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Acquisitions and Dispositions | 12 Months Ended
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Dec. 26, 2015
Acquisitions and Dispositions [Abstract] |
Acquisitions and Dispositions | Note 2 – Acquisitions and Dispositions 2015 Acquisitions Great Lakes Copper On July 31, 2015, the Company entered into a Share Purchase Agreement with Great Lakes Copper, Inc. providing for the purchase of all of the outstanding shares of Great Lakes Copper Ltd. (Great Lakes) for $70.0 million in cash, including a $1.5 million post-closing working capital adjustment. Great Lakes manufactures copper tube products in Canada. This acquisition complements the Company's existing copper tube businesses in the Plumbing & Refrigeration segment. Sherwood Valve Products On June 18, 2015, the Company entered into a Membership Interest Purchase Agreement with Sherwood Valve Products, LLC (Sherwood) providing for the purchase of all of the outstanding equity interests of Sherwood for $21.8 million in cash, net of a post-closing working capital adjustment. Sherwood manufactures valves and fluid control solutions for the HVAC, refrigeration, and compressed gas markets. The acquisition of Sherwood complements the Company's existing refrigeration business, a component of the OEM segment. Turbotec Products, Inc. On March 30, 2015, the Company entered into a Stock Purchase Agreement with Turbotec Products, Inc. (Turbotec) providing for the purchase of all of the outstanding capital stock of Turbotec for approximately $14.1 million in cash, net of a post-closing working capital adjustment. Turbotec manufactures coaxial heat exchangers and twisted tubes for the heating, ventilation, and air-conditioning (HVAC), geothermal, refrigeration, swimming pool heat pump, marine, ice machine, commercial boiler, and heat reclamation markets. The acquisition of Turbotec complements the Company's existing refrigeration business, a component of the OEM segment. 2014 Acquisition Yorkshire Copper Tube On February 28, 2014, the Company entered into a definitive agreement with KME Yorkshire Limited to acquire certain assets and assume certain liabilities of its copper tube business. Yorkshire Copper Tube (Yorkshire) produces European standard copper distribution tubes. The purchase price was approximately $30.1 million, paid in cash. The acquisition of Yorkshire complements the Company's existing copper tube businesses in the Plumbing & Refrigeration segment. The Company recognized approximately $3.4 million of severance costs related to the reorganization of Yorkshire during 2015, compared to $7.3 million in 2014. The Company does not expect to incur further severance costs for the rationalization of the business. 2013 Acquisition Howell Metals Company On October 17, 2013, the Company entered into a Stock Purchase Agreement with Commercial Metals Company and Howell Metal Company (Howell) providing for the purchase of all of the outstanding capital stock of Howell for approximately $55.3 million in cash, net of working capital adjustments. Howell manufactures copper tube and line sets for U.S. distribution. The acquisition of Howell complements the Company's copper tube and line sets businesses, both components of the Plumbing & Refrigeration segment. These acquisitions were accounted for using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values. The following table summarizes the allocation of the purchase price to acquire these businesses, which was financed by available cash balances, as well as the assets acquired and liabilities assumed at the respective acquisition dates. For the Great Lakes, Sherwood, and Turbotec acquisitions, the purchase price allocations are provisional as of December 26, 2015 and subject to change upon completion of the final valuation of the long-lived assets during their respective measurement periods.
(in thousands) |  | Great Lakes |  |  | Sherwood |  |  | Turbotec |  |  | Yorkshire |  |  | Howell |  |  |
Total consideration |  | $ | 70,011 |  |  | $ | 21,795 |  |  | $ | 14,138 |  |  | $ | 30,137 |  |  | $ | 55,276 |  |  |
Allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  |  | 26,079 |  |  |  | 6,490 |  |  |  | 1,936 |  |  |  | — |  |  |  | 14,564 |  |  |
Inventories |  |  | 15,233 |  |  |  | 11,892 |  |  |  | 3,247 |  |  |  | 17,579 |  |  |  | 27,615 |  |  |
Other current assets |  |  | 22 |  |  |  | 260 |  |  |  | 72 |  |  |  | 1,034 |  |  |  | 571 |  |  |
Property, plant, and equipment |  |  | 22,771 |  |  |  | 10,327 |  |  |  | 9,080 |  |  |  | 2,103 |  |  |  | 20,293 |  |  |
Goodwill(1) |  |  | 19,087 |  | (1) |  | — |  |  |  | 2,088 |  |  |  | 8,075 |  | (1) |  | 1,358 |  |  | (1)
Intangible assets |  |  | 27,468 |  |  |  | (38 | ) |  |  | 880 |  |  |  | 16,937 |  |  |  | 2,320 |  |  |
Other assets |  |  | 1,413 |  |  |  | — |  |  |  | 59 |  |  |  | — |  |  |  | — |  |  |
Total assets acquired |  |  | 112,073 |  |  |  | 28,931 |  |  |  | 17,362 |  |  |  | 45,728 |  |  |  | 66,721 |  |  |
Accounts payable |  |  | 36,026 |  |  |  | 6,022 |  |  |  | 1,603 |  |  |  | 10,188 |  |  |  | 9,208 |  |  |
Accrued wages & other employee costs |  |  | — |  |  |  | 471 |  |  |  | 356 |  |  |  | 1,167 |  |  |  | 703 |  |  |
Other current liabilities |  |  | 381 |  |  |  | 487 |  |  |  | 51 |  |  |  | 4,236 |  |  |  | 1,534 |  |  |
Postretirement benefits other than pensions |  |  | 5,655 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |
Other noncurrent liabilities |  |  | — |  |  |  | 156 |  |  |  | 1,214 |  |  |  | — |  |  |  | — |  |  |
Total liabilities assumed |  |  | 42,062 |  |  |  | 7,136 |  |  |  | 3,224 |  |  |  | 15,591 |  |  |  | 11,445 |  |  |
Net assets acquired |  | $ | 70,011 |  |  | $ | 21,795 |  |  | $ | 14,138 |  |  | $ | 30,137 |  |  | $ | 55,276 |  |  |
(1) Tax-deductible goodwill |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
The following details the total intangible assets identified in the allocation of the purchase price at the respective acquisition dates:
