XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Acquisitions and Purchase Accounting Acquisition and Purchase Accounting (Notes) | 12 Months Ended
--- | ---
Dec. 28, 2019
Business Acquisition [Line Items] |
Business Combination Disclosure [Text Block] | ACQUISITIONS AND PURCHASE ACCOUNTING The company operates in a highly fragmented industry and has completed numerous acquisitions over the past several years as a component of its growth strategy. The company has acquired industry leading brands and technologies to position itself as a leader in the commercial foodservice equipment, food processing equipment and residential kitchen equipment industries. The company has accounted for all business combinations using the acquisition method to record a new cost basis for the assets acquired and liabilities assumed. The difference between the purchase price and the fair value of the assets acquired and liabilities assumed has been recorded as goodwill in the financial statements. The company also recognizes identifiable intangible assets, primarily trade names and customer relationships, using a discounted cash flow model. The significant assumptions used to estimate the value of the intangible assets include revenue growth rates, projected profit margins, discount rates, royalty rates, and customer attrition rates. These significant assumptions are forward-looking and could be affected by future economic and market conditions. The results of operations are reflected in the consolidated financial statements of the company from the dates of acquisition. The following represents the company's significant acquisitions in 2019 and 2018 as well as summarized information on various acquisitions that were not individually material. The company also made smaller acquisitions not presented below which are individually and collectively immaterial. Taylor On June 22, 2018, the company completed its acquisition of all of the capital stock of the Taylor Company ("Taylor"), a world leader in beverage solutions, soft serve and ice cream dispensing equipment, frozen drink machines, and automated double-sided grills, located in Rockton, Illinois, for a purchase price of approximately $1.0 billion, net of cash acquired. During the fourth quarter of 2018, the company finalized the working capital provision provided for by the purchase agreement resulting in a refund from the seller of $11.5 million. The final allocation of consideration paid for the Taylor acquisition is summarized as follows (in thousands):
| (as initially reported) June 22, 2018 |  | Measurement Period Adjustments |  | (as adjusted) June 22, 2018
Cash | $ | 2,551 |  |  | $ | 64 |  |  | $ | 2,615 |
Current assets | 71,162 |  |  | (2,011 | ) |  | 69,151 |
Property, plant and equipment | 21,187 |  |  | (556 | ) |  | 20,631 |
Goodwill | 491,339 |  |  | (120,497 | ) |  | 370,842 |
Other intangibles | 484,210 |  |  | 119,550 |  |  | 603,760 |
Other assets | — |  |  | 361 |  |  | 361 |
Long-term deferred tax asset | — |  |  | 227 |  |  | 227 |
Current liabilities | (48,417 | ) |  | (4,099 | ) |  | (52,516 | )
Other non-current liabilities | (8,161 | ) |  | (648 | ) |  | (8,809 | )
Net assets acquired and liabilities assumed | $ | 1,013,871 |  |  | $ | (7,609 | ) |  | $ | 1,006,262 |
The goodwill and $304.7 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $290.9 million allocated to customer relationships, $1.7 million of existing developed oven technology, $4.4 million of equipment backlog, and $2.1 million of deferred service backlog, which are being amortized over periods up to 15 years, 5 years, 3 months, and 3 years, respectively. Goodwill and other intangibles of Taylor are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. A significant portion of the assets are expected to be deductible for tax purposes. Cooking Solutions Group On April 1, 2019, the company completed its acquisition of all of the capital stock of Cooking Solutions Group, Inc. ("Cooking Solutions Group") from Standex International Corporation, which consists of the brands APW Wyott, Bakers Pride, BKI and Ultrafryer with locations in Texas, South Carolina and Mexico for a purchase price of approximately $106.1 million, net of cash acquired. During the third quarter of 2019, the company finalized the working capital provision provided for by the purchase agreement resulting in a payment due to the sellers of $0.1 million. The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
| (as initially reported) April 1, 2019 |  | Preliminary Measurement Period Adjustments |  | (as adjusted) April 1, 2019
Cash | $ | 843 |  |  | $ | — |  |  | $ | 843 |
Current assets | 33,666 |  |  | (1,325 | ) |  | 32,341 |
Property, plant and equipment | 15,959 |  |  | (243 | ) |  | 15,716 |
Goodwill | 31,207 |  |  | 5,327 |  |  | 36,534 |
Other intangibles | 53,450 |  |  | (5,850 | ) |  | 47,600 |
Other assets | — |  |  | 1,470 |  |  | 1,470 |
Current liabilities | (15,130 | ) |  | (368 | ) |  | (15,498 | )
Long-term deferred tax liability | (13,082 | ) |  | 2,226 |  |  | (10,856 | )
Other non-current liabilities | — |  |  | (1,163 | ) |  | (1,163 | )
Net assets acquired and liabilities assumed | $ | 106,913 |  |  | $ | 74 |  |  | $ | 106,987 |
The long term deferred tax liability amounted to $10.9 million. The net deferred tax liability is comprised of $11.6 million of deferred tax liability related to the difference between the book and tax basis on identifiable intangible asset and liability accounts and $0.7 million of deferred tax asset related to the difference between the book and tax basis on identifiable tangible assets and liability accounts. The goodwill and $24.7 million of other intangibles associated with the trade name is subject to the non-amortization provisions of ASC 350. Other intangibles also include $22.5 million allocated to customer relationships and $0.4 million allocated to backlog, which are being amortized over periods of 9 years and 3 months, respectively. Goodwill and other intangibles of Cooking Solutions Group are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes. The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company will complete the purchase price allocation in the first quarter of fiscal 2020. Other 2018 Acquisitions During 2018 the company completed various other acquisitions that were not individually material. The final allocation of consideration paid for the other 2018 acquisitions is summarized as follows (in thousands):
| Preliminary Opening Balance Sheet |  | Measurement Period Adjustments |  | Adjusted Opening Balance Sheet
Cash | $ | 16,293 |  |  | $ | (37 | ) |  | $ | 16,256 |
Current assets | 38,048 |  |  | 115 |  |  | 38,163 |
Property, plant and equipment | 22,340 |  |  | 3,658 |  |  | 25,998 |
Goodwill | 126,647 |  |  | (14,312 | ) |  | 112,335 |
Other intangibles | 46,902 |  |  | 15,900 |  |  | 62,802 |
Other assets | 14 |  |  | — |  |  | 14 |
Current portion of long term debt | (3,329 | ) |  | — |  |  | (3,329 | )
Current liabilities | (23,606 | ) |  | (1,521 | ) |  | (25,127 | )
Long term debt | (2,677 | ) |  | — |  |  | (2,677 | )
Long-term deferred tax liability | (8,937 | ) |  | (4,923 | ) |  | (13,860 | )
Other non-current liabilities | (3,699 | ) |  | — |  |  | (3,699 | )
Consideration paid at closing | $ | 207,996 |  |  | $ | (1,120 | ) |  | $ | 206,876 |
Contingent consideration | 3,454 |  |  | — |  |  | 3,454 |
Net assets acquired and liabilities assumed | $ | 211,450 |  |  | $ | (1,120 | ) |  | $ | 210,330 |
The long term deferred tax liability amounted to $13.9 million. The net deferred tax liability is comprised of $13.1 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets and $0.8 million of deferred tax liability related to the difference between the book and tax basis on identifiable tangible asset and liability accounts. The goodwill and $30.7 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350. Other intangibles also include $28.6 million allocated to customer relationships, $0.3 million allocated to developed technology and $3.3 million allocated to backlog, which are being amortized over periods of 5 to 7 years, 5 years, and 3 months to 1 year, respectively. Goodwill of $85.4 million and other intangibles of $42.9 million of the companies are allocated to the Commercial Foodservice Equipment Group. Goodwill of $26.9 million and other intangibles of $19.9 million are allocated to the Food Processing Equipment Group for segment reporting purposes. Of these assets, goodwill of $22.1 million is expected to be deductible for tax purposes. One purchase agreement includes an earnout provision providing for contingent payments due to the sellers to the extent certain financial targets are exceeded. The earnout is payable between 2020 and 2021, if the company exceeds certain sales and earnings targets. The contractual obligation associated with the contingent earnout provision recognized on the acquisition date is $3.5 million. Other 2019 Acquisitions During 2019 the company completed various other acquisitions that were not individually material. The following estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
| Preliminary Opening Balance Sheet |  | Measurement Period Adjustments |  | Adjusted Opening Balance Sheet
Cash | $ | 2,683 |  |  | $ | (10 | ) |  | $ | 2,673 |
Current assets | 21,525 |  |  | 980 |  |  | 22,505 |
Property, plant and equipment | 8,920 |  |  | 18 |  |  | 8,938 |
Goodwill | 99,838 |  |  | (3,096 | ) |  | 96,742 |
Other intangibles | 64,019 |  |  | 199 |  |  | 64,218 |
Long-term deferred tax asset | 1,288 |  |  | 1,478 |  |  | 2,766 |
Other assets | 137 |  |  | 854 |  |  | 991 |
Current liabilities | (20,437 | ) |  | (535 | ) |  | (20,972 | )
Other non-current liabilities | (6,170 | ) |  | (529 | ) |  | (6,699 | )
Consideration paid at closing | $ | 171,803 |  |  | $ | (641 | ) |  | $ | 171,162 |
Deferred payments | 2,404 |  |  | — |  |  | 2,404 |
Contingent consideration | 4,258 |  |  | — |  |  | 4,258 |
Net assets acquired and liabilities assumed | $ | 178,465 |  |  | $ | (641 | ) |  | $ | 177,824 |
The long term deferred tax asset amounted to $2.8 million. The net deferred tax asset is comprised of $3.0 million of deferred tax asset related to tax loss carryforwards, $0.9 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets, and $0.7 million of deferred tax asset related to the difference between the book and tax basis on other book to tax differences and liability accounts. The goodwill and $29.6 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350. Other intangibles also include $23.9 million allocated to customer relationships, $9.2 million allocated to developed technology and $1.5 million allocated to backlog, which are being amortized over periods of 2 to 10 years, 5 to 7 years, and 3 months, respectively. Goodwill of $43.6 million and other intangibles of $35.2 million of the companies are allocated to the Commercial Foodservice Equipment Group. Goodwill of $43.6 million and other intangibles of $21.3 million are allocated to the Food Processing Equipment Group. Goodwill of $9.5 million and other intangibles of $7.7 million are allocated to the Residential Kitchen Equipment Group for segment reporting purposes. Of these assets, goodwill of $85.5 million and intangibles of $54.1 million are expected to be deductible for tax purposes. One purchase agreement includes deferred payments and earnout provisions providing for contingent payments due to the sellers to the extent certain financial targets are exceeded. The deferred payments are payable between 2020 and 2022. The contractual obligation associated with the deferred payments on the acquisition date is $2.4 million. The earnout is payable in 2022, if the company exceeds certain sales and earnings targets. The contractual obligation associated with the contingent earnout provision recognized on the acquisition date is $4.3 million. The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the company is waiting for additional information necessary to finalize those fair values for substantially all 2019 acquisitions. Thus, the provisional measurements of fair value set forth above are subject to change. The company will complete the purchase price allocations during 2020. Pro Forma Financial Information In accordance with ASC 805 Business Combinations, the following unaudited pro forma results of operations for the twelve months ended December 28, 2019 and December 29, 2018, assumes the 2018 and 2019 acquisitions were completed on December 31, 2017 (first day of fiscal year 2018). The following pro forma results include adjustments to reflect additional interest expense to fund the acquisitions, amortization of intangibles associated with the acquisitions, and the effects of adjustments made to the carrying value of certain assets (in thousands, except per share data):
| Twelve Months Ended
| December 28, 2019 |  | December 29, 2018
Net sales | $ | 3,022,279 |  |  | $ | 3,078,487 |
Net earnings | 344,823 |  |  | 285,642 |
Net earnings per share: |  |  |  |  |
Basic | $ | 6.20 |  |  | $ | 5.14 |
Diluted | $ | 6.20 |  |  | $ | 5.14 |
The historical consolidated financial information of the Company and the acquisitions have been adjusted in the pro forma information to give effect to pro forma events that are (1) directly attributable to the transactions, (2) factually supportable and (3) expected to have a continuing impact on the combined results. Pro forma data may not be indicative of the results that would have been obtained had these acquisitions occurred at the beginning of the periods presented, nor is it intended to be a projection of future results. Additionally, the pro forma financial information does not reflect the costs which the company has incurred or may incur to integrate the acquired businesses.

X
- Definition Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table. + References No definition available. + Details
Name: | us-gaap_BusinessAcquisitionLineItems
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration