other comprehensive loss of $3.7 million on the adoption date.

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Accumulated Other Comprehensive Loss

The following is a summary of the Company's accumulated other comprehensive loss (in thousands):



	May 31, 2020		August 31, 2019
Foreign currency translation adjustments	$	100,654	$	151,115
Pension and other postretirement benefit plans, net of tax	23,396		20,557
Accumulated other comprehensive loss	$	124,050	$	171,672

Property Plant and Equipment

The following is a summary of the Company's components of property, plant and equipment (in thousands):



	May 31, 2020			August 31, 2019
Land, buildings and improvements	$	32,128		$	29,661
Machinery and equipment	137,097			140,083
Gross property, plant and equipment	169,225			169,744
Less: Accumulated depreciation	(108,554		)	(113,015		)
Property, plant and equipment, net	$	60,671		$	56,729

Note 2. Revenue Recognition

Nature of Goods and Services

The Company generates its revenue under two principal activities, which are discussed below:

Product Sales: Sales of tools, heavy-lifting solutions, and rope and cable solutions are recorded when control is transferred to the customer (i.e., performance obligation has been satisfied). For the majority of the Company’s product sales, revenue is recognized at a point in time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company to the customer. For certain other products that are highly customized and have a limited alternative use, and for which the Company has an enforceable right of reimbursement for performance completed to date, revenue is recognized over time. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over time revenue associated with these custom products. For a majority of the Company’s custom products, machine hours and labor hours (efforts-expended measurement) are used as a measure of progress.

Service & Rental Sales: Service contracts consist of providing highly trained technicians to perform bolting, technical services, machining and joint integrity work for our customers. These revenues are recognized over time as our customers simultaneously receive and consume the benefits provided by the Company. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over time revenue associated with service contracts. For a majority of the Company’s service contracts, labor hours (efforts-expended measurement) is used as the measure of progress when it is determined to be a better depiction of the transfer of control to the customer due to the timing and pattern of labor hours incurred. Revenue from rental contracts (less than a year and non-customized products) is generally recognized ratably over the contract term, depicting the customer’s consumption of the benefit related to the rental equipment.

Disaggregated Revenue and Performance Obligations

The Company disaggregates revenue from contracts with customers by reportable segment and product line and by the timing of when goods and services are transferred. See Note 13, "Segment Information" for information regarding our revenue disaggregation by reportable segment and product line.

The following table presents information regarding revenues disaggregated by the timing of when goods and services are transferred (in thousands):



	Three Months Ended May 31,				Nine Months Ended May 31,
	2020		2019		2020		2019
Revenues recognized at point in time	$	73,412	$	117,175	$	275,413	$	335,314
Revenues recognized over time	28,467		60,920		106,526		161,121
Total	$	101,879	$	178,095	$	381,939	$	496,435

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Contract Balances

The Company's contract assets and liabilities are as follows (in thousands):



	May 31, 2020		August 31, 2019
Receivables, which are included in accounts receivable, net	$	93,796	$	125,883
Contract assets, which are included in other current assets	4,563		3,747
Contract liabilities, which are included in other current liabilities	2,233		3,707

Receivables: The Company performs its obligations under a contract with a customer by transferring goods or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established.

Contract Assets: Contract assets relate to the Company’s rights to consideration for work completed but not billed as of the reporting date on contracts with customers. The contract assets are transferred to receivables when the rights become unconditional. The Company has contract assets on contracts that are generally long-term and have revenues that are recognized over time.

Contract Liabilities: As of May 31, 2020, the Company had certain contracts where there were unsatisfied performance obligations and the Company had received cash consideration from customers before the performance obligations were satisfied. The majority of these contracts relate to long-term customer contracts (project durations of greater than three months) and are recognized over time. The Company estimates that the $2.2 million will be recognized in net sales from satisfying those performance obligations within the next twelve months.

Significant Judgments

Timing of Performance Obligations Satisfied at a Point in Time: The Company evaluates when the customer obtains control of the product based on shipping terms, as control will transfer, depending upon such terms, at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because i) the Company has a present right to payment at that time; ii) the legal title has been transferred to the customer; iii) the Company has transferred physical possession of the product to the customer; and iv) the customer has significant risks and rewards of ownership of the product.

Variable Consideration: The Company estimates whether it will be subject to variable consideration under the terms of the contract and includes its estimate of variable consideration in the transaction price based on the expected value method when it is deemed probable of being realized based on historical experience and trends. Types of variable consideration may include rebates, incentives and discounts, among others, which are recorded as a reduction to net sales at the time when control of a performance obligation is transferred to the customer.

Practical Expedients & Exemptions: The Company elected to expense the incremental cost of obtaining a contract when the amortization period for such contracts would be one year or less. The Company does not disclose the value of unperformed obligations for contracts with an original expected length of one year or less and contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

Note 3. Restructuring Charges

The Company has undertaken or committed to various restructuring initiatives including workforce reductions; leadership changes; plant consolidations to reduce manufacturing overhead; satellite office closures; the continued movement of production and product sourcing to low-cost alternatives; and the centralization and standardization of certain administrative functions. Liabilities for severance will generally be paid within twelve months, while future lease payments related to facilities vacated as a result of restructuring will be paid over the underlying remaining lease terms. During fiscal 2019, the Company announced a new restructuring plan focused on i) the integration of the Enerpac and Hydratight businesses (Industrial Tools & Service ("IT&S") segment), ii) the strategic exit of certain commodity type services in our North America Services operations (IT&S segment) and iii) driving efficiencies within the overall corporate structure. In the third quarter of fiscal 2020, the Company announced the expansion and revision of this plan, which further simplifies and flattens the Corporate structure through elimination of redundancies between the segment and corporate functions, while enhancing our commercial and marketing processes to become even closer to our customers. Restructuring charges associated with this plan were $2.5 million and $5.6 million in the three and nine months ended May 31, 2020, respectively. The Company recorded total restructuring charges of $1.1 million in both the three and nine months ended May 31, 2019.

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The following summarizes restructuring reserve activity for the IT&S reportable segment and corporate (in thousands):



	Nine Months Ended May 31, 2020
	Industrial Tools & Services			Corporate
Balance as of August 31, 2019	$	2,912		$	—
Restructuring charges	4,019			1,590
Cash payments	(4,265		)	(871		)
Other non-cash uses of reserve ⁽¹⁾	(556		)	(484		)
Impact of changes in foreign currency rates	(23		)	—
Balance as of May 31, 2020	$	2,087		$	235

⁽¹⁾ Majority of non-cash uses of reserve represents accelerated equity vesting with employee severance agreements.



	Nine Months Ended May 31, 2019
	Industrial Tools & Services			Corporate
Balance as of August 31, 2018	$	1,687		$	46
Restructuring charges	1,136			—
Cash payments	(1,379		)	(46		)
Other non-cash uses of reserve	(18		)	—
Impact of changes in foreign currency rates	(28		)	—
Balance as of May 31, 2019	$	1,398		$	—

Total restructuring charges (inclusive of the Other segment) were $7.2 million for the nine months ended May 31, 2020, with $0.8 million of restructuring charges recognized being reported in the Condensed Consolidated Statements of Earnings in "Cost of products sold," with the balance of charges reported in "Restructuring charges."

The three and nine months ended May 31, 2020 included $0.8 million (reported in the Condensed Consolidated of Earnings in "Cost of products sold") and $1.6 million of restructuring expenses related to Cortland U.S. (Other segment), respectively. Restructuring reserves for Cortland U.S. were $0.6 million and $0.9 million as of May 31, 2020 and August 31, 2019, respectively. There were inconsequential restructuring charges recorded within the Other segment associated with the legacy restructuring initiatives in the three and nine months ended May 31, 2019.

