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ACQUISITIONS
 9 Months Ended
Sep. 30, 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, 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 acquisition 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 acquisition 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       182  
Identifiable intangible assets     995       1,562  
Goodwill     23       251  
Net assets acquired     1,043       2,013  

 

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 nine months ended September 30, 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 nine months ended September 30, 2016 $ 70  

 

 

 

 Weighted Average
Amortization Years

     Pacific
Acquisition		  
Acquired Intangible Assets              
Customer relationships   13     $ 512  
Non-compete agreements   7       180  
Technology-related industry accreditations   Indefinite       870  
          $ 1,562  
               
Amortization expense recorded during the nine months ended September 30, 2016 $ 48  

 

The Company reported Harmonics and Pacific results of operations in the T&D Solutions segment for the nine months ended September 30, 2016.