XML 19 R10.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Acquisitions | 9 Months Ended
--- | ---
Oct. 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. C&K Switches On July 19, 2022, the Company completed the previously announced acquisition of C&K Switches (“C&K”) for $540 million in cash. Founded in 1928, C&K is a leading designer and manufacturer of high-performance electromechanical switches and interconnect solutions with a strong global presence across a broad range of end markets, including industrial, transportation, aerospace, and datacom. At the time the Company and C&K entered into the definitive agreement, C&K had annualized sales of over $200 million. The business is reported as part of the Electronics-Passive Products and Sensors business within the Company's Electronics segment. The acquisition was funded through a combination of cash on hand and debt. The total purchase consideration of $523.0 million, net of cash acquired, 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 price allocation is preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process. 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 C&K acquisition:
(in thousands) | Purchase Price Allocation
Total purchase consideration: |
Cash, net of cash acquired | $ | 523,014 |
Allocation of consideration to assets acquired and liabilities assumed: |
Trade receivables, net | 26,231 |
Inventories | 42,968 |
Other current assets | 2,932 |
Property, plant, and equipment | 32,559 |
Intangible assets | 254,700 |
Goodwill | 278,016 |
Other non-current assets | 14,797 |
Current liabilities | (50,871) |
Long- term debt | (14,889) |
Other non-current liabilities | (63,429) |
| $ | 523,014 |
All C&K goodwill, other assets and liabilities were recorded in the Electronics segment and are 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 C&K’s products and technology with the Company’s existing Electronics products portfolio. Goodwill resulting from the C&K acquisition is not expected to be deductible for tax purposes. Included in the Company’s Condensed Consolidated Statements of Net Income for the three months ended October 1, 2022 are net sales of approximately $37.9 million, and a loss before income taxes of $6.1 million, since the July 19, 2022 acquisition of C&K. As required by purchase accounting rules, the Company recorded a $10.8 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up was partially amortized as a non-cash charge to cost of sales during the three months ended October 1, 2022, as the acquired inventory was sold, and reflected as other non-segment costs. The Company recognized a non-cash charge of $6.8 million to cost of sales during the three months ended October 1, 2022. During the three and nine months ended October 1, 2022, the Company incurred approximately $3.5 million and $9.2 million, respectively, of legal and professional fees related to C&K acquisition recognized as Selling, general, and administrative expenses. These costs were reflected as other non-segment costs. Embed On April 12, 2022, the Company acquired Embed Ltd. (“Embed”). Founded in 2005, Embed is a proven provider of embedded software and firmware developed for a broad range of applications serving transportation end markets. The business is included in the commercial vehicle business within the Company's Transportation segment. The acquisition was funded with the Company’s cash on hand. The total purchase consideration was $9.2 million, net of cash. 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 operations of Carling are included in the commercial vehicle business within the Company's Transportation segment. The purchase price for Carling Technologies was approximately $315.5 million subject to a working capital adjustment. The acquisition was funded with cash on hand. The total purchase consideration of $314.1 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 price allocation is preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process. The primary area not yet finalized relates to the completion of the valuation of certain 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 | $ | 314,094 |
Allocation of consideration to assets acquired and liabilities assumed: |
Trade receivables, net | 26,232 |
Inventories | 56,479 |
Other current assets | 3,454 |
Property, plant, and equipment | 56,128 |
Intangible assets | 126,390 |
Goodwill | 97,975 |
Other non-current assets | 4,007 |
Current liabilities | (21,522) |
Other non-current liabilities | (35,049) |
| $ | 314,094 |
All Carling goodwill, other assets and liabilities were recorded in the Transportation segment and are 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. During the nine months ended October 1, 2022, the Company paid $0.5 million related to the final working capital adjustment and made measurement period adjustments to reduce the fair value of property, plant and equipment of $8.2 million, inventories of $0.8 million, and an increase in net accounts receivable of $0.6 million and intangible assets attributable to customer relationships of $0.5 million. As a result of these adjustments along with a corresponding reduction of deferred tax liabilities of $2.5 million, goodwill was increased by $5.9 million. 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 was amortized as a non-cash charge to cost of sales during the fourth quarter of 2021 and first quarter of 2022, as the acquired inventory was sold, and reflected as other non-segment costs. The Company recognized a non-cash charge of $4.8 million to cost of sales during the nine months ended October 1, 2022. 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 with 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 October 1, 2022, the Company had restricted cash of $0.8 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. The Company recorded a $6.8 million step-up of inventory to its fair value as of the acquisition date. The step-up was amortized as a non-cash charge to cost of sales during the first and second quarters of 2021, as the acquired inventory was sold, and is reflected as other non-segment costs. During the three and nine months ended September 25, 2021, the Company recognized a charge of $3.3 million and 6.8 million, respectively, for the amortization of this fair value inventory step-up. During the nine months ended September 25, 2021, the Company incurred approximately $0.8 million of legal and professional fees related to 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, C&K as though the acquisition had occurred as of December 27, 2020, and Hartland and Carling as though the acquisitions had occurred as of December 29, 2019. The Company has not included pro forma results of operations for Embed as its operations were not material to the Company. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the C&K acquisition occurred as of December 27, 2020 and had the Hartland and Carling acquisitions occurred as of December 29, 2019 or of future consolidated operating results.
|  | For the Three Months Ended |  | For the Nine Months Ended
(in thousands, except per share amounts) |  | October 1, 2022 |  | September 25, 2021 |  | October 1, 2022 |  | September 25, 2021
Net sales |  | $ | 663,741 |  |  | $ | 638,583 |  |  | $ | 2,025,881 |  |  | $ | 1,823,333 |
Income before income taxes |  | 106,333 |  |  | 112,325 |  |  | 375,735 |  |  | 274,406 |
Net income |  | 82,619 |  |  | 89,491 |  |  | 303,341 |  |  | 220,048 |
Net income per share — basic |  | 3.34 |  |  | 3.63 |  |  | 12.27 |  |  | 8.95 |
Net income per share — diluted |  | 3.31 |  |  | 3.59 |  |  | 12.14 |  |  | 8.84 |
Pro forma results presented above primarily reflect the following adjustments:
|  | For the Three Months Ended |  | For the Nine Months Ended
(in thousands) |  | October 1, 2022 |  | September 25, 2021 |  | October 1, 2022 |  | September 25, 2021
Amortization (a) |  | $ | (85) |  |  | $ | (4,775) |  |  | $ | (4,646) |  |  | $ | (14,620) |
Depreciation |  | 451 |  |  | 697 |  |  | 1,979 |  |  | 1,902 |
Transaction costs (b) |  | 3,548 |  |  | (2,096) |  |  | 9,218 |  |  | (6,931) |
Amortization of inventory step-up (c) |  | 6,765 |  |  | — |  |  | 11,534 |  |  | (4,016) |
Interest expense (d) |  | 497 |  |  | 432 |  |  | 815 |  |  | 2,328 |
Income tax (expense) benefit of above items |  | (2,794) |  |  | 1,412 |  |  | (4,582) |  |  | 5,456 |
(a)The amortization adjustment for the three and nine months ended October 1, 2022 and September 25, 2021 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 three and nine months ended October 1, 2022 and September 25, 2021, and recognition of those fees during the three and nine months ended September 25, 2021. (c)The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the three and nine months ended October 1, 2022, and the recognition of the amortization during the nine months ended September 25, 2021. The inventory step-up was amortized over four months as the inventory was sold. (d)The interest expense adjustment reflects incremental interest expense related to the financing of the C&K acquisition.

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

X
- 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 https://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 https://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration