XML 33 R22.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Acquisitions | 9 Months Ended
--- | ---
Sep. 30, 2017
Business Combinations [Abstract] |
Acquisitions | Acquisitions Acquisition of Globe Holding Company, LLC On July 31, 2017, we acquired 100% of the common stock in Globe Holding Company, LLC ("Globe") in an all-cash transaction valued at $215 million minus a working capital adjustment of $1.0 million. There is no contingent consideration. Based in Pittsfield, NH, Globe is a leading innovator and provider of firefighter protective clothing and boots. This acquisition aligns with our corporate strategy in that it strengthens our leading position in the North American fire service market. The transaction was funded through borrowings on our unsecured senior revolving credit facility. Globe operating results are included in our consolidated financial statements from the acquisition date as part of the Americas reportable segment. The acquisition qualifies as a business combination and will be accounted for using the acquisition method of accounting. The following table summarizes the preliminary fair values of the Globe assets acquired and liabilities assumed at the date of acquisition:
(In millions) | July 31, 2017
Current assets (including cash of $58 thousand) | $ | 28.6 |
Property, plant and equipment and other noncurrent assets | 8.7 |
Trade name | 60.0 |
Distributor relationships | 40.2 |
Acquired technology and other intangible assets | 10.5 |
Goodwill | 71.7 |
Total assets acquired | 219.7 |
Total liabilities assumed | 5.7 |
Net assets acquired | $ | 214.0 |
The amounts in the table above are subject to change upon completion of the valuation of the assets acquired and liabilities assumed. This valuation is expected to be completed by mid-2018. Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. Fair values were determined by management, based, in part on an independent valuation performed by a third party valuation specialist. The valuation methods used to determine the fair value of intangible assets included the relief from royalty method for trade name and technology related intangible assets; the excess earnings approach for distributor relationships using distributor inputs and contributory charges; and the cost method for assembled workforce which is included in goodwill. A number of significant assumptions and estimates were involved in the application of these valuation methods, including sales volumes and prices, royalty rates, costs to produce, tax rates, capital spending, discount rates, and working capital changes. Cash flow forecasts were generally based on Globe pre-acquisition forecasts coupled with estimated MSA sales synergies. Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives. The distributor relationships acquired in the Globe transaction will be amortized over a period of 20 years and the remaining identifiable assets will be amortized over 5 years. The trade name was determined to have an indefinite useful life. We will perform an impairment assessment annually on the trade name, or sooner if there is a triggering event. Additionally, as part of each impairment assessment, we will reassess whether the asset continues to have an indefinite life or whether it should be reassessed with a finite life. Estimated future amortization expense related to the identifiable intangible assets is approximately $1.7 million for the remainder of 2017 and $4.1 million in each of the next four years 2018 through 2021 and $3.2 million in 2022. Estimated future depreciation expense related to Globe property, plant and equipment is approximately $0.3 million for the remainder of 2017 and $1.0 million in each of the next five years. Goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, the expected synergies and other benefits that we believe will result from combining the operations of Globe with our operations. Goodwill of $71.7 million related to the Globe acquisition has been recorded in the Americas reportable segment and is deductible for tax purposes. Acquisition of Senscient, Inc. On September 19, 2016, we acquired 100% of the common stock of Senscient, Inc. ("Senscient") for $19.1 million in cash. There is no contingent consideration. Senscient, which is headquartered in the UK, is a leader in laser-based open path gas detection technology. The acquisition of Senscient expands and enhances MSA’s technology offerings in the global market for fixed gas and flame detection systems, as the Company continues to execute its core product growth strategy. The acquisition was funded through borrowings on our unsecured senior revolving credit facility. The following table summarizes the preliminary fair values of the Senscient assets acquired and liabilities assumed at the date of acquisition:
(In millions) | September 19, 2016
Current assets (including cash of $0.7 million) | $ | 5.9 |
Property, plant and equipment and other noncurrent assets | 0.3 |
Acquired technology | 1.6 |
Customer-related intangibles | 2.8 |
Goodwill | 10.5 |
Total assets acquired | 21.1 |
Total liabilities assumed | 2.0 |
Net assets acquired | $ | 19.1 |
Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. Fair values were determined by management, based, in part on an independent valuation performed by a third party valuation specialist. The valuation methods used to determine the fair value of intangible assets included the relief from royalty method for the technology related intangible assets and the cost method for assembled workforce which is included in goodwill. A number of significant assumptions and estimates were involved in the application of these valuation methods, including sales volumes and prices, costs to produce, tax rates, capital spending, discount rates, and working capital changes. Cash flow forecasts were generally based on pre-acquisition forecasts coupled with estimated MSA sales synergies. Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives, which are ten and five years for the technology and customer-related intangibles, respectively. Estimated future amortization expense related to identifiable intangible assets is approximately $0.3 million for the remaining portion of 2017 and $0.7 million each year from 2018 through 2021. Goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, the expected synergies and other benefits that we believe will result from combining the operations of Senscient with our operations. Goodwill of $10.5 million related to the Senscient acquisition is included in the International operating segment and is deductible for tax purposes. Our results for the nine months ended September 30, 2017, include transaction and integration costs of $0.4 million related to the Senscient acquisition and $1.0 million related to the acquisition of Globe Holding Company LLC. These costs are reported in selling, general and administrative expenses. The operating results of both acquisitions have been included in our consolidated financial statements from the acquisition date through September 30, 2017. Our results for the nine months ended September 30, 2017 include Globe sales and net income of $19.7 million and $1.7 million, respectively. Excluding transaction and integration costs, Globe provided $2.4 million of net income for the nine months ended September 30, 2017. The following unaudited pro forma information presents our combined results as if both acquisitions had occurred at the beginning of 2016. The unaudited pro forma financial information was prepared to give effect to events that are (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined company’s results. There were no material transactions between MSA and either Senscient or Globe during the periods presented that are required to be eliminated. Intercompany transactions between Senscient companies as well as the Globe companies during the periods presented have been eliminated in the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined companies may achieve as a result of the acquisitions or the costs to integrate the operations or the costs necessary to achieve cost savings, operating synergies or revenue enhancements. Pro forma condensed combined financial information (Unaudited)
| Three months ended |  | Nine months ended
(In millions, except per share amounts) | September 30, 2017 |  | September 30, 2016 |  | September 30, 2017 |  | September 30, 2016
Net sales | $ | 304.6 |  |  | $ | 305.5 |  |  | $ | 915.1 |  |  | $ | 940.0 |
Income from continuing operations | 30.8 |  |  | 29.9 |  |  | 68.4 |  |  | 81.7 |
Basic earnings per share from continuing operations | 0.81 |  |  | 0.80 |  |  | 1.80 |  |  | 2.18 |
Diluted earnings per share from continuing operations | 0.80 |  |  | 0.78 |  |  | 1.77 |  |  | 2.15 |
The unaudited pro forma condensed combined financial information is presented for information purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that we would have reported had the acquisitions been completed as of the date and for the period presented, and should not be taken as representative of our consolidated results of operations or financial condition following the acquisitions. In addition, the unaudited proforma condensed combined financial information is not intended to project the future financial position or results of operations of the combined company. The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting under existing GAAP. MSA has been treated as the acquirer.

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://www.xbrl.org/2003/role/presentationRef -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

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration