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Acquisitions | 3 Months Ended
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Mar. 31, 2018
Business Combinations [Abstract] |
Acquisition | 6. Acquisition: On June 12, 2017 (the “Acquisition Date”), the Company acquired the facilities of Sovitec Mondial S.A. (“Sovitec”) located in Belgium, Spain, Argentina and France as part of a stock transaction (the “Acquisition”) for $41,572 in cash, excluding assumed debt. Based in Fleurus, Belgium, Sovitec is a high quality producer of engineered glass products used in transportation safety, metal finishing and polymer additives. The Acquisition was accounted for using the acquisition method of accounting. Under the acquisition method, the purchase price was allocated to the identifiable net assets acquired based on the fair values of the identifiable assets acquired and liabilities assumed as of the Acquisition Date. The excess of the purchase price over the fair values of the identifiable net assets acquired was recorded as goodwill. The results of operations of Sovitec have been included in the Company’s consolidated financial statements since the Acquisition Date. The following table sets forth the calculation and allocation of the purchase price to the identifiable net assets acquired with respect to the Acquisition, which was substantially complete as of March 31, 2018.
|  | Provisional Purchase Price Allocation |  | Adjustments |  | Purchase Price Allocation
Total consideration, net of cash acquired |  | $ | 41,572 |  |  | $ | — |  |  | $ | 41,572 |
Recognized amounts of identifiable assets acquired and liabilities assumed: |  |  |  |  |  |  |
Receivables |  | $ | 14,305 |  |  | $ | — |  |  | $ | 14,305 |
Inventories |  | 7,645 |  |  | 1,603 |  |  | 9,248 |
Prepaid and other current assets |  | 400 |  |  | — |  |  | 400 |
Property, plant and equipment |  | 9,020 |  |  | 15,960 |  |  | 24,980 |
Other intangible assets |  | — |  |  | 5,753 |  |  | 5,753 |
Other long-term assets |  | 129 |  |  | 15,921 |  |  | 16,050 |
Fair value of assets acquired |  | 31,499 |  |  | 39,237 |  |  | 70,736 |
Current debt |  | (6,420 | ) |  | — |  |  | (6,420 | )
Accounts payable |  | (10,748 | ) |  | — |  |  | (10,748 | )
Long-term debt |  | (10,189 | ) |  | — |  |  | (10,189 | )
Deferred income taxes |  | — |  |  | (4,426 | ) |  | (4,426 | )
Other long-term liabilities |  | (154 | ) |  | — |  |  | (154 | )
Fair value of net assets acquired |  | 3,988 |  |  | 34,811 |  |  | 38,799 |
Goodwill |  | 37,584 |  |  | (34,811 | ) |  | 2,773 |
|  | $ | 41,572 |  |  | $ | — |  |  | $ | 41,572 |
In accordance with the requirements of the purchase method of accounting for acquisitions, accounts receivable and inventories were recorded at fair market value. As of the Acquisition Date, the fair value of accounts receivable approximated historical cost. The gross contractual amount of accounts receivable at the Acquisition Date was $14,607, of which $302 was deemed uncollectible. Fair value of inventory is defined as estimated selling prices less the sum of (a) costs of disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity, which was $1,603 higher than the historical cost. The Company’s cost of goods sold for the three months ended March 31, 2018 includes a pre-tax charge of $1,603 relating to the step-up on inventory, $108 of additional amortization expense related to identified intangible assets and $421 of additional depreciation expense, which would have been recorded during the year ended December 31, 2017 if the adjustments to the provisional amounts had been recognized as of the Acquisition Date. The Company’s other expense, net for the three months ended March 31, 2018 includes additional amortization expense related to identified intangible assets of $101 which would have been recorded during the year ended December 31, 2017 if the adjustments to the provisional amounts had been recognized as of the Acquisition Date. The Company’s benefit from income taxes for the three months ended March 31, 2018 includes an additional $990 tax benefit associated with the year ended December 31, 2017, to reflect impacts as if the adjustments to the provisional amounts had been recognized as of the Acquisition Date. This amount is primarily a result of opening balance sheet adjustments recorded during the three months ended March 31, 2018, which needed to be re-measured through the income statement because of income tax rate changes that occurred subsequent to the Acquisition Date. The Company believes that the Acquisition will enable it to offer a more comprehensive, cost-effective and high-quality portfolio of products and services to its customers worldwide when, combined with anticipated synergies within its existing business, contributed to a total purchase price that resulted in the recognition of goodwill. All of the goodwill was assigned to the Company’s PM&C reporting segment. The goodwill associated with the Acquisition is not deductible for tax purposes. The valuation of the intangible assets acquired and the related weighted-average amortization periods are as follows:
|  | Amount |  | Weighted-Average Expected Useful Life (in years)
Intangible assets subject to amortization: |  |  |  |
Trademarks |  | $ | 1,767 |  |  | 11
Technical know-how |  | 1,892 |  |  | 11
Total intangible assets subject to amortization |  | 3,659 |  |  |
Trade names, not subject to amortization |  | 2,094 |  |  | Indefinite
Total |  | $ | 5,753 |  |  |
Net sales and net loss generated by the Sovitec legal entities included in the Company’s condensed consolidated statement of operations totaled $10,921 and $1,771, respectively, for the three months ended March 31, 2018. Acquisition costs were immaterial for the three months ended March 31, 2018 and $874 for the three months ended March 31, 2017. Pro Forma Financial Information The unaudited pro forma financial information for the three months ended March 31, 2017 has been derived from the Company’s historical consolidated financial statements and prepared to give effect to the Acquisition, assuming that the Acquisition occurred on January 1, 2016. The unaudited pro forma consolidated results of operations are provided for illustrative purposes only and are not indicative of the Company’s actual consolidated results of operations had the Acquisition been made as of January 1, 2016. The unaudited pro forma results of operations do not reflect any operating efficiencies or potential cost savings which may result from the Acquisition.
| Unaudited
| Three months ended March 31, 2017
Pro forma sales | $ | 341,399 |
Pro forma net loss | (1,796 | )
Pro forma net loss attributable to PQ Group Holdings Inc. | (1,935 | )
Pro forma basic and diluted net loss per share | $ | (0.02 | )
The results of operations for the three months ended March 31, 2018 include the operating results of the combined company for the full period and therefore, there is no pro forma presentation included in the table above. Certain non-recurring charges included in the Company’s results of operations for the three months ended March 31, 2017 were allocated to the respective prior year periods for pro forma purposes. For the three months ended March 31, 2017, non-recurring charges allocated to the prior year period include transaction fee charges of $499 which were excluded from pro forma net loss for the three months ended March 31, 2017. Also included in pro forma net loss for the three months ended March 31, 2017 is amortization expense of $87 and depreciation expense of $204 associated with the fair value step-up of identifiable intangible assets and property, plant and equipment, respectively.

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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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