Note 4. Acquisitions

On January 7, 2020, the Company acquired 100% of the stock of HTL Group ("HTL"), a provider of controlled bolting products, calibration and repair services, and tool rental services. The tuck-in acquisition of HTL provides the Company with a complete line of bolting products and enhances our European rental capabilities. The Company acquired all of the assets and assumed certain liabilities of HTL for an initial purchase price of $33.4 million, net of cash acquired. In the three months ended May 31, 2020, the Company finalized customary working capital negotiations associated with the acquisition which resulted in a $0.1 million reduction to the initial purchase price, for a total final purchase price of $33.3 million. The Company received an inconsequential amount of cash from the working capital true up in the three months ended May 31, 2020 and contractually is to receive the remainder in the three months ending August 31, 2020. As of May 31, 2020, the preliminary purchase price allocation resulted in $10.1 million of goodwill (which is not deductible for tax purposes), $17.5 million of intangible assets, and $6.7 million of property, plant and equipment. The intangible assets were comprised of $3.7 million of indefinite-lived tradenames, $13.1 million of amortizable customer relationships and $0.7 million of amortizable patents. The impact on the remaining balance sheet line items was not material. The Company recorded an aggregate reduction of less than $0.1 million in "Cost of products sold" and "Amortization of intangible assets" in the Condensed Consolidated Statements of Operations for the three months ended May 31, 2020 as a result of adjustments to preliminary purchase accounting amounts. The Company is continuing to evaluate the preliminary purchase price allocations for the acquisition, specifically the fair values assigned to intangible assets and certain tax attributes of the acquisition, which will be completed within a one-year period of the acquisition date.

This acquisition generated net sales of $1.9 million and $3.9 million for the three and nine months ended May 31, 2020, respectively, which are reported within the IT&S reportable segment. This acquisition does not meet the significance tests to require pro forma financial information otherwise required for acquisitions.

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Note 5. Discontinued Operations and Other Divestiture Activities

Discontinued Operations

On October 31, 2019, as part of our overall strategy to become a pure-play industrial tools and services company, the Company completed the previously announced sale of the businesses comprising its former Engineered Components & Systems ("EC&S") segment to wholly owned subsidiaries of BRWS Parent LLC, a Delaware limited liability company and affiliate of One Rock Capital Partners II, LP, for a purchase price of approximately $214.5 million (which included approximately $3.0 million to be paid in four equal quarterly installments after closing, of which $0.7 million was received in the nine months ended May 31, 2020). In connection with the completion of the sale in the three months ended November 30, 2019, the Company recorded a net loss of $4.2 million comprised of a loss of $22.4 million representing the excess of the net assets (exclusive of deferred tax assets and liabilities associated with subsidiaries of the Company whose stock was sold as part of the transaction) as compared to the purchase price less costs to sell and the recognition in earnings of the cumulative effect of foreign currency exchange gains and losses during the quarter largely offset by an income tax benefit of $18.2 million associated with the write off of the net deferred tax liability on subsidiaries of the EC&S segment for which the stock was divested. The Company also recognized an additional $3.3 million of impairment & divestiture costs in the three months ended November 30, 2019 associated with the accelerated vesting of restricted stock awards associated with employees terminated as part of the transaction and $2.7 million of additional divestiture charges which were necessary to complete the transaction. In the three months ended February 29, 2020, the Company incurred approximately $0.3 million of additional miscellaneous divestiture related costs. In the three months ended ended May 31, 2020, the Company finalized the customary negotiation of final working capital amounts and received an additional $1.3 million of proceeds in June 2020. For the three months ended May 31, 2020, the Company recognized a negligible impairment & divestiture benefit associated with the transaction which was comprised of $0.4 million from the finalization of the working capital amounts offset by miscellaneous transaction related costs including finalization of termination costs for employees in certain foreign jurisdictions.

