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Acquisitions and Divestitures | 12 Months Ended
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Dec. 31, 2016
Business Combinations and Dispositions [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures All of the Company’s acquisitions have been accounted for under ASC 805, Business Combinations. Accordingly, the accounts of the acquired companies, after adjustments to reflect fair values assigned to assets and liabilities, have been included in the Company’s consolidated financial statements from their respective dates of acquisition. The results of operations of the acquired companies have been included in the Company’s consolidated results since the date of each acquisition. Supplemental pro forma information has not been provided as the acquisitions did not have a material impact on the Company’s consolidated results of operations individually or in the aggregate. 2016 Acquisitions On March 16, 2016, the Company acquired the stock of Akron Brass Holding Corporation (“Akron Brass”), a producer of a large array of engineered life–safety products for the safety and emergency response markets, which includes apparatus valves, monitors, nozzles, specialty lighting, electronic vehicle–control systems and firefighting hand tools. The business was acquired to complement and create synergies with our existing Hale, Class 1, and Godiva businesses. Headquartered in Wooster, Ohio, Akron Brass had annual revenues in its most recent fiscal year of approximately $120 million and operates in our Fire & Safety/Diversified Products segment. Akron Brass was acquired for cash consideration of $221.4 million. The purchase price was funded with borrowings under the Company’s revolving facilities. Goodwill and intangible assets recognized as part of the transaction were $124.6 million and $90.4 million, respectively. The goodwill is not deductible for tax purposes. On July 1, 2016, the Company acquired the stock of AWG Fittings GmbH (“AWG Fittings”), a producer of engineered products for the safety and emergency response markets, including valves, monitors and nozzles. The business was acquired to complement and create synergies with our existing Hale, Class 1, Godiva and Akron Brass businesses. Headquartered in Ballendorf, Germany, AWG Fittings had annual revenues in its most recent fiscal year of approximately $40 million and operates in our Fire & Safety/Diversified Products segment. AWG Fittings was acquired for cash consideration of $47.5 million (€42.8 million). The purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of the transaction were $22.0 million and $10.3 million, respectively. The goodwill is not deductible for tax purposes. On August 31, 2016, the Company acquired the stock of SFC Koenig AG (“SFC Koenig”), a producer of highly engineered expanders and check valves for critical applications across the transportation, hydraulic, aviation and medical markets. Headquartered in Dietikon, Switzerland, SFC Koenig had annual revenues in its most recent fiscal year of approximately $63 million and operates in our Health & Science Technologies segment. SFC Koenig was acquired for cash consideration of $241.1 million (€215.9 million). The purchase price was funded with cash on hand and borrowings under the Company’s revolving facilities. Goodwill and intangible assets recognized as part of the transaction were $143.7 million and $117.0 million, respectively. The goodwill is not deductible for tax purposes. The Company made initial allocations of the purchase price for the Akron Brass, AWG Fittings and SFC Koenig acquisitions as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. As the Company obtains additional information about these assets and liabilities and learns more about the newly acquired businesses, we will refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. The Company is in the process of finalizing purchase price allocations for the Akron Brass, AWG Fittings and SFC Koenig acquisitions and will make appropriate adjustments to the purchase price allocations prior to the completion of the measurement period, as required. The preliminary allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values at their respective acquisition dates, are as follows:
|  | Akron Brass |  | AWG Fittings |  | SFC Koenig |  | Total
(In thousands) |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 14,523 |  |  | $ | 5,952 |  |  | $ | 9,425 |  |  | $ | 29,900 |
Inventory |  | 29,157 |  |  | 11,766 |  |  | 21,247 |  |  | 62,170 |
Other assets, net of cash acquired |  | 446 |  |  | 565 |  |  | 4,501 |  |  | 5,512 |
Property, plant and equipment |  | 12,195 |  |  | 6,847 |  |  | 5,125 |  |  | 24,167 |
Goodwill |  | 124,643 |  |  | 22,031 |  |  | 143,719 |  |  | 290,393 |
Intangible assets |  | 90,400 |  |  | 10,279 |  |  | 116,998 |  |  | 217,677 |
Deferred income taxes |  | — |  |  | 3,515 |  |  | — |  |  | 3,515 |
Total assets acquired |  | 271,364 |  |  | 60,955 |  |  | 301,015 |  |  | 633,334 |
Current liabilities |  | (7,081 | ) |  | (5,017 | ) |  | (10,088 | ) |  | (22,186 | )
Deferred income taxes |  | (36,439 | ) |  | — |  |  | (41,370 | ) |  | (77,809 | )
Other noncurrent liabilities |  | (6,445 | ) |  | (8,444 | ) |  | (8,449 | ) |  | (23,338 | )
Net assets acquired |  | $ | 221,399 |  |  | $ | 47,494 |  |  | $ | 241,108 |  |  | $ | 510,001 |
