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ACQUISITIONS | 12 Months Ended
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Sep. 30, 2014
ACQUISITIONS [Abstract] |
ACQUISITIONS |
18. | ACQUISITIONS:
Fiscal 2014: On July 29, 2014, the Company acquired Schawk, a leading global brand development, activation and brand deployment company, headquartered in Des Plaines, Illinois. Under the terms of the transaction, Schawk shareholders received $11.80 cash and 0.20582 shares of Matthews' common stock for each Schawk share held. Based on the closing price of Matthews' stock on July 28, 2014, the transaction represented an implied price of $20.74 per share and a total enterprise value (which included net outstanding debt, net of cash acquired) of $616,686. Schawk provides comprehensive brand development and brand deployment services to clients primarily in the consumer packaged goods, retail and life sciences markets. Schawk creates and sells its clients' brands, produces brand assets and protects brand equities to help drive brand performance. Schawk currently delivers its services through more than 155 locations in over 20 countries across North and South America, Europe, Asia and Australia. Schawk's revenue totaled $442,640 in 2013. The purchase price exceeded the fair value of the identifiable net assets and, accordingly, $312,558 was allocated to goodwill, substantially none of which is tax deductible. The acquisition was made at prices above the fair value of the acquired identifiable assets, resulting in goodwill, due to expectations of the synergies that will be realized by combining the businesses. These synergies include the elimination of redundant facilities, functions and staffing; use of the Company's existing commercial infrastructure to expand sales of the acquired businesses' products; and use of the commercial infrastructure of the acquired business to cost-effectively expand sales of Company products. The acquisition has been accounted for using the purchase method of accounting, and the acquired company's results have been included in the accompanying financial statements from their date of acquisition. Acquisition transaction costs are recorded in selling, general and administrative expenses. The net assets acquired have been recorded based on estimates of fair value and are subject to adjustment upon finalization of the valuation process. The Company is not aware of any information that indicates the final valuation will differ materially from preliminary estimates. The preliminary purchase price allocation related to the Schawk acquisition is not finalized as of September 30, 2014, and is based upon a preliminary valuation which is subject to change as the Company obtains additional information, including with respect to fixed assets, intangible assets, certain liabilities and related taxes. The preliminary purchase price allocation for the Schawk acquisition is as follows:
Purchase Price |  |  |
Cash paid |  | $ | 309,524 |
Treasury stock (5,398,829 shares issued, $43.45 per share) |  |  | 234,579 |
Cash for debt repayment |  |  | 83,882 |
Cash acquired |  |  | (11,299 | )
|  | $ | 616,686 |
Net Assets Acquired |  |  |  |
Trade receivables |  | $ | 91,407 |
Inventory |  |  | 27,459 |
Other current assets |  |  | 16,537 |
Property, plant and equipment |  |  | 43,236 |
Definite-lived intangible assets: |  |  |  |
Customer relationships |  |  | 203,270 |
Product technology |  |  | 2,890 |
Tradenames and other |  |  | 1,610 |
Indefinite-lived intangible assets: |  |  |  |
Tradenames |  |  | 119,650 |
Goodwill |  |  | 312,558 |
Other assets |  |  | 7,864 |
Trade accounts payable |  |  | (21,088 | )
Other current liabilities |  |  | (50,265 | )
Multi-employer plan withdrawal liability |  |  | (30,622 | )
Non-current liabilities |  |  | (107,820 | )
|  | $ | 616,686 |
The weighted-average amortization periods for intangible assets acquired are 20 years for customer relations, 5 years for product technology and 3 years for non-compete agreements. The weighted average amortization period for all definite-lived intangible assets acquired is 19.7 years. Transaction-related costs related to the acquisition totaled $5,627. The following unaudited pro forma information presents a summary of the consolidated results of Matthews combined with Schawk as if the acquisition had occurred on October 1, 2012:
|  | Schawk |  |  | Pro Forma Combined |
|  | Acquisition date through September 30, 2014 |  |  | 2014 |  |  | 2013 |
Sales |  | $ | 75,060 |  |  | $ | 1,458,277 |  |  | $ | 1,430,843 |
Income before income taxes |  |  | (8,453 | ) |  |  | 89,779 |  |  |  | 41,271 |
Net income |  |  | (5,888 | ) |  |  | 63,586 |  |  |  | 29,470 |
Earnings per share |  | $ | (.21 | ) |  | $ | 1.93 |  |  | $ | .89 |
The Schawk results from the acquisition date through September 30, 2014 included acquisition-related expenses and the write-off of inventory step-up value of $3,401 and $9,537, respectively These unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments, such as interest expense on acquisition debt and acquisition related costs. The pro forma information does not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on the date indicated, or which may result in the future. Fiscal 2013: Acquisition spending, net of cash acquired, during the year ended September 30, 2013 totaled $73,959. The acquisitions were not individually material to the Company's consolidated financial position or results of operations, and primarily included the following: In March 2013, the Company completed the purchase of the remaining 38.5% interest in Kroma Pre-Press Preparation Systems Industry & Trade, Inc. ("Kroma"), completing the option arrangement in connection with the July 2011 acquisition of a 61.5% interest in Kroma. In December 2012, the Company acquired Pyramid Controls, Inc. and its affiliate, Pyramid Control Systems (collectively, "Pyramid"). Pyramid is a provider of warehouse control systems and conveyor control solutions for distribution centers. The acquisition is designed to expand Matthews' fulfillment products and services in the warehouse management market. The initial purchase price for the transaction was $26,178, plus additional consideration of $3,703 paid in fiscal 2014 based on operating results. In November 2012, the Company acquired Wetzel Holding AG, Wetzel GmbH and certain related affiliates (collectively, "Wetzel"). Wetzel is a leading European provider of pre-press services and gravure printing forms, with manufacturing operations in Germany and Poland. Wetzel's products and services are sold primary within Europe, and the acquisition is designed to expand Matthews' products and services in the global graphics imaging market. The purchase price for Wetzel was 42.6 million Euros ($54,748) on a cash-free, debt-free basis. The Company has completed the allocation of purchase price for all fiscal 2013 acquisitions. Fiscal 2012: In May 2012, the Company acquired Everlasting Granite Memorial Co., Inc. ("Everlasting Granite"), a supplier of granite memorials, columbariums and private mausoleum estates. The transaction was structured as an asset purchase and was designed to expand the Company's presence and product breadth in the granite memorial business.

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