During the first quarter of fiscal 2019, the Company determined that the Precision Hayes business was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business. The Company completed the sale of the Precision Hayes business on December 31, 2018 for $23.6 million cash net of final transaction costs, working capital adjustments, accelerated vesting of equity compensation, retention bonuses and other adjustments which were recognized within the second quarter of fiscal 2019. The Company recorded $9.5 million of impairment & divestiture charges during the nine months ended May 31, 2019, of which the charges represented the excess of the net book value of the net assets held for sale less the anticipated proceeds, less costs to sell.

The Company completed the sale of the Cortland Fibron business on December 19, 2018 for $12.5 million in cash. During the three and nine months ended May 31, 2019, the Company recognized $0.0 million and $4.3 million of impairment & divestiture charges associated with the divestiture of the Cortland Fibron business.

In addition to the above disclosed matters, the Company also incurred $2.4 million and $4.9 million of divestiture related costs during the three and nine months ended May 31, 2019, respectively.

As the aforementioned divestitures were a part of our strategic shift to become a pure-play industrial tools and services company, the results of their operations (including the stated impairment & divestiture charges) are recorded as a component of "Loss from discontinued operations" in the Condensed Consolidated Statements of Operations for all periods presented.

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The following represents the detail of "(Loss) earnings from discontinued operations, net of income taxes" within the Condensed Consolidated Statements of Operations (in thousands):



	Three Months Ended May 31,					Nine Months Ended May 31,
	2020			2019		2020*			2019
Net sales	$	—		$	117,171	$	67,010		$	363,270
Cost of products sold	—			87,224		49,749			272,456
Gross profit	—			29,947		17,261			90,814

Selling, administrative and engineering expenses	116			16,801		11,567			54,184
Amortization of intangible assets	—			1,573		—			5,142
Restructuring (benefit) charges	—			—		(11		)	446
Impairment & divestiture (benefit) charges	(31		)	2,392		28,699			18,711
Operating (loss) earnings	(85		)	9,181		(22,994		)	12,331
Financing costs, net	—			109		14			102
Other expense (income), net	—			1,165		(104		)	1,712
(Loss) earnings before income tax (benefit) expense	(85		)	7,907		(22,904		)	10,517
Income tax (benefit) expense	(16		)	2,347		(16,828		)	3,999
Net (loss) earnings from discontinued operations	$	(69	)	$	5,560	$	(6,076	)	$	6,518

* "(Loss) earnings from discontinued operations, net of income taxes" for the periods presented in fiscal 2020 include the results of the EC&S segment for the two months ended October 31, 2019 (the divestiture date) as well as the ancillary impacts from certain retained liabilities subsequent to the divestiture. As a result of the classification of the segment as assets and liabilities held for sale for the two months ended October 31, 2019, the Company did not record amortization or depreciation expense in the results of operations in accordance with U.S. GAAP. Furthermore, the Company excluded EC&S segment employees from the fiscal 2020 bonus compensation plan, hence there are no expenses associated with the plan for that period.

Other Divestiture Activities

On September 20, 2019, the Company completed the sale of the UNI-LIFT product line, a component of our Milwaukee Cylinder business (IT&S segment) for initial net cash proceeds of $6.0 million, which resulted in an impairment & divestiture benefit of $4.6 million in the three months ended November 30, 2019. In the three months ended February 28, 2020, the Company recorded an additional benefit of $0.1 million related to agreement with the buyer on final working capital amounts and various other benefits. In March 2020, the buyer of the UNI-LIFT product line extended a long-term supply agreement with a significant customer. Pursuant to the sales agreement, this action triggered the requirement for the buyer to pay $1.5 million of contingent proceeds which was received by the Company in the three months ended May 31, 2020 and recorded as an "Impairment & divestiture benefit" within the Condensed Consolidated Statements of Operations.