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit, revenue and earnings growth potential of these businesses. Of the $217.7 million of acquired intangible assets, $28.8 million was assigned to the Akron Brass trade name and is not subject to amortization. The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life) | Total |  | Weighted Average Life
Trade names | $ | 14,078 |  |  | 15
Customer relationships | 134,519 |  |  | 13
Unpatented technology | 40,280 |  |  | 13
Amortized intangible assets | 188,877 |  |  |
Indefinite lived - Akron Brass trade name | 28,800 |  |  |
Total acquired intangible assets | $ | 217,677 |  |  |
The Company incurred $4.7 million of acquisition-related transaction costs in 2016. These costs were recorded in Selling, general and administrative expenses and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company also incurred $14.7 million of non-cash acquisition fair value inventory step-up charges associated with the completed 2016 acquisitions. These charges were recorded in Cost of sales. 2015 Acquisitions On May 29, 2015, the Company acquired the stock of Novotema, SpA (“Novotema”), a leader in the design, manufacture and sale of specialty sealing solutions for use in the building products, gas control, transportation, industrial and water markets. The business was acquired to complement and create synergies with our existing Sealing Solutions platform. Located in Villongo, Italy, Novotema operates in our Health & Science Technologies segment. Novotema was acquired for cash consideration of $61.1 million (€56 million). The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $34.3 million and $20.0 million, respectively. The $34.3 million of goodwill is not deductible for tax purposes. On June 10, 2015, the Company acquired the stock of Alfa Valvole, S.r.l (“Alfa Valvole”), a leader in the design, manufacture and sale of specialty valve products for use in the chemical, petro-chemical, energy and sanitary markets. The business was acquired to expand our valve capabilities. Located in Casorezzo, Italy, Alfa Valvole operates in our Fluid & Metering Technologies segment. Alfa Valvole was acquired for cash consideration of $112.6 million (€99.8 million). The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $69.6 million and $32.1 million, respectively. The $69.6 million of goodwill is not deductible for tax purposes. On July 1, 2015, the Company acquired the membership interests of CiDRA Precision Services, LLC (“CPS” or “CiDRA Precision Services”), a leader in the design, manufacture and sale of microfluidic components serving the life science, health and industrial markets. The business was acquired to provide a critical building block to our emerging microfluidic and nanofludics capabilities. Located in Wallingford, Connecticut, CPS operates in our Health & Science Technologies segment. CPS was acquired for an aggregate purchase price of $24.2 million, consisting of $19.5 million in cash and contingent consideration valued at $4.7 million as of the opening balance sheet date. The contingent consideration was based on the achievement of financial objectives during the 12-month period following the close. Based on potential outcomes, the undiscounted amount of all the future payments that the Company could have been required to make under the contingent consideration arrangement was between $0 and $5.5 million. During the six months ended June 30, 2016, the Company re-evaluated the contingent consideration arrangement and fully reversed the $4.7 million liability based on CPS’s actual operating results from July 1, 2015 to June 30, 2016. The $4.7 million reversal was recognized as a benefit within Selling, general and administrative expenses, of which $3.7 million was recognized in March 2016 and the remaining $1.0 million was recognized in June 2016. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $9.7 million and $12.3 million, respectively. The $9.7 million of goodwill is deductible for tax purposes. On December 1, 2015, the Company acquired the assets of a complementary product line within our Fluid & Metering Technologies segment. The purchase price and goodwill associated with this transaction were $1.9 million and $0.7 million, respectively. The purchase prices for Novotema, Alfa Valvole and CPS have been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of the acquisitions. The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values at their respective acquisition dates, is as follows:
| Novotema |  | Alfa Valvole |  | CPS |  | Other |  | Total
(In thousands) |  |  |  |  |  |  |  |  |
Accounts receivable | $ | 8,029 |  |  | $ | 13,487 |  |  | $ | 945 |  |  | $ | — |  |  | $ | 22,461 |
Inventory | 2,886 |  |  | 11,036 |  |  | 442 |  |  | 1,102 |  |  | 15,466 |
Other assets, net of cash acquired | 1,866 |  |  | 3,367 |  |  | 79 |  |  | — |  |  | 5,312 |
Property, plant and equipment | 11,844 |  |  | 8,395 |  |  | 1,105 |  |  | — |  |  | 21,344 |
Goodwill | 34,316 |  |  | 69,568 |  |  | 9,739 |  |  | 748 |  |  | 114,371 |
Intangible assets | 20,011 |  |  | 32,058 |  |  | 12,290 |  |  | — |  |  | 64,359 |
Total assets acquired | 78,952 |  |  | 137,911 |  |  | 24,600 |  |  | 1,850 |  |  | 243,313 |
Current liabilities | (7,760 | ) |  | (11,279 | ) |  | (420 | ) |  | — |  |  | (19,459 | )
Deferred income taxes | (7,803 | ) |  | (12,622 | ) |  | — |  |  | — |  |  | (20,425 | )
