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Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Basis of Presentation

Description of Business

Generac Holdings Inc. (the Company) owns all of the common stock of Generac Acquisition Corp. (GAC), which in turn, owns all of the common stock of Generac Power Systems, Inc. (the Borrower). The Company is a leading designer and manufacturer of a wide range of power generation equipment and other engine powered products. As a leader in power equipment serving residential, light-commercial, industrial, oil & gas, and construction markets, Generac’s power products are available globally through a broad network of independent dealers, retailers, wholesalers and equipment rental companies, as well as sold direct to certain end user customers.

Over the past several years, the Company has executed a number of acquisitions that support our strategic plan. A summary of these acquisitions include the following:

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On October 3, 2011, the Company acquired substantially all of the assets of Magnum Products (Magnum), a supplier of generator powered light towers and mobile generators for a variety of industries and specialties. The Magnum business is a strategic fit for the Company as it provides diversification, with the introduction of new engine powered products, distribution channels and end markets.

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On December 8, 2012, the Company acquired the equity of Ottomotores UK and its affiliates (Ottomotores), with operations in Mexico City, Mexico and Curitiba, Brazil. Ottomotores is a leading manufacturer in the Mexican market for industrial diesel gensets and is a market participant throughout all of Latin America.

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On August 1, 2013, the Company acquired the equity of Tower Light SRL and its wholly-owned subsidiaries (Tower Light). Headquartered outside Milan, Italy, Tower Light is a leading developer and supplier of mobile light towers throughout Europe, the Middle East and Africa.

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On November 1, 2013, the Company purchased the assets of Baldor Electric Company’s generator division (Baldor Generators). Baldor Generators offers a complete line of power generation equipment throughout North America with power output up to 2.5MW.

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On September 2, 2014, the Company acquired the equity of Pramac America LLC, resulting in the ownership of the Powermate trade name and the right to license the DeWalt brand name for certain residential engine powered tools. The transaction also included working capital associated with these products. This acquisition helps to expand the Generac brand portfolio across its residential product platform and increases its product offering in the portable generator category.

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On October 1, 2014, the Company acquired MAC, Inc. and its related entities (MAC). MAC is a leading manufacturer of premium-grade commercial and industrial mobile heaters within the United States and Canada. The acquisition expands the Company’s portfolio of mobile power products and provides increased access to the oil & gas market.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany amounts and transactions have been eliminated in consolidation. Certain prior period amounts contained in Note 7, “Product Warranty Obligations” have been reclassified to conform to the current period’s presentation.

The condensed consolidated balance sheet as of September 30, 2014, the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2014 and 2013, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2014 and 2013 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for the fair presentation of the financial position, results of operation and cash flows, have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.

Accumulated Other Comprehensive Loss

The following presents a tabular disclosure of changes in accumulated other comprehensive loss during the three and nine months ended September 30, 2014 and 2013, net of tax:

		Foreign Currency Translation Adjustments				Defined Benefit Pension Plan				Unrealized Gain (Loss) on Cash Flow Hedges				Total

Beginning Balance – June 30, 2014		$	1,188			$	(4,393	)		$	(934	)		$	(4,139	)
Other comprehensive income (loss) before reclassifications			(2,014	)			-				989				(1,025	)
Amounts reclassified from accumulated other comprehensive loss			-				-				-				-
Net current-period other comprehensive income (loss)			(2,014	)			-				989				(1,025	)
Ending Balance – September 30, 2014		$	(826	)		$	(4,393	)		$	55			$	(5,164	)

		Foreign Currency Translation Adjustments				Defined Benefit Pension Plan				Unrealized Gain (Loss) on Cash Flow Hedges				Total

Beginning Balance – June 30, 2013		$	(15	)		$	(12,081	)		$	(376	)		$	(12,472	)
Other comprehensive income before reclassifications			867				-				-				867
Amounts reclassified from accumulated other comprehensive loss (1)			-				-				376				376
Net current-period other comprehensive income			867				-				376				1,243
Ending Balance – September 30, 2013		$	852			$	(12,081	)		$	-			$	(11,229	)

(1)

Represents amortization of unrealized losses on interest rate swaps to interest expense of $393 net of tax benefit of $17 for the three months ended September 30, 2013.

		Foreign Currency Translation Adjustments				Defined Benefit Pension Plan				Unrealized Gain (Loss) on Cash Flow Hedges				Total

Beginning Balance – January 1, 2014		$	1,204			$	(4,393	)		$	774			$	(2,415	)
Other comprehensive loss before reclassifications			(2,030	)			-				(719	)			(2,749	)
Amounts reclassified from accumulated other comprehensive loss			-				-				-				-
Net current-period other comprehensive loss			(2,030	)			-				(719	)			(2,749	)
Ending Balance – September 30, 2014		$	(826	)		$	(4,393	)		$	55			$	(5,164	)

		Foreign Currency Translation Adjustments				Defined Benefit Pension Plan				Unrealized Gain (Loss) on Cash Flow Hedges				Total

Beginning Balance – January 1, 2013		$	(34	)		$	(12,081	)		$	(2,381	)		$	(14,496	)
Other comprehensive income before reclassifications			886				-				-				886
Amounts reclassified from accumulated other comprehensive loss (1)			-				-				2,381				2,381
Net current-period other comprehensive income			886				-				2,381				3,267
Ending Balance – September 30, 2013		$	852			$	(12,081	)		$	-			$	(11,229	)

(1)

Represents amortization of unrealized losses on interest rate swaps to interest expense of $2,490 net of tax benefit of $109 for the nine months ended September 30, 2013.

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

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