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Acquisitions | 12 Months Ended
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Dec. 31, 2017
Business Combinations [Abstract] |
Acquisitions |
17. | Acquisitions
PMFG On September 3, 2015, the Company completed its acquisition of 100% of PMFG’s outstanding common stock for a purchase price of $136.7 million. PMFG’s shareholders had the option to elect to exchange each share of PMFG common stock for either (i) $6.85 in cash, without interest, or (ii) shares of the Company’s common stock valued at $6.85, based on the volume weighted average trading price of the Company’s common stock for the 15-trading day period ending on September 2, 2015, the last trading day before the closing of the acquisition, subject to a collar so that there was a maximum exchange ratio of 0.6456 shares of the Company’s common stock for each share of PMFG common stock and a minimum exchange ratio of 0.5282 shares of the Company’s common stock for each share of PMFG common stock, subject to certain exceptions and with overall elections subject to proration. Approximately 44.5% of the shares of PMFG common stock converted into the right to receive the $6.85 cash consideration, for an approximate total of $64.6 million. The Company’s common stock trading price for the 15 day period was $9.6655. As a result, each of the remaining shares of PMFG common stock converted into the right to receive 0.6456 shares of Company common stock, or an approximate total of 7,602,166 shares of Company common stock in aggregate. In accordance with the proration and reallocation provisions of the merger agreement, because the $6.85 per share cash consideration was oversubscribed by PMFG shareholders prior to the election deadline, (a) each PMFG share for which a valid stock election was made or for which no valid cash or stock election was made was automatically cancelled and converted into the right to receive the stock consideration and (b) each PMFG shareholder of record that made a valid cash election by the deadline received (i) the cash consideration for approximately 58.05% of such holder’s PMFG shares for which a valid cash election was made and (ii) the stock consideration for approximately 41.95% of such holder’s PMFG Shares for which a valid cash election was made. The value of stock recorded for purchase accounting was $72.1 million, which equates to approximately $9.49 per share. PMFG is a global provider of engineered equipment for the abatement of air pollution, the separation and filtration of containments from gases and liquids, and industrial noise control equipment, which complements our Energy segment businesses. As a result of the PMFG acquisition, the Company acquired a 60% equity investment in Peerless Propulsys that entitled the Company to 80% of Peerless Propulsys’s earnings. In prior periods, the noncontrolling interest of Peerless Propulsys was reported as a separate component on the Consolidated Balance Sheets. During 2016, the Company entered into an agreement with the noncontrolling owner of Peerless Propulsys and issued a promissory note in the amount of $5.3 million due on July 11, 2019 in exchange for 100% ownership in the equity and earnings of Peerless Propulsys. The minority interest had a carrying value of $4.1 million on July 11, 2016, compared to the purchase price of $5.3 million. Since the Company already had control over the equity investment, the excess paid of $1.2 million was recorded as a debit to additional paid in capital. The interest rate on the note payable is 1.50%, which approximates the market rate given the short term duration of the note payable. All of the borrowers’ assets are pledged to secure this agreement. As of December 31, 2017, $5.3 million of the note payable was outstanding and is payable at the earlier of July 11, 2019 or thirty days subsequent to the sale of building and land that the Company owns in China. The note payable is currently classified as a current liability in the Consolidated Balance Sheets as of December 31, 2017. In conjunction with entering into the agreement to acquire the noncontrolling interest of Peerless Propulsys, the Company listed the land and building as assets held for sale with a carrying value of $5.4 million in the Consolidated Balance Sheets as of December 31, 2017. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing after the Company finalized purchase accounting during 2016.
(Table only in thousands) |  |  |  |
Current assets (including cash of $27,100) |  | $ | 92,293 |
Property and equipment |  |  | 24,787 |
Other assets |  |  | 953 |
Assets held for sale (a) |  |  | 950 |
Deferred income tax asset |  |  | — |
Goodwill |  |  | 59,860 |
Intangible – finite life |  |  | 29,940 |
Intangible – indefinite life |  |  | 10,280 |
Total assets acquired |  |  | 219,063 |
Current liabilities assumed |  |  | (73,364 | )
Deferred income tax liability |  |  | (800 | )
Long term liabilities assumed |  |  | (3,961 | )
Noncontrolling interest |  |  | (4,212 | )
Net assets acquired |  | $ | 136,726 |
(a) | The assets held for sale consists primarily of real property, and are valued at the estimated proceeds less cost to sell. The Company has not recorded a gain or loss on the classification of the subject assets to held for sale.
During 2017, 2016, and 2015, PMFG accounted for $89.4 million, $101.7 million, and $40.8 million of revenue, respectively, and $6.7, $13.1 million, and $2.2 million of pre-tax income, respectively, included in the Company’s results. Goodwill related to the PMFG acquisition is not deductible for tax purposes. The following unaudited pro forma information represents the Company’s results of operations as if PMFG acquisition had occurred as of January 1, 2014:
(Table only in thousands, except per share data) |  | Year Ended December 31, 2015 |
Net sales |  | $ | 460,726 |
Net loss |  |  | (29,568 | )
Earnings per share: |  |  |  |
Basic |  |  | (0.87 | )
Diluted |  |  | (0.87 | )
The pro forma results have been prepared for informational purposes only and include adjustments to amortize acquired intangible assets with finite life, reflect foregone interest income on cash paid for the acquisitions, reflect additional interest expense on debt used to fund the acquisitions, and to record the income tax consequences of the pro forma adjustments. Included in the pro forma results are acquisition related expenses of $17.7 million, and certain nonrecurring expenses, such as goodwill impairment, of $3.7 million, for the year ended December 31, 2015. Shares used to calculate the basic and diluted earnings per share were adjusted to reflect the additional shares of common stock issued to fund a portion of the acquisition price. These pro forma results do not purport to be indicative of the results of operations that would have occurred had the purchases been made as of the beginning of the periods presented or of the results of operations that may occur in the future. Goodwill recognized on the PMFG acquisition represents value the Company expects to be created by combining the operations of the acquired business with the Company’s operations, including the expansion into markets within existing business segments, access to new customers and potential cost savings and synergies. See Note 7 for further discussion related to the Company’s goodwill. Acquisition and integration expenses on the Consolidated Statements of Operations are related to acquisition activities, which include retention, legal, accounting, banking, and other expenses.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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