Acquisitions

3 Months Ended

Jun. 30, 2019

Acquisition

On December 7, 2018, the Company completed the acquisition of all of the issued and outstanding common stock of Alpha Technologies Services, Inc. (“ATS”) and Alpha Technologies Ltd. (“ATL”), resulting in ATS and ATL becoming wholly-owned subsidiaries of the Company (the “share purchase”). Additionally, the Company acquired substantially all of the assets of Alpha Technologies Inc. and certain assets of Altair Advanced Industries, Inc. and other affiliates of ATS and ATL (all such sellers, together with ATS and ATL, “Alpha”), in each case in accordance with the terms and conditions of certain restructuring agreements (collectively, the “asset acquisition” and together with the share purchase, the “acquisition”). Based in Bellingham, Washington, Alpha is a global industry leader in comprehensive commercial-grade energy solutions for broadband, telecom, renewable, industrial and traffic customers around the world. The initial purchase consideration for the acquisition was $750,000, of which $650,000 was paid in cash and the balance was settled by issuing 1,177,630 shares of EnerSys common stock. These shares were issued out of the Company's treasury stock and were valued at $84.92 per share, which was based on the thirty-day volume weighted average stock price of the Company’s common stock at closing, in accordance with the purchase agreement. The 1,177,630 shares had a closing date fair value of $93,268, based upon the December 7, 2018, closing date spot rate of $79.20. The total purchase consideration, consisting of cash paid of $650,000, shares valued at $93,268 and an adjustment for working capital (due from seller of $766) was $742,502. The Company funded the cash portion of the acquisition with borrowings from the Amended Credit Facility as defined in Note 12. See Note 12 for additional information.

The acquisition expands the Company's footprint in broadband and telecom markets. The goodwill recognized in connection with this transaction reflects the benefits the Company expects to realize from being able to provide a one-stop, fully integrated power solutions offering to its customers, as well as the benefit of cost synergies from alignment of the Alpha group within its own organizational structure.

The results of operations of Alpha have been included in the Company’s Americas segment.

The following table represents the fair values assigned to the assets acquired and liabilities assumed and resulting goodwill. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year from the acquisition date (“the measurement period”).

The acquired assets and assumed liabilities include the following:



Accounts receivable	$	115,467
Inventories	84,297
Other current assets	6,822
Other intangible assets	332,000
Property, plant and equipment	20,987
Other assets	9,005
Total assets acquired	$	568,578
Accounts payable	35,803
Accrued liabilities	41,918
Deferred income taxes	56,331
Other liabilities	12,642
Total liabilities assumed	$	146,694
Net assets acquired	$	421,884

Purchase price:
Cash paid for net assets acquired	$	650,000
Fair value of shares issued for net assets acquired	93,268
Working capital adjustment	(766		)
Total purchase consideration	742,502
Less: Fair value of acquired identifiable assets and liabilities	421,884
Goodwill	$	320,618

The following table summarizes the estimated fair value of Alpha's identifiable intangible assets and the initial assessment of their respective estimated lives:



	Type	Life in Years	Fair Value
Trademarks	Indefinite-lived	Indefinite	$	56,000
Customer relationships	Finite-lived	14	221,000
Technology	Finite-lived	10	55,000
Total identifiable intangible assets			$	332,000

The Company recorded the acquisition using the acquisition method of accounting and recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition. The excess of the purchase price over the net tangible and intangible assets is recorded to goodwill. Estimated goodwill deductible for tax purposes is $42,262. The measurement of the fair value of assets acquired and liabilities assumed is substantially complete. The Company continues to gather necessary information to finalize the accounting for income taxes associated with the acquisition, and as such the Company could record additional adjustments to the provisional amount recognized as this additional information is obtained.

The following unaudited summary information is presented on a consolidated pro forma basis as if the acquisition had occurred on April 1, 2017:



	Quarter ended
		July 1, 2018
Net sales		$	835,292
Net earnings attributable to EnerSys stockholders		58,665
Net earnings per share attributable to EnerSys stockholders - basic		1.36
Net earnings per share attributable to EnerSys stockholders - assuming dilution		1.34

The pro forma amounts include additional interest expense on the debt issued to finance the purchases, amortization and depreciation expense based on the estimated fair value and useful lives of intangible assets and plant assets, and related tax effects. The pro forma results are not necessarily indicative of the combined results had the Alpha acquisition been completed on April 1, 2017, nor are they indicative of future combined results. The remeasurement of Alpha's deferred taxes due to the Tax Act are being excluded in arriving at these pro forma results.

Other Intangible Assets

Information regarding the Company’s other intangible assets are as follows:



	Balance as of
	June 30, 2019							March 31, 2019
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Indefinite-lived intangible assets:
Trademarks	$	152,497	$	(953	)	$	151,544	$	152,484	$	(953	)	$	151,531
Finite-lived intangible assets:
Customer relationships	286,552		(48,224		)	238,328		286,664		(42,704		)	243,960
Non-compete	3,015		(2,768		)	247		3,025		(2,807		)	218
Technology	77,755		(14,033		)	63,722		77,779		(12,229		)	65,550
Trademarks	2,003		(1,257		)	746		2,003		(1,236		)	767
Licenses	1,484		(1,196		)	288		1,477		(1,187		)	290
Total	$	523,306	$	(68,431	)	$	454,875	$	523,432	$	(61,116	)	$	462,316

The Company’s amortization expense related to finite-lived intangible assets was $7,316 and $2,069, for the first quarter of fiscal 2020 and fiscal 2019, respectively. The expected amortization expense based on the finite-lived intangible assets as of June 30, 2019, is $22,175 for the remainder of fiscal 2020, $29,237 in fiscal 2021, $28,993 in fiscal 2022, $27,694 in fiscal 2023 and $24,287 in fiscal 2024.