After the sale of the UNI-LIFT product line, the Company determined that the remaining Milwaukee Cylinder business was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business. The Company recorded impairment & divestiture charges of $4.6 million in the three months ended November 30, 2019 comprised of impairment charges of $2.5 million representing the excess of net assets held for sale compared to the anticipated proceeds less costs to sell, $1.9 million associated with our requirement to withdraw from the multi-employer pension plan associated with that business and $0.2 million of other divestiture related charges. The Company completed the divestiture of the Milwaukee Cylinder business on December 2, 2019 for a negligible amount. In the three months ended May 31, 2020, the Company recorded inconsequential amounts of impairment & divestiture charges associated with changes in estimate on retained liabilities.

The historical results of the Milwaukee Cylinder business, inclusive of the UNI-LIFT product line, (which had net sales of $4.3 million in the three months ended May 31, 2019 and $2.9 million and $7.1 million in the nine months ended May 31, 2020 and May 31, 2019, respectively) are not material to the condensed consolidated financial results.

On October 22, 2019, the Company completed the sale of the Connectors product line (IT&S segment) for net cash proceeds of $2.7 million, which resulted in an impairment & divestiture benefit of $1.3 million in the three months ended November 30, 2019. During the three months ended February 28, 2020, the Company recorded $0.1 million of impairment & divestiture charges related to working capital adjustment. The historical results of the Connectors product line (which had net sales of $1.0 million in the three months ended May 31, 2019 and $0.2 million and $2.5 million in the nine months ended May 31, 2020 and May 31, 2019, respectively) are not material to the condensed consolidated financial results.

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As of February 28, 2020, the Company determined that it was no longer probable that a loss would occur related to an outstanding legal matter associated with a previously divested business, as such, recorded an impairment & divestiture benefit of $0.8 million in the nine months ended May 31, 2020.

In the three months ended May 31, 2019, the Company recognized an impairment & divestiture benefit of $13.0 million related to the Cortland U.S. business representing the restoration of the cumulative effect of foreign currency rate changes since acquisition that had been recorded as impairment & divestiture charges in previous periods in fiscal 2019. As a result of triggering events identified as of November 30, 2018 and February 28, 2019, the Company recorded impairment & divestiture charges of $13.7 million for the nine months ended May 31, 2019, associated with Goodwill impairments in the Cortland U.S. business.

Note 6. Goodwill, Intangible Assets and Long-Lived Assets

Changes in the gross carrying value of goodwill and intangible assets result from changes in foreign currency exchange rates, business acquisitions, divestitures and impairment charges. The changes in the carrying amount of goodwill for the nine months ended May 31, 2020 are as follows (in thousands):



	Industrial Tools & Services		Other		Total
Balance as of August 31, 2019	$	242,873	$	17,542	$	260,415
Acquisition of HTL Group (Note 4)	10,087		—		10,087
Impact of changes in foreign currency rates	658		9		667
Balance as of May 31, 2020	$	253,618	$	17,551	$	271,169

The gross carrying value and accumulated amortization of the Company’s intangible assets are as follows (in thousands):



		May 31, 2020						August 31, 2019
	Weighted Average Amortization Period (Years)	Gross Carrying Value		Accumulated Amortization		Net Book Value		Gross Carrying Value		Accumulated Amortization		Net Book Value
Amortizable intangible assets:
Customer relationships	14	$	138,749	$	102,344	$	36,405	$	126,229	$	96,817	$	29,412
Patents	12	13,922		12,769		1,153		13,227		12,276		951
Trademarks and tradenames*	12	3,153		2,070		1,083		4,513		2,921		1,592
Indefinite lived intangible assets:
Tradenames	N/A	24,192		—		24,192		20,420		—		20,420
		$	180,016	$	117,183	$	62,833	$	164,389	$	112,014	$	52,375

*The decrease in the Gross Carrying Value and Accumulated Amortization of Trademarks and tradenames is a result of the Milwaukee Cylinder business being held for sale as of November 30, 2019 and the impairment charge discussed in Note 5, "Discontinued Operations and Other Divestiture Activities." included the Trademarks and tradenames associated with that business being fully impaired.