Other noncurrent liabilities | (2,291 | ) |  | (1,420 | ) |  | — |  |  | — |  |  | (3,711 | )
Net assets acquired | $ | 61,098 |  |  | $ | 112,590 |  |  | $ | 24,180 |  |  | $ | 1,850 |  |  | $ | 199,718 |
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit, revenue and earnings growth potential of these businesses. The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life) | Total |  | Weighted Average Life
Trade names | $ | 9,247 |  |  | 15
Customer relationships | 44,401 |  |  | 12
Unpatented technology | 10,711 |  |  | 8
Total acquired intangible assets | $ | 64,359 |  |  |
The Company incurred $2.6 million of acquisition-related transaction costs in 2015. These costs were recorded in Selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company also incurred $3.4 million of non-cash acquisition fair value inventory charges in 2015. These charges were recorded in Cost of sales. 2014 Acquisitions On April 28, 2014, the Company acquired the stock of Aegis Flow Technologies (“Aegis”), a producer of specialty chemical processing valves for use in the chemical, petro-chemical, chlor-alkali, and pulp/paper industries. Located in Geismar, Louisiana, Aegis operates in our Fluid & Metering Technologies segment. Aegis was acquired for cash consideration of approximately $25 million. The entire purchase price was funded with borrowings under the Company’s revolving facilities. Goodwill and intangible assets recognized as part of this transaction were $7.7 million and $8.8 million, respectively. The $7.7 million of goodwill is deductible for tax purposes. The purchase price for Aegis has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of the acquisition. The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
(In thousands) |
Accounts receivable | $ | 1,147 |
Inventory | 6,230 |
Other current assets, net of cash acquired | 232 |
Property, plant and equipment | 2,988 |
Goodwill | 7,711 |
Intangible assets | 8,770 |
Total assets acquired | 27,078 |
Total liabilities assumed | (1,633 | )
Net assets acquired | $ | 25,445 |
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of this business. The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life) | Total |  | Weighted Average Life
Trade names | $ | 3,304 |  |  | 15
Customer relationships | 4,393 |  |  | 14
Unpatented technology | 1,073 |  |  | 8
Total acquired intangible assets | $ | 8,770 |  |  |
The Company incurred $1.7 million of acquisition-related transaction costs in 2014. These costs were recorded in Selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company incurred $1.3 million of non-cash acquisition fair value inventory charges in 2014. These charges were recorded in Cost of sales. 2016 Divestitures The Company periodically reviews its operations for businesses which may no longer be aligned with its strategic objectives and focus on core business and customers. Any resulting gain or loss recognized due to divestitures is recorded within Loss (gain) on sale of businesses - net. On July 29, 2016, the Company completed the sale of its Hydra-Stop product line for $15.0 million in cash, resulting in a pre-tax gain on the sale of $5.8 million. In addition, the Company can earn up to $2 million based on the achievement of financial objectives for net sales in 2016 and 2017. The Company recorded $2.8 million of income tax expense associated with this transaction during the year ended December 31, 2016. The results of Hydra-Stop were reported within the Fluid & Metering Technologies segment and generated $7.5 million of revenues in 2016 through the date of sale. On September 9, 2016, the Company completed the sale of its Melles Griot KK (“CVI Japan”) subsidiary for $17.5 million in cash, resulting in a pre-tax loss on the sale of $7.9 million. The Company recorded $3.4 million of income tax benefit associated with this transaction during the year ended December 31, 2016. The results of CVI Japan were reported within the Health & Science Technologies segment and generated $13.1 million of revenues in 2016 through the date of sale. On October 10, 2016, the Company completed the sale of its IETG and 40Seven subsidiaries for $2.7 million in cash, resulting in a pre-tax loss on the sale of $4.2 million. There was no income tax impact associated with this transaction. The results of IETG and 40Seven were reported within the Fluid & Metering Technologies segment and generated $8.3 million of revenues in 2016 through the date of sale. On December 30, 2016, the Company completed the sale of its Korea Electro-Optics Co., Ltd. (“CVI Korea”) subsidiary for $3.8 million in cash, resulting in a pre-tax loss on the sale of $16.0 million. The Company recorded $9.1 million of income tax benefit associated with this transaction during the year ended December 31, 2016. The results of CVI Korea were reported within the Health & Science Technologies segment and generated $11.7 million of revenues in 2016 through the date of sale. 2015 Divestiture On July 31, 2015, the Company completed the sale of its Ismatec product line for $27.7 million in cash, resulting in a pre-tax gain on the sale of $18.1 million. The Company recorded $4.8 million of income tax expense associated with this transaction during the year ended December 31, 2015. The results of Ismatec were reported in the Health & Science Technologies segment and generated $5.3 million of revenues in 2015 through the date of sale.

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