(in thousands) |  |  | Estimated Useful Life |  |  | Great Lakes |  |  | Turbotec |  |  | Yorkshire |  |  | Howell |  |  |
Intangible asset type: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  |  | 20 years |  |  | $ | 20,273 |  |  | $ | 350 |  |  | $ | 10,699 |  |  | $ | 1,910 |  |  |
Non-compete agreements |  |  | 3-5 years |  |  |  | 2,269 |  |  |  | 90 |  |  |  | 4,504 |  |  |  | — |  |  |
Patents and technology |  |  | 10-15 years |  |  |  | 3,104 |  |  |  | 220 |  |  |  | — |  |  |  | — |  |  |
Trade names and licenses |  |  | 5-10 years |  |  |  | 2,453 |  |  |  | 220 |  |  |  | 1,055 |  |  |  | 410 |  |  |
Other |  |  | 2-5 years |  |  |  | (631 | ) |  |  | — |  |  |  | 679 |  |  |  | — |  |  |
Total intangible assets |  |  |  |  |  | $ | 27,468 |  |  | $ | 880 |  |  | $ | 16,937 |  |  | $ | 2,320 |  |  |
The results of operations of the acquired businesses were included in the Company's Consolidated Financial Statements from their respective acquisition dates. 2015 Disposition On June 1, 2015, the Company sold certain assets. Simultaneously, the Company entered into a lease agreement with the purchaser of the assets for their continued use for a period of approximately 22 months (Lease Period). The total sales price was $20.2 million, of which $5.0 million was received on June 1, 2015; the Company will receive $5.0 million on December 30, 2016 and the remaining $10.2 million will be received at the end of the Lease Period. This transaction resulted in a pre-tax gain of $15.4 million in the second quarter of 2015, or 17 cents per diluted share after tax. This gain was recognized in the Plumbing & Refrigeration segment. The net book value of the assets disposed was $2.3 million. For goodwill testing purposes, these assets were part of the SPD reporting unit, which is a component of the Company's Plumbing & Refrigeration segment. Because these assets met the definition of a business, $2.4 million of the SPD reporting unit's goodwill balance was allocated to the disposal group. The amount of goodwill allocated was based on the relative fair values of the asset group that was disposed and the portion of the SPD reporting unit that was retained. 2014 Dispositions On November 21, 2014, the Company entered into a Share Purchase Agreement with Travis Perkins PLC to sell all of the outstanding capital stock of Mueller Primaflow Limited (Primaflow), the Company's United Kingdom based plumbing and heating systems import distribution business, for approximately $24.9 million. Primaflow, which serves markets in the United Kingdom and Ireland, was included in the Plumbing & Refrigeration segment and reported net sales of $57.5 million and after-tax net income of $4.4 million for the 2014 fiscal year. The carrying value of the assets disposed totaled $25.3 million, consisting primarily of accounts receivable and inventories. The carrying value of the liabilities disposed totaled $7.1 million, consisting primarily of accounts payable and other current liabilities. In addition, the Company recognized a cumulative translation loss of $6.0 million. The net gain on the sale of this business was immaterial to the Consolidated Financial Statements. During November 2014, the Company sold its ABS plastic pipe manufacturing assets. These assets had a carrying value of approximately $1.9 million and were part of the SPD reporting unit, which is a component of the Plumbing & Refrigeration segment. The sales price was $6.0 million, which resulted in a pre-tax gain of $4.1 million. 2013 Disposition On August 9, 2013, the Company sold certain of its plastic fittings manufacturing assets located in Portage, Michigan and Ft. Pierce, Florida. Simultaneously, the Company entered into a lease agreement with the purchaser of the assets to continue to manufacture and distribute Schedule 40 plastic fittings utilizing the Ft. Pierce assets for a period of approximately eight to 14 months (Transition Period). The total sale price was $66.2 million, of which $61.2 million was received on August 9, 2013; the remaining $5.0 million was received during the second quarter of 2014. This transaction resulted in a pre-tax gain of $39.8 million in the third quarter of 2013, or 41 cents per diluted share after tax. The net book value of the plastic fittings manufacturing assets disposed was $15.9 million. For goodwill testing purposes, these assets were part of the SPD reporting unit, which is a component of the Company's Plumbing & Refrigeration segment. Because these assets met the definition of a business, $10.5 million of the SPD reporting unit's goodwill balance was allocated to the disposal group. The amount of goodwill allocated was based on the relative fair values of the asset group that was disposed and the portion of the SPD reporting unit that was retained. The Company has continued to manufacture and supply plastic drain, waste, and vent (DWV) fittings, and extended its third party supply agreement to complement its product offering with purchased products it does not manufacture with the remaining assets. This supply agreement was originally entered into after the majority of the Company's plastic manufacturing assets were destroyed in the 2011 fire at its Wynne, Arkansas facility. With the decision to cease the Company's manufacturing operations in Portage, there was an evaluation of the remaining long-lived assets for impairment, and it was determined that the carrying values of the land and building were no longer recoverable. An impairment charge of $3.2 million was recognized during the third quarter of 2013 to adjust the carrying values of the land and building to their estimated fair value. The fair value estimate was determined by obtaining and evaluating recent sales data for similar assets (Level 2 within the fair value hierarchy). During March 2014, the land and building in Portage were sold for $4.7 million, resulting in a pre-tax gain of $1.4 million.

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