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Note 2 - Acquisitions
 9 Months Ended
Sep. 30, 2016
Notes to Financial Statements  
Business Combination Disclosure [Text Block]
2. Acquisitions
 
Acquisition of Pramac
 
On March 1, 2016, the Company acquired a 65% ownership interest in Pramac for a purchase price, net of cash
acquired, of $60,886. Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network. The acquisition purchase price was funded solely through cash on hand.
 
 
The 35% noncontrolling interest in
Pramac had an acquisition date fair value of $34,253, and was recorded as a redeemable noncontrolling interest in the condensed consolidated balance sheet, as the noncontrolling interest party has within its control the right to require the Company to redeem its interest in Pramac. The noncontrolling interest holder has a put option to sell their interests to the Company any time within five years from the acquisition. The put option price is either (i) a fixed amount if voluntarily exercised within the first two years after the acquisition, or (ii) based on a multiple of earnings, subject to the terms of the acquisition. Additionally, the Company holds a call option that it may redeem commencing five years from the acquisition, or earlier upon the occurrence of certain circumstances. The call option price is based on a multiple of earnings that is subject to the terms of the acquisition. Both the put and call option only provide for the complete transfer of the noncontrolling interest, with no partial transfers of interest permitted.
 
The Company recorded a preliminary purchase price allocation during the
first quarter of 2016, and was updated in the third quarter of 2016, based upon its estimates of the fair value of the acquired assets and assumed liabilities. The preliminary purchase price allocation as of September 30, 2016 was as follows:
 
   
March 1, 2016
  
Accounts receivable
   $ 51,108  
Inventories
     40,070  
Property and equipment
     19,129  
Intangible assets
     34,471  
Goodwill
     47,682  
Other assets
     8,153  
Total assets acquired
     200,613  
         
Short-term borrowings
     21,105  
Accounts payable
     40,270  
Long-term debt and capital lease obligations (including current portion)
     18,599  
Other liabilities
     25,447  
Redeemable noncontrolling interest
     34,253  
Noncontrolling interest
     53  
Net assets acquired
   $ 60,886  
 
The goodwill ascribed to this acquisition is not deductible for tax purposes.
The accompanying condensed consolidated financial statements include the results of Pramac from the date of acquisition through September 30, 2016.
 
Acquisition of CHP
 
On August 1, 2015,
a subsidiary of the Company acquired CHP for a purchase price, net of cash acquired, of $74,570. Headquartered in Vergennes, Vermont, CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, with sales primarily in North America. The acquisition was funded solely through cash on hand.
 
The Company recorded a preliminary purchase price allocation during the
third quarter of 2015 based upon its estimates of the fair value of the acquired assets and assumed liabilities. As a result, the Company recorded approximately $81,726 of intangible assets, including approximately $30,076 of goodwill, as of the acquisition date. The purchase price allocation was finalized in the fourth quarter of 2015, resulting in a $6,552 decrease to total intangible assets, including an increase of $6,208 in goodwill. The goodwill ascribed to this acquisition is not deductible for tax purposes. In addition, the Company assumed $12,000 of CHP’s debt in conjunction with this acquisition. The accompanying condensed consolidated financial statements include the results of CHP from the date of acquisition through September 30, 2016.
 
 
P
ro
Forma Information
 
The following unaudited pro forma information of t
he Company gives effect to these acquisitions as though the transactions had occurred on January 1, 2015:
 
   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
   
2016
    
2015
    
2016
    
2015
  
Net Sales:
                                
As reported
   $ 373,121     $ 359,291     $ 1,027,032     $ 959,469  
Pro forma
     373,121       415,260       1,056,379       1,159,587  
                                 
Net income attributable to Generac Holdings Inc.:
                                
As reported
   $ 26,183     $ 34,036     $ 57,279     $ 68,565  
Pro forma
     26,257       32,675       58,989       68,380  
                                 
Net income attributable to Generac Holdings Inc. per
 common share - diluted
                                
As reported
   $ 0.40     $ 0.49     $ 0.87     $ 0.98  
Pro forma
     0.40       0.47       0.89       0.98  
 
Th
is unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated on January 1, 2015.