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Acquisitions | 12 Months Ended
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Jan. 01, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, “Business Combinations,” in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition. The operating results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition. Carling Technologies On November 30, 2021, the Company completed the previously announced acquisition of Carling Technologies, Inc. (“Carling”), pursuant to the Stock Purchase Agreement, dated as of October 19, 2021. Founded in 1920, Carling has a leading position in switching and circuit protection technologies with a strong global presence in commercial vehicle, marine and datacom/telecom infrastructure markets. At the time of acquisition, Carling had annualized sales of approximately $170 million. The business is headquartered in Plainville, Connecticut, with offices and facilities located around the world and is reported as part of the commercial vehicle business within our Transportation segment. The purchase price for Carling Technologies was approximately $315 million subject to change for a working capital adjustment. The acquisition was funded with cash on hand. The total purchase consideration of $313.6 million, net of cash, has been allocated, on a preliminary basis, to assets acquired and liabilities assumed, as of the completion of the acquisition, based on preliminary estimated fair values. The purchase consideration is subject to change for the final working capital adjustments. The purchase price allocation is preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process. The primary areas that are not yet finalized relate to the completion of the valuations of certain property, plant and equipment, intangible assets and acquired income tax assets and liabilities. As a result, these allocations are subject to change during the purchase price allocation period as the valuations are finalized. The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the Carling acquisition:
(in thousands) | Purchase Price Allocation
Total purchase consideration: |
Cash, net of cash acquired | $ | 313,583 |
Allocation of consideration to assets acquired and liabilities assumed: |
Trade receivables, net | 25,503 |
Inventories | 57,450 |
Other current assets | 3,454 |
Property, plant, and equipment | 64,301 |
Intangible assets | 125,890 |
Goodwill | 92,366 |
Other non-current assets | 4,104 |
Current liabilities | (21,723) |
Other non-current liabilities | (37,762) |
| $ | 313,583 |
All Carling goodwill, other assets and liabilities were recorded in the Transportation segment and are primarily reflected in the Americas, Europe and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Carling’s products and technology with the Company’s existing commercial vehicle products portfolio. Goodwill resulting from the Carling acquisition is not expected to be deductible for tax purposes. Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended January 1, 2022 are net sales of $15.3 million, and a loss before income taxes of $1.2 million, since the November 30, 2021 acquisition of Carling. As required by purchase accounting rules, the Company recorded a $6.4 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up is being amortized as a non-cash charge to cost of goods sold during the fourth quarter of 2021 and first quarter of 2022, as the acquired inventory is sold, and reflected as other non-segment costs. The Company recognized a non-cash charge of $1.6 million to cost of goods sold during the fiscal year ended January 1, 2022. For the fiscal year ended January 1, 2022, the Company incurred approximately $4.5 million of legal and professional fees related to the Carling acquisition recognized as Selling, general, and administrative expenses. These costs were reflected as other non-segment costs. Hartland Controls On January 28, 2021, the Company acquired Hartland Controls ("Hartland"), a manufacturer and leading supplier of electrical components used primarily in heating, ventilation, air conditioning ("HVAC") and other industrial and control systems applications. At the time of acquisition, Hartland had annualized sales of approximately $70 million. The purchase price for Hartland was $111.0 million and the operations of Hartland are included in the Industrial segment. The total purchase consideration of $108.5 million, net of cash, cash equivalents, and restricted cash has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values. As of January 1, 2022, the Company had restricted cash of $1.7 million in an escrow account for general indemnification purposes. The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed in the Hartland acquisition:
(in thousands) | Purchase Price Allocation
Total purchase consideration: |
Cash, net of cash acquired, and restricted cash | $ | 108,516 |
Allocation of consideration to assets acquired and liabilities assumed: |
Trade receivables, net | 12,915 |
Inventories | 35,808 |
Other current assets | 2,224 |
Property, plant, and equipment | 6,296 |
Intangible assets | 39,660 |
Goodwill | 38,502 |
Other non-current assets | 3,782 |
Current liabilities | (24,861) |
Other non-current liabilities | (5,810) |
| $ | 108,516 |
All Hartland goodwill, other assets and liabilities were recorded in the Industrial segment and are primarily reflected in the Americas and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Hartland’s products and technology with the Company’s existing industrial products portfolio. Goodwill resulting from the Hartland acquisition is not expected to be deductible for tax purposes. Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended January 1, 2022 are net sales of $100.5 million and a loss before income taxes of $2.8 million since the January 28, 2021 acquisition of Hartland. The Company recorded a $6.8 million step-up of inventory to its fair value as of the acquisition date based on the valuation. The step-up was fully amortized as a non-cash charge to cost of goods sold during the first and second quarters of 2021, as the acquired inventory was sold, and is reflected as other non-segment costs. For the fiscal year ended January 1, 2022, the Company recognized a charge of $6.8 million for the amortization of this fair value inventory step-up. For the fiscal year ended January 1, 2022, the Company incurred approximately $0.8 million of legal and professional fees related to the Hartland acquisition recognized as Selling, general, and administrative expenses. These costs were reflected as other non-segment costs. Pro Forma Results The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company, Hartland and Carling as though the acquisition had occurred as of December 29, 2019. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the Hartland and Carling acquisitions occurred as of December 29, 2019 or of future consolidated operating results.
|  | For the Fiscal Year Ended
(in thousands, except per share amounts) |  | January 1, 2022 |  | December 26, 2020
Net sales |  | $ | 2,257,390 |  |  | $ | 1,662,896 |
Income before income taxes |  | 357,090 |  |  | 141,491 |
Net income |  | 296,030 |  |  | 115,078 |
Net income per share — basic |  | 12.03 |  |  | 4.72 |
Net income per share — diluted |  | 11.87 |  |  | 4.68 |
Pro forma results presented above primarily reflect the following adjustments:
|  | For the Fiscal Year Ended
(in thousands) |  | January 1, 2022 |  | December 26, 2020
Amortization(a) |  | $ | (8,770) |  |  | $ | (12,669) |
Depreciation |  | (64) |  |  | 253 |
Transaction costs(b) |  | 5,381 |  |  | (5,381) |
Amortization of inventory step-up(c) |  | 8,398 |  |  | (13,156) |
Income tax (expense) benefit of above items |  | (1,021) |  |  | 6,706 |
(a)The amortization adjustment for the twelve months ended January 1, 2022 and December 26, 2020 primarily reflects incremental amortization resulting from the measurement of intangibles at their fair values. (b)The transaction cost adjustments reflect the reversal of certain legal and professional fees from the twelve months ended January 1, 2022 and recognition of those fees during the twelve months ended December 26, 2020. (c)The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the twelve months ended January 1, 2022 and the recognition of the amortization during the twelve months ended December 26, 2020. The inventory step-up is amortized over four months for both acquisitions. For the fiscal year ended January 1, 2022 and December 26, 2020, the Company recorded $6.2 million and $0.8 million of acquisition-related expenses associated with completed and contemplated acquisitions within Selling, general and administrative expenses in the Consolidated Statements of Net Income.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: 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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