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Acquisitions | 12 Months Ended
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Dec. 31, 2018
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 plus a working capital adjustment of $1.4 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 was accounted for using the acquisition method of accounting. We finalized the purchase price allocation as of June 30, 2018. The following table summarizes the 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 | 8.3 |
Trade name | 60.0 |
Distributor relationships | 40.2 |
Acquired technology and other intangible assets | 10.5 |
Goodwill | 74.5 |
Total assets acquired | 222.1 |
Total liabilities assumed | 5.7 |
Net assets acquired | $ | 216.4 |
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 October 1st 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 $4.1 million in each of the next three years, $3.2 million in year four, and $2.0 million in year five. Estimated future depreciation expense related to Globe property, plant and equipment is approximately $1.0 million in each of the next five years. 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 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. We finalized the purchase price allocation as of September 30, 2017. The following table summarizes the 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 both acquisitions 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 excess earnings approach for all customer relationships and Latchways technology related intangible assets; the relief from royalty method for the Latchways trade name and Senscient technology related intangible assets; and the cost method for assembled workforce which is included in goodwill for both acquisitions. 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 Senscient 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 identifiable intangible assets for Senscient include technology and customer-related intangibles which will be amortized over ten and five years, respectively. Estimated future amortization expense related to Senscient identifiable intangible assets is approximately $0.7 million in years one and two, $0.5 million in year three and $0.2 million in years four and five. 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, Latchways and Senscient with our operations. Goodwill of $74.5 million related to the Globe acquisition has been recorded in the Americas reportable segment and is expected to be tax deductible. Goodwill of $10.5 million related to the Senscient acquisition was recorded in the International reportable segment and is expected to be tax deductible. Our results for the year ended December 31, 2018 include strategic transaction costs of $0.4 million, including an immaterial amount of integration costs of related to the Globe acquisition. Our results for the year ended December 31, 2017 include strategic transaction costs of $4.2 million, including transaction and integration costs of $1.8 million related to the Globe acquisition as well as integration costs of $0.4 million related to the Senscient acquisition. Our results for the year ended December 31, 2016, include strategic transaction costs of $2.5 million including transaction and integration costs of $0.8 million related to the Senscient acquisition. These costs are all 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. Our results for the year ended December 31, 2018 include Globe sales of $113.9 million and net income of $13.3 million. These results include depreciation expense of $1.0 million and amortization expense of $4.1 million. Excluding transaction and integration costs, Globe provided $13.6 million of net income for the year ended December 31, 2018. Our results for the year ended December 31, 2017 include Globe sales of $46.1 million and net income of $3.7 million. These results include depreciation expense of $0.5 million and amortization expense of $1.7 million. Excluding transaction and integration costs, Globe provided $4.9 million of net income for the year ended December 31, 2017. Our results for the year ended December 31, 2016 include Senscient sales of $2.7 million and a net loss of $1.1 million which includes amortization, primarily related to intangible assets, of $0.2 million. 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 Senscient or Globe during the periods presented that are required to be eliminated. Intercompany transactions between Senscient companies and Globe companies during the periods presented have been eliminated in the unaudited pro forma combined financial information. The unaudited pro forma 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 financial information (Unaudited)
(In millions, except per share amounts) | 2017 | 2016
Net sales | $ | 1,261 |  | $ | 1,263 |
Income from continuing operations | 35 |  | 105 |
Basic earnings per share from continuing operations | 0.93 |  | 2.81 |
Diluted earnings per share from continuing operations | 0.92 |  | 2.78 |
The unaudited pro forma 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 periods presented, and should not be taken as representative of our consolidated results of operations or financial condition following the acquisitions. In addition, the unaudited pro forma combined financial information is not intended to project the future financial position or results of operations of the combined company. The unaudited pro forma financial information was prepared using the acquisition method of accounting for both acquisitions under existing U.S. GAAP. MSA has been treated as the acquirer.

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- 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
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