Quarterly report pursuant to Section 13 or 15(d)

Basis of Presentation

v3.19.3.a.u2
Basis of Presentation
3 Months Ended
Nov. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation
Note 1. Basis of Presentation
General
The accompanying unaudited condensed consolidated financial statements of Actuant Corporation, doing business as Enerpac Tool Group (“Actuant,” “Company,” "we," or "us"), 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 months ended November 30, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2020.
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 through implementing selected third-party lease software utilized as a central repository for all leases. The Company 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 in the three months ended November 30, 2019 which resulted in an increase to retained earnings with an offsetting increase in accumulated other comprehensive loss of $3.7 million.
Accumulated Other Comprehensive Loss
The following is a summary of the Company's accumulated other comprehensive loss (in thousands):
 
 
November 30, 2019
 
August 31, 2019
Foreign currency translation adjustments
 
$
90,629

 
$
151,115

Pension and other postretirement benefit plans, net of tax
 
23,783

 
20,557

Accumulated other comprehensive loss
 
$
114,412

 
$
171,672


Property Plant and Equipment
The following is a summary of the Company's components of property, plant and equipment (in thousands):
 
 
November 30, 2019
 
August 31, 2019
Land, buildings and improvements
 
$
29,586

 
$
29,661

Machinery and equipment
 
136,713

 
140,083

Gross property, plant and equipment
 
166,299

 
169,744

Less: Accumulated depreciation
 
(110,205
)
 
(113,015
)
Property, plant and equipment, net
 
$
56,094

 
$
56,729