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Acquisitions
 3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Acquisitions

3. ACQUISITIONS

 

Since January 1, 2015, the Company has acquired two businesses in the U.S. These acquisitions have allowed the Company to expand its products and service capabilities and offer its customers a greater breadth of solutions for their electrical power distribution and backup power needs. A summary of the acquisitions is as follows:

  

Business Acquired  Closing  Net Assets Acquired
(in 000s)		  Segment  Primary Form of Consideration
Harmonics Holdings Inc.   01/16/15   $1,043    T&D Solutions   Seller note/debt forgiveness
Pacific Power Systems Integration, Inc.   08/01/15    2,013    T&D Solutions   Cash
        $3,056         

 

Each of the acquired businesses has been included in the Company’s results of operations since the date of its respective closing.

 

2015 Acquisitions

 

On January 16, 2015, the Company, through its Jefferson Electric, Inc. subsidiary, acquired substantially all the assets comprising the business of Harmonics Holdings Inc. (“Harmonics”), consisting primarily of intellectual property, forgiveness of debt, accounts receivable and machinery and equipment. Harmonics is a Connecticut-based specialty provider of equipment that incorporates a patented technology for the elimination of harmonic currents in power distribution systems. The transaction was accounted for under the purchase method of accounting and the Company funded the acquisition from available cash on hand, a seller note and forgiveness of debt.

 

On August 1, 2015, the Company, through its Pioneer Custom Electrical Products Corp. subsidiary, acquired substantially all the assets comprising the business of Pacific Power Systems Integration, Inc. (“Pacific”). Located in Santa Fe Springs, California, Pacific is a manufacturer of low and medium voltage switchgear, primarily serving customers in the oil refining, mass transit and utility sectors. The transaction was accounted for under the purchase method of accounting and the Company funded the cash consideration for the acquisition with debt drawn under one of the Company’s revolving credit facilities.

 

The following table summarizes the consideration paid for the Harmonics and Pacific acquisitions and presents the allocation of the amount to the net tangible and identifiable intangible assets based on their estimated fair values as of January 16, 2015 and August 1, 2015, respectively (in thousands):

 

  Harmonics Acquisition  Pacific Acquisition
Purchase Price          
Cash consideration  $93   $2,013 
Forgiveness of trade payables and indebtedness due to purchaser   609    — 
Deferred payments due to seller   341    — 
   $1,043   $2,013 
Purchase Price Allocation          
Current assets  $21   $18 
Property, plant and equipment   4    147 
Intangible assets   995    1,500 
Goodwill   23    348 
Net assets acquired  $1,043   $2,013 

 

As of March 31, 2016, the Company has finalized the purchase price allocation for Harmonics while the Pacific purchase price allocation presented above is preliminary.

 

The acquisitions resulted in the recognition of goodwill in the Company’s consolidated financial statements because the purchase prices exceeded the net tangible asset values, and reflects the future net income and cash flow potential of the acquired businesses.

 

The following table summarizes the major classes of intangible assets arising from the acquisition of Harmonics and Pacific, their respective amortization periods, and the amount of amortization expense recognized during the three months ended March 31, 2016 (in thousands):

 

    Weighted Average
Amortization Years		   Harmonics Acquisition
Acquired Intangible Assets        
Customer relationships     10     $ 319  
Non-compete agreements     5       75  
Developed technology     10       492  
Trademark     Indefinite       26  
Technology-related industry accreditations     Indefinite       83  
            $ 995  
Amortization expense recorded during the three months ended March 31, 2016           $ 23  

 

   Weighted Average
Amortization Years		  Pacific Acquisition
Acquired Intangible Assets          
Customer relationships   7   $400 
Non-compete agreements   7    100 
Technology-related industry accreditations   Indefinite    1,000 
        $1,500 
Amortization expense recorded during the three months ended March 31, 2016      $18 

 

The Company reported Harmonics and Pacific results of operations in the T&D Solutions segment for the three months ended March 31, 2016.