The Company estimates that amortization expense will be $2.2 million for the remaining three months of fiscal 2020. Amortization expense for future years is estimated to be: $8.0 million in fiscal 2021, $7.2 million in fiscal 2022, $5.7 million in fiscal 2023, $4.0 million in fiscal 2024, $3.3 million in fiscal 2025 and $8.3 million cumulatively thereafter. The future amortization expense amounts represent estimates and may be impacted by future acquisitions, divestitures, impairments or changes in foreign currency exchange rates, among other causes.

Fiscal 2019 Impairment Charges

As previously discussed in Note 5, "Discontinued Operations and Other Divestiture Activities.", within the Other segment, the Company recognized $13.7 million of Goodwill impairment charges for the nine months ended May 31, 2019 related to the Cortland U.S. business in conjunction with triggering events identified during the period.

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Note 7. Product Warranty Costs

The Company generally offers its customers an assurance warranty on products sold, although warranty periods may vary by product type and application. The reserve for future warranty claims, which is recorded within the "Other current liabilities" line in the Condensed Consolidated Balance Sheets, is based on historical claim rates and current warranty cost experience. The following summarizes the changes in product warranty reserves for the nine months ended May 31, 2020 and 2019, respectively (in thousands):



	Nine Months Ended May 31,
	2020			2019
Beginning balance	$	1,145		$	931
Provision for warranties	354			1,099
Warranty payments and costs incurred	(735		)	(806		)
Warranty activity for divested businesses	(27		)	—
Impact of changes in foreign currency rates	1			(22		)
Ending balance	$	738		$	1,202

Note 8. Debt

The following is a summary of the Company’s long-term indebtedness (in thousands):



	May 31, 2020			August 31, 2019
Senior Credit Facility
Revolver	$	—		$	—
Term Loan	—			175,000
Total Senior Credit Facility	—			175,000
5.625% Senior Notes	287,559			287,559
Total Senior Indebtedness	287,559			462,559
Less: Current maturities of long-term debt	—			(7,500		)
Debt issuance costs	(1,062		)	(2,114		)
Total long-term debt, less current maturities	$	286,497		$	452,945

Senior Credit Facility

In March 2019, the Company entered into a Senior Credit Facility with a syndicate of banks, to among other things, i) expand the multi-currency revolving line of credit from $300 million to $400 million, ii) extend the maturity of the Company's Senior Credit Facility from May 2020 to March 2024 and iii) modify certain other provisions of the credit agreement including a reduction in pricing. The Senior Credit Facility was initially comprised of a $400 million revolving line of credit and a $200 million term loan. At May 31, 2020, there were no borrowings under either the revolving line of credit or the term loan. As of that date, $394.9 million was available for borrowing under the revolving line of credit.

The Senior Credit Facility also provides the option for future expansion, subject to certain conditions, through a $300 million accordion and/or a $200 million incremental term loan. Borrowings under the Senior Credit Facility bear interest at a variable rate based on LIBOR or a base rate, with interest rate spreads above LIBOR or the base rate being subject to adjustments based on the Company's net leverage ratio, ranging from 1.125% to 2.00% in the case of loans bearing interest at LIBOR and from 1.25% to 1.00% in the case of loans bearing interest at the base rate. In addition, a non-use fee is payable quarterly on the average unused amount of the revolving line of credit ranging from 0.15% to 0.3% per annum, based on the Company's net leverage ratio.

In November 2019, the Company used the proceeds from the sale of the EC&S segment to pay off the outstanding principal balance on the term loan. In conjunction with the repayment, the Company expensed the remaining $0.6 million of associated capitalized debt issuance costs.

The Senior Credit Facility contains two financial covenants which are a maximum leverage ratio of 3.75:1 and a minimum interest coverage ratio of 3.5:1. Certain transactions lead to adjustments to the underlying ratio, including an increase to the leverage ratio from 3.75 to 4.25 during the four fiscal quarters after a significant acquisition. The sale of the EC&S segment triggered a reduction of the minimum interest coverage ratio from 3.5 to 3.0 for any fiscal quarter ending within twelve months after the sale of the EC&S segment. In April 2020, the Company proactively amended its Senior Credit Facility to extend the interest coverage ratio at 3.0 for an additional 12 months through October 2021 to mitigate risks associated with the potential impact of the COVID-19 pandemic.

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The Company was in compliance with all financial covenants at May 31, 2020. Borrowings under the Senior Credit Facility are secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors and certain equity interests owned by the foreign law pledgors.

Senior Notes

On April 16, 2012, the Company issued $300 million of 5.625% Senior Notes due 2022 (the “Senior Notes”), of which $287.6 million remained outstanding as of May 31, 2020. The Senior Notes required no principal installments prior to their June 15, 2022 maturity, required semiannual interest payments in December and June of each year and contained certain financial and non-financial covenants. The Senior Notes included a call feature that allowed the Company to repurchase them anytime on or after June 15, 2017 at stated redemption prices currently at 100.9% and reducing to 100.0% on June 15, 2020, plus accrued and unpaid interest.

Subsequent Event

In order to reduce interest costs, on June 15, 2020, the Company borrowed $295.0 million under the Senior Credit Facility revolving line of credit, which was used by the Company to redeem all of the outstanding Senior Notes at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest as of that date. Based on the current leverage ratio, the rate on the revolving line of credit is LIBOR + 1.375%.

Note 9. Fair Value Measurement

The Company assesses the inputs used to measure the fair value of financial assets and liabilities using a three-tier hierarchy. Level 1 inputs include unadjusted quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing an asset or liability.

The fair value of the Company’s cash and cash equivalents, accounts receivable, and accounts payable approximated book value at both May 31, 2020 and August 31, 2019 due to their short-term nature. The fair value of variable rate long-term debt approximated book value at August 31, 2019 as the interest rate approximated market rates (the Company had no variable rate debt outstanding as of May 31, 2020). Foreign currency exchange contracts are recorded at fair value. The fair value of the Company's foreign currency exchange contracts was a net asset of less than $0.1 million at both May 31, 2020 and August 31, 2019. The fair value of the foreign currency exchange contracts was based on quoted inactive market prices and is therefore classified as Level 2 within the valuation hierarchy. The fair value of the Company’s outstanding Senior Notes was $287.9 million and $291.5 million at May 31, 2020 and August 31, 2019, respectively. The fair value of the Senior Notes was based on quoted inactive market prices and are therefore classified as Level 2 within the valuation hierarchy.

Note 10. Derivatives

All derivatives are recognized in the balance sheet at their estimated fair value. The Company does not enter into derivatives for speculative purposes. Changes in the value of derivatives (not designated as hedges) are recorded in earnings along with the gain or loss on the hedged asset or liability.

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations. In order to manage this risk, the Company utilizes foreign currency exchange contracts to reduce the exchange rate risk associated with recognized non-functional currency balances. The effects of changes in exchange rates are reflected concurrently in earnings for both the fair value of the foreign currency exchange contracts and the related non-functional currency asset or liability. These derivative gains and losses offset foreign currency gains and losses from the related revaluation of non-functional currency assets and liabilities (amounts included in "Other expense" in the Condensed Consolidated Statements of Operations). The U.S. dollar equivalent notional value of these short duration foreign currency exchange contracts was $33.2 million and $13.3 million at May 31, 2020 and August 31, 2019, respectively. The fair value of outstanding foreign currency exchange contracts was a net asset of less than $0.1 million at both May 31, 2020 and August 31, 2019. Net foreign currency loss (included in "Other expense" in the Condensed Consolidated Statements of Operations) related to these derivative instruments were as follows (in thousands):



	Three Months Ended May 31,						Nine Months Ended May 31,
	2020			2019			2020			2019
Foreign currency loss, net	$	(842	)	$	(114	)	$	(1,393	)	$	(115	)

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The Company also uses foreign currency forward exchange contracts to hedge portions of our net investments in non-U.S. subsidiaries (net investment hedge) against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. The change in the value of foreign currency forward exchange contracts designated as net investment hedges are recorded in accumulated other comprehensive income where they offset gains and losses recorded on our net investments where the entity has a non-U.S. dollar functional currency. As of May 31, 2020, the notional value of foreign currency forward exchange contracts designated as net investment hedges was $31.6 million. The Company recorded through accumulated other comprehensive income (loss) a gain of $0.8 million and $0.5 million in the three and nine months ended May 31, 2020, respectively.

Note 11. Earnings per Share and Shareholders' Equity

The Company's Board of Directors authorized the repurchase of shares of the Company's common stock under publicly announced share repurchase programs. Since the inception of the initial share repurchase program in fiscal 2012, the Company has repurchased 22,799,230 shares of common stock for $667.7 million. As of May 31, 2020, the maximum number of shares that may yet be purchased under the programs is 5,200,770 shares. The Company repurchased 503,873 shares for $9.7 million during the three months ended May 31, 2020 (all shares were purchased in March 2020 under a SEC Rule 10b5-1 trading plan, before the repurchase was able to be suspended in response to the COVID-19 pandemic) and 1,343,662 shares for $27.5 million during the nine months ended May 31, 2020.

The reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share amounts):



	Three Months Ended May 31,					Nine Months Ended May 31,
	2020			2019		2020			2019
Numerator:
Net (loss) earnings from continuing operations	$	(4,930	)	$	26,858	$	5,360		$	11,201
Net (loss) earnings from discontinued operations	(69		)	5,560		(6,076		)	6,518
Net (loss) earnings	(4,999		)	32,418		(716		)	17,719

Denominator:
Weighted average common shares outstanding - basic	59,826			61,422		60,012			61,232
Net effect of dilutive securities - stock based compensation plans	—			418		346			469
Weighted average common shares outstanding - diluted	$	59,826		$	61,840	$	60,358		$	61,701

(Loss) earnings per common share from continuing operations:
Basic	$	(0.08	)	$	0.44	$	0.09		$	0.18
Diluted	$	(0.08	)	$	0.43	$	0.09		$	0.18

(Loss) earnings per common share from discontinued operations:
Basic	$	—		$	0.09	$	(0.10	)	$	0.11
Diluted	$	—		$	0.09	$	(0.10	)	$	0.11

(Loss) earnings per common share:
Basic	$	(0.08	)	$	0.53	$	(0.01	)	$	0.29
Diluted	$	(0.08	)	$	0.52	$	(0.01	)	$	0.29

Anti-dilutive securities from stock based compensation plans (excluded from earnings per share calculation)	2,479			987		1,435			1,164

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The following table illustrates the changes in the balances of each component of shareholders' equity for the three months ended May 31, 2020 (in thousands):



	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Stock Held in Trust			Deferred Compensation Liability		Total Shareholders’ Equity
	Issued Shares	Amount		Additional Paid-in Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Stock Held in Trust			Deferred Compensation Liability		Total Shareholders’ Equity
Balance at February 29, 2020	82,540	$	16,508	$	189,716		$	(658,017	)	$	923,622		$	(117,464	)	$	(2,434	)	$	2,434	$	354,365
Net loss	—	—		—			—			(4,999		)	—			—			—		(4,999		)
Other comprehensive loss, net of tax	—	—		—			—			—			(6,586		)	—			—		(6,586		)
Stock contribution to employee benefit plans and other	6	1		96			—			—			—			—			—		97
Restricted stock awards	13	3		(3		)	—			—			—			—			—		—
Treasury stock repurchases	—	—		—			(9,715		)	—			—			—			—		(9,715		)
Stock based compensation expense	—	—		3,184			—			—			—			—			—		3,184
Stock option exercises	—	—		—			—			—			—			—			—		—
Tax effect related to net share settlement of equity awards	—