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Dodge Acquisition | 9 Months Ended
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Dec. 31, 2022
Dodge Acquisition Abstract |
Dodge Acquisition | 13. Dodge Acquisition On November 1, 2021, the Company completed the acquisition of Dodge for approximately $2,908,241, net of cash acquired and subject to certain adjustments. The purchase price was paid with (i) $1,285,761 of borrowing under the Term Loan Facility, net of issuance costs, (ii) $1,050,811 of net proceeds from common stock and MCPS offerings, (iii) $494,200 of net proceeds from the Senior Notes offering, and (iv) approximately $77,469 of cash on hand. Since the close of the transaction, purchase price adjustments totaling $28,710 have been recorded. In the acquisition, the Company purchased 100% of the capital stock of certain entities, including Dodge Mechanical Power Transmission Company Inc. (now known as Dodge Industrial, Inc.), and certain other assets relating to ABB Asea Brown Boveri Ltd.’s mechanical power transmission business. With offices in Greenville, South Carolina, Dodge is a leading manufacturer of mounted bearings, gearings and mechanical products with market-leading brand recognition. Dodge manufactures a complete line of mounted bearings, enclosed gearing and power transmission components across a diverse set of industrial end markets. Dodge primarily operates across the construction and mining aftermarket, and the food & beverage, warehousing and general machinery verticals, with sales predominately in the Americas. Acquisition costs incurred for the fiscal year ended April 2, 2022 totaled $22,598 and were recorded as period expenses and included within other, net within the consolidated statements of operations. Remaining acquisition-related costs incurred for the three and nine months ended December 31, 2022 were immaterial. This acquisition was accounted for as a purchase transaction. The purchase price allocation was completed during the third quarter of fiscal 2023. The assets acquired and liabilities assumed were recorded based on their fair values at the date of acquisition as follows:
|  | November 1, 2021 |
Cash and cash equivalents |  | $ | 81,868 |
Accounts receivable |  |  | 83,533 |
Inventory |  |  | 136,062 |
Prepaid expenses and other current assets |  |  | 1,261 |
Property, plant and equipment |  |  | 165,109 |
Operating lease assets |  |  | 9,768 |
Goodwill |  |  | 1,596,083 |
Other intangible assets |  |  | 1,385,082 |
Other noncurrent assets |  |  | 3,697 |
Accounts payable |  |  | (69,263 | )
Accrued rebates |  |  | (30,184 | )
Accrued expenses and other current liabilities |  |  | (44,766 | )
Deferred tax liabilities |  |  | (298,618 | )
Other noncurrent liabilities |  |  | (56,989 | )
Net assets acquired |  |  | 2,962,643 |
Less cash received |  |  | 81,868 |
Net consideration |  | $ | 2,880,775 |
The goodwill associated with this acquisition is the result of expected synergies from combining the operations of the acquired business with the Company’s operations, and intangible assets that do not qualify for separate recognition, such as an assembled workforce. $44,941 of the acquired goodwill is deductible for tax purposes. The fair value of the identifiable intangible assets of $1,385,082, consisting primarily of customer relationships and trade names, was determined using the income approach. Specifically, a multi-period, excess earnings method was utilized for the customer relationships and the relief-from-royalty method was utilized for the trade name. The fair value of the customer relationships, $1,185,000, is being amortized based on the economic pattern of benefit over a period of 24 years; the fair value of the trade names, $200,000, is being amortized on a straight-line basis over a 26-year term. These amortization periods represent the estimated useful lives of the assets. The results of operations for Dodge have been included in the Company’s financial statements for the period subsequent to the completion of the acquisition on November 1, 2021. Dodge contributed $174,765 of revenue and $37,532 of operating income for the three months ended December 31, 2022. Dodge contributed $544,505 of revenue and $106,178 of operating income for the nine months ended December 31, 2022. Dodge contributed $109,976 of revenue and $5,348 of operating income for both the three and nine months ended January 1, 2022. The following table reflects the unaudited pro forma operating results of the Company for the three- and nine-month fiscal periods ended January 1, 2022, which gives effect to the acquisition of Dodge as if it had been acquired on March 29, 2020. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective March 29, 2020, nor are they intended to be indicative of results that may occur in the future. The underlying pro forma information includes the historical financial results of the Company and the acquired business adjusted for certain items such as amortization of acquired intangible assets and acquisition costs incurred. The pro forma information does not include the effects of any synergies, cost reduction initiatives or anticipated integration costs related to the acquisitions.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | January 1, 2022 |  |  | January 1, 2022 |
Net sales |  | $ | 319,100 |  |  | $ | 968,680 |
Net income |  | $ | 18,567 |  |  | $ | 62,990 |
Upon closing, the Company entered into a transition services agreement (the “Dodge TSA”) with ABB, pursuant to which ABB agreed to support the information technology, human resources and benefits, finance, tax and treasury functions of the Dodge business for six to 12 months. Substantially all services under the Dodge TSA terminated on November 1, 2022. Costs associated with the Dodge TSA were $1,241 and $8,945 for the three and nine months ended December 31, 2022, respectively, and are included in other, net on the Company’s consolidated statement of operations. Since the purchase of the Dodge business on November 1, 2021, costs associated with the Dodge TSA were $16,948 through December 31, 2022.

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