XML 19 R8.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Note 2 - Acquisitions | 9 Months Ended
--- | ---
Mar. 31, 2018
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | 2. Acquisitions The Company’s recent acquisitions are strategically significant to the future growth prospects of the Company. At the time of the acquisition and March 31, 2018, the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors. Piazza Rosa Group During the first quarter of fiscal year 2018, the Company acquired the Piazza Rosa Group. The Italy-based privately held company is a leading provider of mold and tool treatment and finishing services for the automotive and consumer products markets. We have included the results of the Piazza Rosa Group in our Engraving segment in our Condensed Consolidated Financial Statements. The Company paid $10.1 million in cash, net of a $2.8 million payment to satisfy debt of the entity at the time of acquisition, for all of the issued and outstanding equity interests of the Piazza Rosa Group. The final purchase price is subject to net asset value adjustments that have not yet been finalized. The preliminary purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values on the closing date. Goodwill recorded from this transaction is attributable to potential revenue increases from the combined competencies with Standex Engraving’s worldwide presence and Piazza Rosa Group’s texturizing capabilities. The combined companies create a global tool finishing service leader and open additional opportunities in the broader surface engineering market. Intangible assets of $4.1 million were recorded, consisting of $2.3 million of customer relationships to be amortized over a period of eight years, $1.6 million for trademarks, and $0.2 million of other intangibles assets. Since the preliminary valuation, the Company adjusted goodwill by $1.6 million primarily as a result of identification of other identifiable assets. The goodwill of $4.6 million created by the transaction is not deductible for income tax purposes. The components of the fair value of the Piazza Rosa Group acquisition, including the preliminary allocation of the purchase price at March 31, 2018, are as follows (in thousands):
|  | Preliminary Allocation |  |  |  |  |  | Adjusted Allocation |
|  | September 30, 2017 |  |  | Adjustments |  |  | March 31, 2018 |
Fair value of business combination: |  |  |  |  |  |  |  |  |  |  |  |
Cash payments |  | $ | 12,889 |  |  | $ | - |  |  | $ | 12,889 |
Less: cash paid to satisfy acquired debt |  |  | (2,833 | ) |  |  | - |  |  |  | (2,833 | )
Total |  | $ | 10,056 |  |  | $ | - |  |  | $ | 10,056 |
Identifiable assets acquired and liabilities assumed: |  |  |  |  |  |  |  |  |  |  |  |
Other acquired assets |  | $ | 2,678 |  |  | $ | 1,664 |  |  | $ | 4,342 |
Inventories |  |  | 637 |  |  |  | (2 | ) |  |  | 635 |
Property, plant, and equipment |  |  | 5,005 |  |  |  | - |  |  |  | 5,005 |
Identifiable intangible assets |  |  | 4,087 |  |  |  | (1 | ) |  |  | 4,086 |
Goodwill |  |  | 6,218 |  |  |  | (1,643 | ) |  |  | 4,575 |
Liabilities assumed |  |  | (7,387 | ) |  |  | - |  |  |  | (7,387 | )
Deferred taxes |  |  | (1,182 | ) |  |  | (18 | ) |  |  | (1,200 | )
Total |  | $ | 10,056 |  |  | $ | - |  |  | $ | 10,056 |
OKI Sensor Device Corporation During the third quarter of fiscal year 2017, the Company acquired all of the outstanding shares of OKI Sensor Device Corporation from OKI Electric Industry Co., Ltd. Located in Kofu City, Japan, OKI Sensor Device Corporation is the world’s leading designer and supplier of magnetic reed switches. Now named Standex Electronics Japan Corporation (“Standex Electronics Japan”), the acquisition enhances the Company’s access to important Asian markets and enables the Company to offer a world class suite of reed switches and related magnetic solutions while continuing to serve Standex Electronics Japan’s diverse distribution channels. We have included the results of Standex Electronics Japan in our Electronics segment in our Condensed Consolidated Financial Statements. The Company paid $129.2 million in cash, net of cash acquired, for 100% of the outstanding stock of Standex Electronics Japan. The preliminary purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values on the closing date. Goodwill recorded from this transaction is attributable to potential revenue increases from enhanced access to our Asian markets and synergies created from the vertical integration with a key supplier. Intangible assets of $51.4 million were recorded, consisting of $47.8 million of developed technology to be amortized over a period of 10 - 20 years, $3.4 million of customer relationships to be amortized over a period of fifteen years, and $0.2 million of product order backlog which was amortized during fiscal year 2017. Since the preliminary valuation, the Company adjusted goodwill by $3.4 million as a result of tax adjustments, a pension adjustment of $1.9 million and purchase accounting changes including a decrease in the fair value of developed technology, fixed assets, and customer relationships of $2.3 million, $0.2 million, and $0.2 million, respectively, and an additional $0.1 million of product order backlog which was amortized during fiscal year 2017. The goodwill of $79.4 million created by the transaction is not deductible for income tax purposes. The components of the fair value of the Standex Electronics Japan acquisition, including the final allocation of purchase price at March 31, 2018, are as follows (in thousands):
|  | Preliminary Allocation |  |  |  |  |  |  | Final Allocation |
|  | March 31, 2017 |  |  | Adjustments |  |  | March 31, 2018 |
Fair value of business combination: |  |  |  |  |  |  |  |  |  |  |  |
Cash payments |  | $ | 137,676 |  |  | $ | - |  |  | $ | 137,676 |
Less: cash acquired |  |  | (8,521 | ) |  |  | - |  |  |  | (8,521 | )
Total |  | $ | 129,155 |  |  | $ | - |  |  | $ | 129,155 |
Identifiable assets acquired and liabilities assumed: |  |  |  |  |  |  |  |  |  |  |  |
Other acquired assets |  | $ | 12,497 |  |  | $ | (2,158 | ) |  | $ | 10,339 |
Inventories |  |  | 7,387 |  |  |  | 816 |  |  |  | 8,203 |
Property, plant, and equipment |  |  | 12,703 |  |  |  | 5,503 |  |  |  | 18,206 |
Identifiable intangible assets |  |  | 53,800 |  |  |  | (2,400 | ) |  |  | 51,400 |
Goodwill |  |  | 75,985 |  |  |  | 3,449 |  |  |  | 79,434 |
Liabilities assumed |  |  | (10,811 | ) |  |  | (8,468 | ) |  |  | (19,279 | )
Deferred taxes |  |  | (22,406 | ) |  |  | 3,258 |  |  |  | (19,148 | )
Total |  | $ | 129,155 |  |  | $ | - |  |  | $ | 129,155 |
The following table reflects the unaudited pro forma operating results of the Company for the three and nine months ended March 31, 2018 and 2017, which give effect to the acquisition of Standex Electronics Japan as if it had occurred at the beginning of each period presented. The pro forma information combines the historical financial results of the Company and Standex Electronics Japan, adjusted for changes in foreign exchange rates. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective at the beginning of each period, nor are they intended to be indicative of results that may occur in the future. The pro forma information does not include the effects of any synergies related to the Standex Electronics Japan acquisition, transactions between the entities prior to acquisition, or the pre-acquisition impact of other businesses acquired by the Company during this period as they were not material to the Company’s historical results of operations.
|  | (Unaudited Pro Forma) |  |  | (Unaudited Pro Forma) |
|  | Three Months ended March 31 , |  |  | Nine Months Ended March 31 , |
In thousands |  | 201 8 |  |  | 201 7 |  |  | 201 8 |  |  | 201 7 |
Net Sales |  | $ | 216,743 |  |  | $ | 200,423 |  |  | $ | 640,873 |  |  | $ | 587,496 |
Net Income |  | $ | 12,820 |  |  | $ | 12,944 |  |  | $ | 24,191 |  |  | $ | 41,653 |
Earnings per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 1.01 |  |  | $ | 1.02 |  |  | $ | 1.91 |  |  | $ | 3.29 |
Diluted |  | $ | 1.00 |  |  | $ | 1.01 |  |  | $ | 1.89 |  |  | $ | 3.26 |
* | Fiscal year 2017 unaudited pro-forma results have been recast as a result of the adoption of Accounting Standards Update (ASU) 2016 - 09, Improvements to Employee Share-Based Payment Accounting.
Pro forma earnings during the nine months ended March 31, 2018 were adjusted to exclude tax-affected acquisition-related costs incurred during the first quarter of $0.2 million. Pro forma earnings during the three months ended March 31, 2017 were adjusted to include expense of $0.6 million for amortization of intangible assets recognized at fair value, depreciation expense of $0.4 million for the fair value adjustment of the acquired fixed assets, and $0.3 million of interest expense associated with incremental borrowings under the Company’s Credit Facility. Pro forma earnings were also adjusted to exclude non-recurring acquisition-related costs of $3.1 million. Pro forma earnings during the nine months ended March 31, 2017 were adjusted to include expense of $1.8 million for amortization of intangible assets recognized at fair value, depreciation expense of $1.1 million for the fair value adjustment of the acquired fixed assets, and $0.8 million of interest expense associated with incremental borrowings under the Company’s Credit Facility. Pro forma earnings were also adjusted to exclude non-recurring acquisition-related costs of $3.6 million. Acquisition-Related Costs Acquisition-related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of (i) deferred compensation and (ii) acquisition-related professional service fees and expenses, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and regulatory matters related to acquired entities. These costs do not include the amortization of the acquired intangible assets, and also do not include purchase accounting expenses, which we define as acquired backlog and the step-up of inventory to fair value. Deferred compensation costs relate to payments due to the Horizon Scientific seller of $2.8 million on the second anniversary and $5.6 million on the third anniversary of the closing date of the purchase. For the three and nine months ended March 31, 2018, we recorded deferred compensation costs for estimated deferred compensation earned by the Horizon Scientific seller to date of $0.7 million and $2.1 million, respectively. The payments are contingent on the seller remaining an employee of the Company with limited exceptions at each anniversary date. Acquisition related expenses consist of miscellaneous professional service fees and expenses for our recent acquisitions. The components of acquisition-related costs are as follows (dollars in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | March 31 , |  |  | March 31 , |
|  | 201 8 |  |  | 201 7 |  |  | 201 8 |  |  | 201 7 |
Deferred compensation arrangements |  | $ | 702 |  |  | $ | 703 |  |  | $ | 2,108 |  |  | $ | 1,405 |
Acquisition-related costs |  |  | 589 |  |  |  | 4,719 |  |  |  | 891 |  |  |  | 5,520 |
Other |  |  | (37 | ) |  |  | - |  |  |  | (37 | ) |  |  | - |
Total |  | $ | 1,254 |  |  | $ | 5,422 |  |  | $ | 2,962 |  |  | $ | 6,925 |

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://fasb.org/us-gaap/role/ref/legacyRef -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_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration