(State of incorporation) (I.R.S. Employer Id. No.) economic uncertainty or a prolonged economic downturn; the realization of anticipated cost savings from restructuring activities and cost reduction efforts; market conditions in the truck, automotive, agricultural, industrial, production automation, oil & gas, energy, maintenance, power generation increased competition in the markets we serve and market acceptance of existing and new products; our ability to successfully identify and integrate acquisitions and realize anticipated benefits/results from acquired companies; operating margin risk due to competitive product pricing, operating efficiencies, reduced production levels and material, labor and overhead cost increases; foreign currency, interest rate and commodity risk; supply chain and industry trends, including changes in purchasing and other business practices by customers; regulatory and legal developments including changes to United States taxation rules, health care reform and governmental climate change initiatives; the potential for a non-cash asset impairment charge, if operating performance at one or more of our businesses were to fall significantly below current levels;x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 20122013¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Wisconsin 39-0168610 Large accelerated filer x Accelerated filer ¨ Non-accelerated filer (Do(Do not check if a smaller reporting company) Smaller reporting company ¨ 20122013 was 72,941,967. Page No. Page No. 4 5 6 7 8 19 23 23 24 24marine, solar,and infrastructure residential and commercial construction and retail Do-It Yourself (“DIY”) industries;
When used herein, the terms “Actuant,” “we,” “us,” “our” and the “Company” refer to Actuant Corporation and its subsidiaries.
Three Months Ended November 30, | ||||||||
2012 | 2011 | |||||||
Net sales | $ | 377,248 | $ | 392,799 | ||||
Cost of products sold | 230,262 | 240,191 | ||||||
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|
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| |||||
Gross profit | 146,986 | 152,608 | ||||||
Selling, administrative and engineering expenses | 87,830 | 88,109 | ||||||
Amortization of intangible assets | 7,854 | 7,218 | ||||||
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|
|
| |||||
Operating profit | 51,302 | 57,281 | ||||||
Financing costs, net | 6,322 | 8,222 | ||||||
Other expense, net | 364 | 657 | ||||||
|
|
|
| |||||
Earnings before income tax expense | 44,616 | 48,402 | ||||||
Income tax expense | 8,273 | 11,228 | ||||||
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|
|
| |||||
Net earnings | $ | 36,343 | $ | 37,174 | ||||
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| |||||
Earnings per share: | ||||||||
Basic | $ | 0.50 | $ | 0.54 | ||||
Diluted | $ | 0.49 | $ | 0.50 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 72,791 | 68,421 | ||||||
Diluted | 74,271 | 75,142 |
Three Months Ended November 30, | ||||||||
2013 | 2012 | |||||||
Net sales | $ | 339,556 | $ | 307,809 | ||||
Cost of products sold | 207,776 | 183,441 | ||||||
Gross profit | 131,780 | 124,368 | ||||||
Selling, administrative and engineering expenses | 81,918 | 74,860 | ||||||
Amortization of intangible assets | 6,215 | 6,034 | ||||||
Operating profit | 43,647 | 43,474 | ||||||
Financing costs, net | 6,750 | 6,322 | ||||||
Other expense, net | 1,141 | 644 | ||||||
Earnings from continuing operations before income tax expense | 35,756 | 36,508 | ||||||
Income tax expense | 2,751 | 5,957 | ||||||
Earnings from continuing operations | 33,005 | 30,551 | ||||||
Earnings from discontinued operations, net of income taxes | 3,032 | 5,792 | ||||||
Net earnings | $ | 36,037 | $ | 36,343 | ||||
Earnings from continuing operations per share: | ||||||||
Basic | $ | 0.45 | $ | 0.42 | ||||
Diluted | $ | 0.44 | $ | 0.41 | ||||
Earnings per share: | ||||||||
Basic | $ | 0.49 | $ | 0.50 | ||||
Diluted | $ | 0.48 | $ | 0.49 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 73,085 | 72,791 | ||||||
Diluted | 75,011 | 74,271 |
(unaudited)
Three Months Ended November 30, | ||||||||
2012 | 2011 | |||||||
Net earnings | $ | 36,343 | $ | 37,174 | ||||
Other comprehensive income (loss), net of tax | ||||||||
Foreign currency translation adjustments | 12,089 | (32,567 | ) | |||||
Pension and other postretirement benefit plans | ||||||||
Actuarial loss arising during period | 125 | — | ||||||
Amortization of actuarial losses included in net periodic pension cost | 90 | 33 | ||||||
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| |||||
215 | 33 | |||||||
Cash flow hedges | ||||||||
Unrealized net gains arising during period | 2 | 148 | ||||||
Net (gains) losses reclassified into earnings | (131 | ) | — | |||||
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|
| |||||
(129 | ) | 148 | ||||||
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|
| |||||
Total other comprehensive income (loss), net of tax | 12,175 | (32,386 | ) | |||||
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| |||||
Comprehensive income | $ | 48,518 | $ | 4,788 | ||||
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|
|
Three Months Ended November 30, | ||||||||
2013 | 2012 | |||||||
Net earnings | $ | 36,037 | $ | 36,343 | ||||
Other comprehensive income, net of tax | ||||||||
Foreign currency translation adjustments | 17,047 | 12,089 | ||||||
Pension and other postretirement benefit plans | 50 | 215 | ||||||
Cash flow hedges | (94 | ) | (129 | ) | ||||
Total other comprehensive income, net of tax | 17,003 | 12,175 | ||||||
Comprehensive income | $ | 53,040 | $ | 48,518 |
November 30, 2013 | August 31, 2013 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 109,542 | $ | 103,986 | ||||
Accounts receivable, net | 221,528 | 219,075 | ||||||
Inventories, net | 155,129 | 142,549 | ||||||
Deferred income taxes | 18,585 | 18,796 | ||||||
Other current assets | 32,636 | 28,228 | ||||||
Assets of discontinued operations | 270,106 | 272,606 | ||||||
Total current assets | 807,526 | 785,240 | ||||||
Property, plant and equipment | ||||||||
Land, buildings and improvements | 53,200 | 52,669 | ||||||
Machinery and equipment | 319,345 | 305,200 | ||||||
Gross property, plant and equipment | 372,545 | 357,869 | ||||||
Less: Accumulated depreciation | (167,217 | ) | (156,373 | ) | ||||
Property, plant and equipment, net | 205,328 | 201,496 | ||||||
Goodwill | 745,476 | 734,952 | ||||||
Other intangibles, net | 375,307 | 376,692 | ||||||
Other long-term assets | 30,228 | 20,952 | ||||||
Total assets | $ | 2,163,865 | $ | 2,119,332 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Trade accounts payable | $ | 159,275 | $ | 154,049 | ||||
Accrued compensation and benefits | 41,413 | 43,800 | ||||||
Current maturities of long-term debt | 1,125 | — | ||||||
Income taxes payable | 10,464 | 14,014 | ||||||
Other current liabilities | 60,964 | 56,899 | ||||||
Liabilities of discontinued operations | 53,233 | 53,080 | ||||||
Total current liabilities | 326,474 | 321,842 | ||||||
Long-term debt, less current maturities | 501,875 | 515,000 | ||||||
Deferred income taxes | 118,277 | 115,865 | ||||||
Pension and postretirement benefit liabilities | 19,167 | 20,698 | ||||||
Other long-term liabilities | 66,373 | 65,660 | ||||||
Shareholders’ equity | ||||||||
Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 77,380,943 and 77,001,144 shares, respectively | 15,475 | 15,399 | ||||||
Additional paid-in capital | 63,423 | 49,758 | ||||||
Treasury stock, at cost, 4,383,513 and 3,983,513 shares, respectively | (120,267 | ) | (104,915 | ) | ||||
Retained earnings | 1,224,725 | 1,188,685 | ||||||
Accumulated other comprehensive loss | (51,657 | ) | (68,660 | ) | ||||
Stock held in trust | (3,199 | ) | (3,124 | ) | ||||
Deferred compensation liability | 3,199 | 3,124 | ||||||
Total shareholders’ equity | 1,131,699 | 1,080,267 | ||||||
Total liabilities and shareholders’ equity | $ | 2,163,865 | $ | 2,119,332 |
November 30, | August 31, | |||||||
2012 | 2012 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 68,311 | $ | 68,184 | ||||
Accounts receivable, net | 232,267 | 234,756 | ||||||
Inventories, net | 225,084 | 211,690 | ||||||
Deferred income taxes | 22,785 | 22,583 | ||||||
Prepaid expenses and other current assets | 30,121 | 24,068 | ||||||
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| |||||
Total current assets | 578,568 | 561,281 | ||||||
Property, plant and equipment | ||||||||
Land, buildings and improvements | 50,796 | 49,866 | ||||||
Machinery and equipment | 252,237 | 242,718 | ||||||
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| |||||
Gross property, plant and equipment | 303,033 | 292,584 | ||||||
Less: Accumulated depreciation | (185,274 | ) | (176,700 | ) | ||||
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| |||||
Property, plant and equipment, net | 117,759 | 115,884 | ||||||
Goodwill | 871,698 | 866,412 | ||||||
Other intangibles, net | 440,188 | 445,884 | ||||||
Other long-term assets | 17,243 | 17,658 | ||||||
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|
|
| |||||
Total assets | $ | 2,025,456 | $ | 2,007,119 | ||||
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| |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Trade accounts payable | $ | 164,665 | $ | 174,746 | ||||
Accrued compensation and benefits | 43,696 | 58,817 | ||||||
Current maturities of debt | 8,750 | 7,500 | ||||||
Income taxes payable | 5,982 | 5,778 | ||||||
Other current liabilities | 66,754 | 72,165 | ||||||
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| |||||
Total current liabilities | 289,847 | 319,006 | ||||||
Long-term debt | 387,500 | 390,000 | ||||||
Deferred income taxes | 129,951 | 132,653 | ||||||
Pension and postretirement benefit liabilities | 26,233 | 26,442 | ||||||
Other long-term liabilities | 89,927 | 87,182 | ||||||
Shareholders’ equity | ||||||||
Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 75,799,085 and 75,519,079 shares, respectively | 15,158 | 15,102 | ||||||
Additional paid-in capital | 16,450 | 7,725 | ||||||
Treasury stock, at cost, 2,917,951 and 2,658,751 shares, respectively | (70,225 | ) | (63,083 | ) | ||||
Retained earnings | 1,197,912 | 1,161,564 | ||||||
Accumulated other comprehensive loss | (57,297 | ) | (69,472 | ) | ||||
Stock held in trust | (2,340 | ) | (2,689 | ) | ||||
Deferred compensation liability | 2,340 | 2,689 | ||||||
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| |||||
Total shareholders’ equity | 1,101,998 | 1,051,836 | ||||||
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|
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| |||||
Total liabilities and shareholders’ equity | $ | 2,025,456 | $ | 2,007,119 | ||||
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|
|
See accompanying Notes to Condensed Consolidated Financial Statements
Three Months Ended November 30, | ||||||||
2012 | 2011 | |||||||
Operating Activities | ||||||||
Net earnings | $ | 36,343 | $ | 37,174 | ||||
Adjustments to reconcile net earnings to cash provided by operating activities: | ||||||||
Depreciation and amortization | 14,449 | 13,540 | ||||||
Amortization of debt discount and debt issuance costs | 496 | 497 | ||||||
Stock-based compensation expense | 3,477 | 3,543 | ||||||
Benefit for deferred income taxes | (3,156 | ) | (950 | ) | ||||
Other non-cash adjustments | (177 | ) | 58 | |||||
Changes in components of working capital and other: | ||||||||
Accounts receivable | 4,539 | (9,597 | ) | |||||
Inventories | (11,318 | ) | (2,595 | ) | ||||
Prepaid expenses and other assets | (6,143 | ) | (825 | ) | ||||
Trade accounts payable | (11,548 | ) | (2,886 | ) | ||||
Income taxes payable | 1,161 | 1,216 | ||||||
Accrued compensation and benefits | (13,953 | ) | (19,169 | ) | ||||
Other accrued liabilities | (1,895 | ) | 469 | |||||
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|
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| |||||
Net cash provided by operating activities | 12,275 | 20,475 | ||||||
Investing Activities | ||||||||
Proceeds from sale of property, plant and equipment | 977 | 5,918 | ||||||
Capital expenditures | (7,689 | ) | (5,595 | ) | ||||
Business acquisitions, net of cash acquired | (83 | ) | (290 | ) | ||||
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|
|
| |||||
Net cash (used in) provided by investing activities | (6,795 | ) | 33 | |||||
Financing Activities | ||||||||
Net borrowings on revolver and other debt | — | 4,809 | ||||||
Principal repayments on term loan | (1,250 | ) | — | |||||
Purchase of treasury shares | (7,142 | ) | (20,410 | ) | ||||
Stock option exercises and related tax benefits | 5,473 | 2,782 | ||||||
Cash dividend | (2,911 | ) | (2,748 | ) | ||||
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|
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| |||||
Net cash used in financing activities | (5,830 | ) | (15,567 | ) | ||||
Effect of exchange rate changes on cash | 477 | (1,043 | ) | |||||
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| |||||
Net increase in cash and cash equivalents | 127 | 3,898 | ||||||
Cash and cash equivalents – beginning of period | 68,184 | 44,221 | ||||||
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|
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| |||||
Cash and cash equivalents – end of period | $ | 68,311 | $ | 48,119 | ||||
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|
|
Three months ended November 30, | ||||||||
2013 | 2012 | |||||||
Operating Activities | ||||||||
Net earnings | $ | 36,037 | $ | 36,343 | ||||
Adjustments to reconcile net earnings to cash provided by operating activities: | ||||||||
Depreciation and amortization | 16,204 | 14,449 | ||||||
Benefit for deferred income taxes | (8,408 | ) | (3,156 | ) | ||||
Stock-based compensation expense | 4,103 | 3,477 | ||||||
Amortization of debt discount and debt issuance costs | 560 | 496 | ||||||
Other non-cash adjustments | (867 | ) | (177 | ) | ||||
Sources (uses) of cash from changes in components of working capital and other: | ||||||||
Accounts receivable | 7,040 | 4,539 | ||||||
Inventories | (11,634 | ) | (11,318 | ) | ||||
Prepaid expenses and other assets | (3,049 | ) | (6,143 | ) | ||||
Trade accounts payable | 2,560 | (11,548 | ) | |||||
Income taxes payable | (3,189 | ) | 1,161 | |||||
Accrued compensation and benefits | (2,595 | ) | (13,953 | ) | ||||
Other accrued liabilities | (3,816 | ) | (1,895 | ) | ||||
Net cash provided by operating activities | 32,946 | 12,275 | ||||||
Investing Activities | ||||||||
Proceeds from sale of property, plant and equipment | 1,913 | 977 | ||||||
Capital expenditures | (11,257 | ) | (7,689 | ) | ||||
Business acquisitions, net of cash acquired | — | (83 | ) | |||||
Net cash used in investing activities | (9,344 | ) | (6,795 | ) | ||||
Financing Activities | ||||||||
Net repayments on revolver | (12,000 | ) | — | |||||
Principal repayments on term loan | — | (1,250 | ) | |||||
Purchase of treasury shares | (15,352 | ) | (7,142 | ) | ||||
Stock option exercises and related tax benefits | 10,562 | 5,473 | ||||||
Payment of contingent acquisition consideration | (414 | ) | — | |||||
Cash dividend | (2,919 | ) | (2,911 | ) | ||||
Net cash used in financing activities | (20,123 | ) | (5,830 | ) | ||||
Effect of exchange rate changes on cash | 2,077 | 477 | ||||||
Net increase in cash and cash equivalents | 5,556 | 127 | ||||||
Cash and cash equivalents – beginning of period | 103,986 | 68,184 | ||||||
Cash and cash equivalents – end of period | $ | 109,542 | $ | 68,311 |
2014 energy asset owners. The purchase price allocation tradenames. Net sales As reported Pro forma Net earnings As reported Pro forma Basic earnings per share As reported Pro forma Diluted earnings per share As reported Pro forma Discontinued Operations Balance as of August 31, 2012 Purchase accounting adjustments Impact of changes in foreign currency rates Balance as of November 30, 2012 Amortizable intangible assets: Customer relationships Patents Trademarks and tradenames Non-compete agreements and other Indefinite lived intangible assets: Tradenames Beginning balances Purchase accounting adjustment Provision for warranties Warranty payments and costs incurred Impact of changes in foreign currency rates Ending balances Senior Credit Facility Revolver Term Loan 5.625% Senior Notes Total Senior Indebtedness Less: current maturities of long-term debt Total long-term debt 2013 Level 1 Valuation: Cash equivalents Investments Level 2 Valuation: Foreign currency derivatives Numerator: Net earnings from continuing operations Plus: 2% Convertible Notes financing costs, net of taxes Net earnings for diluted earnings per share Denominator: Weighted average common shares outstanding for basic earnings per share Net effect of dilutive securities—equity based compensation plans Net effect of 2% Convertible Notes based on the if-converted method Weighted average common and equivalent shares outstanding for diluted earnings per share Basic Earnings Per Share: Diluted Earnings Per Share: The effective income tax rate from continuing operations was loss carryforward of $3.4 million. Net Sales by Segment: Industrial Energy Electrical Engineered Solutions Net Sales by Reportable Product Line: Industrial Energy Electrical Vehicle Systems Other Operating Profit: Industrial Energy Electrical Engineered Solutions General Corporate Assets: Industrial Energy Electrical Engineered Solutions General Corporate Net sales Cost of products sold Gross profit Selling, administrative and engineering expenses Amortization of intangible assets Operating profit Financing costs, net Intercompany expense (income), net Other expense (income), net Earnings before income tax expense Income tax expense Net earnings before equity in earnings of subsidiaries Equity in earnings of subsidiaries Net earnings Comprehensive income Net sales Cost of products sold Gross profit Selling, administrative and engineering expenses Amortization of intangible assets Operating profit Financing costs, net Intercompany expense (income), net Other expense, net Earnings before income tax expense Income tax expense Net earnings before equity in earnings of subsidiaries Equity in earnings (loss) of subsidiaries Net earnings Comprehensive income ASSETS Current assets Property, plant & equipment, net Goodwill Other intangibles, net Investment in subsidiaries Intercompany receivable Other long-term assets Total assets LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities Long-term debt Deferred income taxes Pension and post-retirement benefit liabilities Other long-term liabilities Intercompany payable Shareholders’ equity Total liabilities and shareholders’ equity ASSETS Current assets Property, plant & equipment, net Goodwill Other intangibles, net Investment in subsidiaries Intercompany receivable Other long-term assets Total assets LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities Long-term debt Deferred income taxes Pension and post-retirement benefit liabilities Other long-term liabilities Intercompany payable Shareholders’ equity Total liabilities and shareholders’ equity Operating Activities Net cash provided by (used in) operating activities Investing Activities Proceeds from sale of property, plant and equipment Capital expenditures Business acquisitions, net of cash acquired Cash provided by (used in) investing activities Financing Activities Principal repayment of term loans Intercompany loan activity Purchase of treasury shares Stock option exercises, related tax benefits and other Cash dividend Cash provided by (used in) financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents—beginning of period Cash and cash equivalents—end of period Operating Activities Net cash provided by (used in) operating activities Investing Activities Proceeds from sale of property, plant and equipment Capital expenditures Business acquistitions, net of cash acquired Cash (used in) provided by investing activities Financing Activities Net borrowings on revolver and other debt Intercompany loan activity Purchase of treasury shares Stock option exercises and related tax benefits Cash dividend Cash (used in) provided by financing activities Effect of exchange rate changes on cash Net (decrease) increase in cash and cash equivalents Cash and cash equivalents—beginning of period Cash and cash equivalents—end of period We remain focused on maintaining our financial strength by adjusting our cost structure to reflect changes in demand levels and by proactively managing working capital and cash flow generation. Our priorities during fiscal 2014 include a continued focus on growth initiatives (new product development, market share gains, geographic expansion and strategic acquisitions), operational excellence and cash flow generation. Net sales Cost of products sold Gross profit Selling, administrative and engineering Amortization of intangible assets Operating profit Financing costs, net Other expense, net Earnings before income tax expense Income tax expense Net earnings year). Net sales Operating profit Operating profit % margin improved slightly due to effective cost management and favorable sales mix. Net sales Operating profit Operating profit % Net sales Operating profit Operating profit % Net sales Operating profit Operating profit % Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities Effect of exchange rates on cash Net increase in cash and cash equivalents from Continuing Operations Accounts receivable, net Inventory, net Accounts payable Net primary working capital continuing operations (in millions): Our Senior Credit Facility, which matures on 2013 September 1 to September 30, 2012 October 1 to October 31, 2012 November 1 to November 30, 2012 Total 201320122013 was derived from the Company’s audited financial statements, but does not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Company’s fiscal 20122013 Annual Report on Form 10-K.20122013 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2013.three business acquisitions during fiscal 2012. All of the acquisitions resultedin previous periods. Acquisitions result in the recognition of goodwill in the Company’s consolidated financial statements because thetheir purchase prices reflectprice reflects the future earnings and cash flow potential of these companies, as well as the complementary strategic fit and resulting synergies these businesses shouldare expected to bring to existing operations. The Company incurred acquisition transaction costs of $0.1 million and $0.3 million for the three months ended November 30, 2012 and 2011, respectively, related to various business acquisition activities.During fiscal 2012,Company completed two Maxima Technologies tuck-in acquisitions that further expand thesegment's geographic presence, product offeringstechnologies and technologiesservices provided to the global energy market. Headquartered in Aberdeen, Scotland, Viking is a support specialist providing a comprehensive range of the Engineered Solutions segment. On July 20, 2012 the Company completed the acquisition of the stock of CrossControl AB (“CrossControl”) for $40.6 million of cash, plus potential contingent consideration. CrossControl, headquartered in Sweden, provides advanced electronic solutions for user-machine interaction, vehicle control and mobile connectivity in critical environments. On March 28, 2012 the Company acquired the stock of Turotest Medidores Ltda (“Turotest”) for $8.1 million of cash and $5.3 million of deferred purchase price. Turotest, headquartered in Brazil, designs and manufactures instrument panels and gauges serving the Brazilian agriculture and industrial markets.In addition, on February 10, 2012 the Company completed the acquisition of the stock of Jeyco Pty Ltd (“Jeyco”) for $20.7 million of cash. This Cortland (Energy segment) tuck-in acquisition, designs and provides specialized mooring, rigging and towing systemsequipment and services to the offshore oil & gas industryindustry. Viking serves customers globally with primary markets in Australiathe North Sea (U.K. and Norway) and Australia. The majority of Viking's revenue is derived from offshore vessel mooring solutions which include design, rental, installation and inspection. Viking also provides survey, manpower and other international markets. Additionally, Jeyco’s products are used in a variety of applications for other markets including cyclone mooringmarine services to offshore operators, drillers and marine, defense and mining tow systems.for fiscal 2012 acquisitionsof the Viking acquisition resulted in the recognition of $40.4$32.8$65.4 million of intangible assets, including $24.2$40.5 million of customer relationships $5.7and $24.9 million of tradenames, $2.2 million of technologies and $0.7 million of non-compete agreements.20122013 and 2011,2012, give effect to these acquisitionsthe Viking acquisition as though the transactionstransaction and related financing activities had occurred on September 1, 20112012 (in thousands, except per share amounts): Three Months Ended
November 30, 2012 2011 $ 377,248 $ 392,799 377,248 415,787 $ 36,343 $ 37,174 36,502 40,097 $ 0.50 $ 0.54 0.50 0.59 $ 0.49 $ 0.50 0.49 0.54 Three months ended November 30, 2013 2012 Net sales As reported $ 339,556 $ 307,809 Pro forma 339,556 332,742 Earnings from continuing operations As reported $ 33,005 $ 30,551 Pro forma 33,005 33,672 Basic earnings per share from continuing operations As reported $ 0.45 $ 0.42 Pro forma 0.45 0.46 Diluted earnings per share from continuing operations As reported $ 0.44 $ 0.41 Pro forma 0.44 0.45 RestructuringCompany continuously reviews its cost structure to be responsive to changes in end market demand, identify opportunities for cost synergies from recent acquisitions and in light of changesElectrical segment is primarily involved in the worldwide economy.design, manufacture and distribution of a broad range of electrical products to the retail DIY, wholesale, original equipment manufacturer (“OEM”), solar, utility, marine and other harsh environment markets. The results of operations for the Electrical segment have been reported as discontinued operations for all periods presented. The following table summarizes the results of discontinued operations (in thousands): Three months ended November 30, 2013 2012 Net sales $ 63,012 $ 69,439 Operating income 5,229 8,108 Income tax expense (2,197 ) (2,316 ) Income from discontinued operations, net of taxes $ 3,032 $ 5,792 of increased uncertainty and reduced demand, the Company has implementedrecognized an impairment charge during fiscal 2013 of $159.1 million, including a write-down of $137.8 million of goodwill and $21.3 million of indefinite lived intangible assets (tradename). The impairment charge represents the excess of the net book value of the held for sale assets over the estimated fair value, less selling costs. The following is a summary of the assets and liabilities of discontinued operations (in thousands): November 30, 2013 August 31, 2013 Accounts receivable, net $ 36,781 $ 41,247 Inventories, net 56,422 55,142 Property, plant & equipment, net 9,977 9,545 Goodwill 76,989 76,877 Other intangible assets, net 85,083 84,387 Other assets 4,854 5,408 Assets of discontinued operations $ 270,106 $ 272,606 Trade accounts payable $ 19,192 $ 19,824 Other current liabilities 13,770 12,984 Deferred income taxes 9,544 9,376 Other long-term liabilities 10,727 10,896 Liabilities of discontinued operations $ 53,233 $ 53,080 restructuring initiatives including workforce reductions, plant consolidationstransaction costs and income taxes to be approximately $225 million, which will be utilized to reduce manufacturing overhead, the continued movement of production and product sourcingnet debt. The divestiture is expected to low cost countries and the centralization of certain selling and administrative functions. Restructuring costs were $0.7 million and $0.5 million for the three months ended November 30, 2012 and 2011, respectively. The restructuring reserve at November 30, 2012 and August 31, 2012 was $2.3 million and $2.9 million, respectively. The remaining restructuring related severance will be paid during the next twelve months, while facility consolidation costs (primarily reserves for future lease payments for vacated facilities) will be paid over the underlying lease terms.result in a net gain on disposal.20122013 are as follows (in thousands): Industrial Energy Electrical Engineered
Solutions Total $ 81,404 $ 259,521 $ 213,870 $ 311,617 $ 866,412 — — — 87 87 1,044 2,020 777 1,358 5,199 $ 82,448 $ 261,541 $ 214,647 $ 313,062 $ 871,698 Industrial Energy Engineered
Solutions Total Balance as of August 31, 2013 $ 82,611 $ 341,903 $ 310,438 $ 734,952 Purchase accounting adjustments — 74 — 74 Impact of changes in foreign currency rates 983 7,785 1,682 10,450 Balance as of November 30, 2013 $ 83,594 $ 349,762 $ 312,120 $ 745,476 Weighted November 30, 2012 August 31, 2012 Average Gross Net Gross Net Amortization Carrying Accumulated Book Carrying Accumulated Book Period (Years) Value Amortization Value Value Amortization Value 15 $ 349,873 $ 100,296 $ 249,577 $ 347,739 $ 93,768 $ 253,971 13 53,042 35,865 17,177 52,851 34,842 18,009 19 43,690 9,357 34,333 43,820 8,670 35,150 4 7,734 6,590 1,144 7,677 6,316 1,361 N/A 137,957 — 137,957 137,393 — 137,393 $ 592,296 $ 152,108 $ 440,188 $ 589,480 $ 143,596 $ 445,884 November 30, 2013 August 31, 2013 Amortizable intangible assets: Customer relationships 15 $ 322,758 $ 102,017 $ 220,741 $ 318,143 $ 95,215 $ 222,928 Patents 11 30,821 19,464 11,357 30,564 18,747 11,817 Trademarks and tradenames 19 24,213 7,764 16,449 24,088 7,356 16,732 Non-compete agreements and other 4 7,143 6,617 526 7,034 6,458 576 Indefinite lived intangible assets: Tradenames N/A 126,234 126,234 124,639 — 124,639 $ 511,169 $ 135,862 $ 375,307 $ 504,468 $ 127,776 $ 376,692 $7.9$6.2 million and $7.2$6.0 million for the three months ended November 30, 20122013 and 2011,2012, respectively. The Company estimates that amortization expense will be approximately $22.0$18.8 million for the remainder of fiscal 2013.2014. Amortization expense for future years is estimated to be as follows: $28.1$24.8 million in fiscal 2014, $28.02015, $24.7 million in 2015, $27.92016, $23.7 million in fiscal 2016, $26.72017, $23.3 million in fiscal 2017, $26.32018, $23.1 million in fiscal 20182019 and $143.2 $110.6 During the three months ended November 30, 2011, the warranty reserve was reduced by $5.7 million, the result of a purchase accounting adjustment to Mastervolt’s initial estimated warranty reserve. The reserve for future warranty claims is based on historical claim rates and current warranty cost experience. The following is a rollforward of the accrued product warranty reserve from continuing operations (in thousands): Three Months Ended
November 30, 2012 2011 $ 12,869 $ 23,707 — (5,719 ) 2,417 2,491 (3,096 ) (2,903 ) 271 (1,109 ) $ 12,461 $ 16,467 Three months ended November 30, 2013 2012 Beginning balance $ 7,413 $ 5,121 Provision for warranties 230 1,365 Warranty payments and costs incurred (1,232 ) (1,893 ) Impact of changes in foreign currency rates 53 45 Ending balance $ 6,464 $ 4,638 November 30,
2012 August 31,
2012 $ — $ — 96,250 97,500 96,250 97,500 300,000 300,000 396,250 397,500 (8,750 ) (7,500 ) $ 387,500 $ 390,000 November 30,
2013 August 31,
2013Senior Credit Facility Revolver $ 113,000 $ 125,000 Term Loan 90,000 90,000 203,000 215,000 5.625% Senior Notes 300,000 300,000 Total Senior Indebtedness 503,000 515,000 Less: current maturities of long-term debt (1,125 ) — Total long-term debt, less current maturities $ 501,875 $ 515,000 February 23, 2016 providesJuly 18, 2018, includes a $600$600 million revolving credit facility, a $100$90 million term loan and a $300$350 million expansion option, subject to certain conditions. Borrowings are subject to a pricing grid, which can result in increases or decreases to the borrowing spread above LIBOR, depending on the Company’s leverage ratio, ranging from 1.25%1.00% to 2.50% in the case of loans bearing interest at LIBOR and from 0.25%0.00% to 1.50% in the case of loans bearing interest at the base rate. At November 30, 2012,2013, the borrowing spread on LIBOR based borrowings was 1.5%1.50% (aggregating 1.75% on the outstanding term loan)to approximately 1.70%). In addition, a non-use fee is payable quarterly on the average unused credit line under the revolver ranging from 0.2%0.15% to 0.4%0.40% per annum. At November 30, 20122013, the available and unused credit line under the revolver was $596.3 million.$483.0 million. Quarterly principal payments of $1.25$1.1 million began will begin on the $100 million term loan on March 31, 2012,September 30, 2014, increasing to $2.5$2.3 million per quarter beginning on March 31, 2013,September 30, 2015, with the remaining principal due at maturity. The Senior Credit Facility, which is secured by substantially all of the Company’s domestic personal property assets, also contains customary limits and restrictions concerning investments, sales of assets, liens on assets, dividends and other payments. The two financial covenants included in the Senior Credit Facility agreement are a maximum leverage ratio of 3.75:3.75:1 and a minimum fixed chargeinterest coverage ratio of 1.50:3.50:1. The Company was in compliance with all debtfinancial covenants at November 30, 2012.$300$300 million of 5.625% Senior Notes due 2022 (the “Senior Notes”). The Senior Notes require no principal installments prior to their June 15, 2022 maturity, require semiannual interest payments in December and June of each year and contain certain financial and non-financial covenants. The Company utilized the net proceeds from this issuance to fund the repurchase of all its then outstanding $250 million of 6.875% Senior Notes due 2017 at a cost of 104%, or $260.4 million.In March 2012, the Company called all of its then outstanding $117.6 million of 2% Convertible Notes for cash at par. As a result of the call notice, substantially all of the holders of the 2% Convertible Notes converted them into newly issued shares of the Company’s Class A common stock, at a conversion rate of 50.6554 shares per $1,000 of principal amount (resulting in the issuance of 5,951,440 shares of common stock) while the remaining $0.1 million of 2% Convertible Notes were repurchased for cash.and liabilities,(liabilities), measured at fair value, are included in the condensed consolidated balance sheet (in thousands): November 30,
2012 August 31,
2012 $ 1,158 $ 5,154 1,602 1,602 $ 576 $ 945 At August 31, 2012, Mastervolt’s goodwill ($40.0 million) and tradename ($13.6 million) were written down to estimated fair value, resulting in a non-cash impairment charge of $62.5 million. In order to arrive at the implied fair value of goodwill, the Company assigned the fair value to all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. The tradename was valued using the relief of royalty income approach. These represent Level 3 assets measured at fair value on a nonrecurring basis. November 30,
2013 August 31,
2013Level 1 Valuation: Cash equivalents $ 123 $ 1,092 Investments 1,962 1,793 Level 2 Valuation: Foreign currency derivatives $ (626 ) $ 143 20122013 and August 31, 20122013 due to their short-term nature and the fact that the interest rates approximated market rates. The fair value of the Company’s outstanding $300$300 million of 5.625% Senior Notes was $310.5$303.0 million and $309.8$300.8 million at November 30, 20122013 and August 31, 2012,2013, respectively. The fair value of the Senior Notes was based on quoted inactive market prices and are therefore classified as Level 2 within the valuation hierarchy.8.9. Earnings Per Share Three Months Ended
November 30, 2012 2011 $ 36,343 $ 37,174 — 511 $ 36,343 $ 37,685 72,791 68,421 1,480 764 — 5,957 74,271 75,142 $ 0.50 $ 0.54 $ 0.49 $ 0.50 At November 30, 2012 and 2011, outstanding share based awards to acquire 789,000 and 3,856,000 shares of common stock were not included in the Company’s computation of earnings per share because the effect would have been anti-dilutive.As discussed in Three months ended November 30, 2013 2012 Numerator: Earnings from continuing operations $ 33,005 $ 30,551 Denominator: Weighted average common shares outstanding for basic earnings per share 73,085 72,791 Net effect of dilutive securities—stock based compensation plans 1,926 1,480 Weighted average common and equivalent shares outstanding for diluted earnings per share 75,011 74,271 Earnings per common share from continuing operations: Basic $ 0.45 $ 0.42 Diluted $ 0.44 $ 0.41 Anti-dilutive securities-stock based compensation plans (excluded from earnings per share calculation) 1 789 6, “Debt” the Company issued 5,951,440 shares of common stock in the third quarter of fiscal 2012, in conjunction with the conversion of its 2% Convertible Notes, resulting in an increase in the weighted average common shares outstanding for basic earnings per share. However, the impact of the additional share issuance was already included in the diluted earnings per share calculation, on an if-converted method. The Company has also repurchased common shares on the open market in the last year, as well as issued new shares pursuant to equity compensation plans.Note 9.10. Income TaxesCompany’sCompany's income tax expense is impacted by a number of factors, including the amount of taxable earnings derived in foreign jurisdictions with tax rates that are higher or lower than the U.S. Federal statutory rate, permanent items, state tax rates and the ability to utilize various tax credits and net operating loss carryforwards.18.5%23.1%16.3% for the comparable prior year period. During the three months ended November 30, 2012 and 2011, respectively. The decrease in2013 the effectiveCompany liquidated a foreign entity which generated a $7.3 million discrete income tax rate forbenefit from the three months ended November 30, 2012, relativeresulting net operating loss carryforwards. Similarly, the first quarter fiscal 2013 income tax provision included $5.5 million of discrete period income tax benefits, the result of changes to the prior year, reflects the benefits ofdeferred income tax minimization planning, increased foreign tax creditsbalances and the utilizationrecognition of a net operating losses.$24.6$18.0 million at August 31, 20122013 to $25.3$18.7 million at November 30, 2012.2013. Substantially all of these unrecognized tax benefits, if recognized, would reduce the effective income tax rate. In addition, as of November 30, 20122013 and August 31, 2012,2013, the Company had liabilities totaling $4.8$3.1 million and $4.5$2.9 million, respectively, for the payment of interest and penalties related to its unrecognized income tax benefits.10.11. Segment Informationfourthree reportable segments: Industrial, Energy Electrical, and Engineered Solutions. The Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Energy segment provides joint integrity products and services, customizing offshore vessel mooring solutions, as well as rope and cable solutions to the global oil & gas, power generation and energy markets. The Electrical segment designs, manufactures and distributes a broad range of electrical products to the retail DIY, wholesale, original equipment manufacturer (“OEM”), solar, utility, marine and other harsh environment markets. The Engineered Solutions segment provides highly engineered position and motion control systems to OEMs in various vehicle markets, as well as a variety of other products to the industrial and agricultural markets. Three Months Ended
November 30, 2012 2011 $ 101,122 $ 100,253 90,769 80,421 69,439 82,833 115,918 129,292 $ 377,248 $ 392,799 $ 101,122 $ 100,253 90,769 80,421 69,439 82,833 61,187 76,363 54,731 52,929 $ 377,248 $ 392,799 $ 27,006 $ 27,934 15,387 13,217 7,828 4,977 7,625 18,999 (6,544 ) (7,846 ) $ 51,302 $ 57,281 November 30,
2012 August 31,
2012 $ 271,607 $ 268,735 545,760 540,409 444,780 437,914 671,372 667,550 91,937 92,511 $ 2,025,456 $ 2,007,119 Three months ended November 30, 2013 2012 Net Sales by Segment: Industrial $ 98,641 $ 101,122 Energy 107,925 90,769 Engineered Solutions 132,990 115,918 $ 339,556 $ 307,809 Net Sales by Reportable Product Line: Industrial $ 98,641 $ 101,122 Energy 107,925 90,769 Vehicle Systems 71,649 58,029 Other 61,341 57,889 $ 339,556 $ 307,809 Operating Profit: Industrial $ 26,897 $ 27,006 Energy 8,923 15,387 Engineered Solutions 13,190 7,625 General Corporate (5,363 ) (6,544 ) $ 43,647 $ 43,474 November 30, 2013 August 31, 2013 Assets: Industrial $ 287,705 $ 280,110 Energy 833,032 812,444 Engineered Solutions 675,785 652,581 General Corporate 97,237 101,591 Assets of Discontinued Operations 270,106 272,606 $ 2,163,865 $ 2,119,332 11.12. Contingencies and Litigation$10.9$11.2 million and $8.5$10.7 million at November 30, 20122013 and August 31, 2012,2013, respectively, the majority of which secure self-insured workers compensation liabilities.$12.0$10.9 million at November 30, 2012.2013.12.13. Guarantor Subsidiaries$300$300.0 million of 5.625% Senior Notes. All of our material domestic wholly owned subsidiaries (the “Guarantors”) fully and unconditionally guarantee (except for certain customary limitations) such debt on a joint and several basis. There are no significant restrictions on the ability of the Guarantors to make distributions to the Parent. The following tables present the results of operations, financial position and cash flows of Actuant Corporation and its subsidiaries, the Guarantor and non-Guarantor entities, and the eliminations necessary to arrive at the information for the Company on a consolidated basis. Three Months Ended November 30, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 45,838 $ 124,117 $ 207,293 $ — $ 377,248 12,408 87,868 129,986 — 230,262 33,430 36,249 77,307 — 146,986 17,453 25,040 45,337 — 87,830 321 3,449 4,084 — 7,854 15,656 7,760 27,886 — 51,302 6,358 5 (41 ) — 6,322 (7,270 ) 1,955 5,315 — — (364 ) (316 ) 1,044 — 364 16,932 6,116 21,568 — 44,616 3,140 1,134 3,999 — 8,273 13,792 4,982 17,569 — 36,343 22,551 17,899 1,024 (41,474 ) — $ 36,343 $ 22,881 $ 18,593 $ (41,474 ) $ 36,343 $ 48,518 $ 28,858 $ 26,019 $ (54,877 ) $ 48,518 Three Months Ended November 30, 2011 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 48,520 $ 136,441 $ 207,838 $ — $ 392,799 15,279 94,632 130,280 — 240,191 33,241 41,809 77,558 — 152,608 20,666 26,262 41,181 — 88,109 335 3,420 3,463 — 7,218 12,240 12,127 32,914 — 57,281 8,237 3 (18 ) — 8,222 (7,491 ) 566 6,925 — — 193 344 120 — 657 11,301 11,214 25,887 — 48,402 2,622 2,601 6,005 — 11,228 8,679 8,613 19,882 — 37,174 28,495 16,794 (488 ) (44,801 ) — $ 37,174 $ 25,407 $ 19,394 $ (44,801 ) $ 37,174 $ 4,788 $ 8,339 $ 11,321 $ (19,660 ) $ 4,788 Three Months Ended November 30, 2013 Parent Guarantors Non-Guarantors Eliminations Consolidated Net sales $ 45,091 $ 79,636 $ 214,829 $ — $ 339,556 Cost of products sold 12,072 55,255 140,449 — 207,776 Gross profit 33,019 24,381 74,380 — 131,780 Selling, administrative and engineering expenses 16,858 15,952 49,108 — 81,918 Amortization of intangible assets 318 2,575 3,322 — 6,215 Operating profit 15,843 5,854 21,950 — 43,647 Financing costs, net 6,779 3 (32 ) — 6,750 Intercompany expense (income), net (4,997 ) (339 ) 5,336 — — Other expense (income), net 10,417 (293 ) (8,983 ) — 1,141 Earnings from continuing operations before income tax expense (benefit) 3,644 6,483 25,629 — 35,756 Income tax expense (benefit) 1,008 1,795 (52 ) — 2,751 Net earnings before equity in earnings of subsidiaries 2,636 4,688 25,681 — 33,005 Equity in earnings of subsidiaries 34,222 13,333 3,200 (50,755 ) — Earnings from continuing operations 36,858 18,021 28,881 (50,755 ) 33,005 Earnings (loss) from discontinued operations (821 ) 3,338 515 — 3,032 Net earnings $ 36,037 $ 21,359 $ 29,396 $ (50,755 ) $ 36,037 Comprehensive income $ 53,040 $ 38,797 $ 27,671 $ (66,468 ) $ 53,040 Three Months Ended November 30, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated Net sales $ 45,838 $ 70,191 $ 191,780 $ — $ 307,809 Cost of products sold 12,408 48,304 122,729 — 183,441 Gross profit 33,430 21,887 69,051 — 124,368 Selling, administrative and engineering expenses 17,118 15,103 42,639 — 74,860 Amortization of intangible assets 321 2,657 3,056 — 6,034 Operating profit 15,991 4,127 23,356 — 43,474 Financing costs, net 6,358 5 (41 ) — 6,322 Intercompany expense (income), net (7,270 ) 1,955 5,315 — — Other expense (income), net (364 ) (403 ) 1,411 — 644 Earnings from continuing operations before income tax expense 17,267 2,570 16,671 — 36,508 Income tax expense 3,236 121 2,600 — 5,957 Net earnings before equity in earnings of subsidiaries 14,031 2,449 14,071 — 30,551 Equity in earnings of subsidiaries 22,551 17,899 1,024 (41,474 ) — Earnings from continuing operations 36,582 20,348 15,095 (41,474 ) 30,551 Earnings (loss) from discontinued operations (239 ) 2,533 3,498 — 5,792 Net earnings $ 36,343 $ 22,881 $ 18,593 $ (41,474 ) $ 36,343 Comprehensive income $ 48,518 $ 28,858 $ 26,019 $ (54,877 ) $ 48,518 November 30, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 73,934 $ 152,380 $ 352,254 $ — $ 578,568 6,890 31,077 79,792 — 117,759 62,543 432,464 376,691 — 871,698 14,201 202,745 223,242 — 440,188 1,919,244 265,560 92,319 (2,277,123 ) — — 425,309 301,844 (727,153 ) — 11,835 22 5,386 — 17,243 $ 2,088,647 $ 1,509,557 $ 1,431,528 $ (3,004,276 ) $ 2,025,456 $ 61,673 $ 54,539 $ 173,635 $ — $ 289,847 387,500 — — — 387,500 88,353 — 41,598 — 129,951 22,253 — 3,980 — 26,233 62,308 525 27,094 — 89,927 364,562 — 362,591 (727,153 ) — 1,101,998 1,454,493 822,630 (2,277,123 ) 1,101,998 $ 2,088,647 $ 1,509,557 $ 1,431,528 $ (3,004,276 ) $ 2,025,456 August 31, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 88,559 $ 151,168 $ 321,554 $ — $ 561,281 6,944 31,818 77,122 — 115,884 62,543 433,193 370,676 — 866,412 14,522 206,194 225,168 — 445,884 1,886,478 250,738 90,770 (2,227,986 ) — — 418,253 307,282 (725,535 ) — 12,297 22 5,339 — 17,658 $ 2,071,343 $ 1,491,386 $ 1,397,911 $ (2,953,521 ) $ 2,007,119 $ 76,686 $ 63,105 $ 179,215 $ — $ 319,006 390,000 — — — 390,000 91,604 — 41,049 — 132,653 22,500 — 3,942 — 26,442 59,929 620 26,633 — 87,182 378,788 — 346,747 (725,535 ) — 1,051,836 1,427,661 800,325 (2,227,986 ) 1,051,836 $ 2,071,343 $ 1,491,386 $ 1,397,911 $ (2,953,521 ) $ 2,007,119 November 30, 2013 Parent Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets Cash and cash equivalents $ 2,669 $ — $ 106,873 $ — $ 109,542 Accounts receivable, net 16,425 42,229 162,874 — 221,528 Inventories, net 27,283 43,317 84,529 — 155,129 Deferred income taxes 12,926 — 5,659 — 18,585 Other current assets 9,386 963 22,287 — 32,636 Assets of discontinued operations — 186,037 84,069 — 270,106 Total current assets 68,689 272,546 466,291 — 807,526 Property, plant & equipment, net 7,695 22,521 175,112 — 205,328 Goodwill 62,543 264,502 418,431 — 745,476 Other intangibles, net 12,929 138,682 223,696 — 375,307 Investment in subsidiaries 2,143,586 229,910 113,539 (2,487,035 ) — Intercompany receivable — 521,072 368,018 (889,090 ) — Other long-term assets 14,635 22 15,571 — 30,228 Total assets $ 2,310,077 $ 1,449,255 $ 1,780,658 $ (3,376,125 ) $ 2,163,865 LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable $ 20,058 $ 32,040 $ 107,177 $ — $ 159,275 Accrued compensation and benefits 9,490 3,532 28,391 — 41,413 Current maturities of long-term debt 1,125 — — — 1,125 Income taxes payable 6,332 — 4,132 — 10,464 Other current liabilities 21,592 5,812 33,560 — 60,964 Liabilities of discontinued operations — 22,774 30,459 — 53,233 Total current liabilities 58,597 64,158 203,719 — 326,474 Long-term debt, less current maturities 501,875 — — — 501,875 Deferred income taxes 65,576 — 52,701 — 118,277 Pension and postretirement benefit liabilities 14,563 — 4,604 — 19,167 Other long-term liabilities 53,241 339 12,793 — 66,373 Intercompany payable 484,526 — 404,564 (889,090 ) — Shareholders’ equity 1,131,699 1,384,758 1,102,277 (2,487,035 ) 1,131,699 Total liabilities and shareholders’ equity $ 2,310,077 $ 1,449,255 $ 1,780,658 $ (3,376,125 ) $ 2,163,865 August 31, 2013 Parent Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets Cash and cash equivalents $ 16,122 $ — $ 87,864 $ — $ 103,986 Accounts receivable, net 20,471 40,343 158,261 — 219,075 Inventories, net 27,343 38,948 76,258 — 142,549 Deferred income taxes 13,002 — 5,794 — 18,796 Other current assets 7,454 963 19,811 — 28,228 Assets of discontinued operations — 192,129 80,477 — 272,606 Total current assets 84,392 272,383 428,465 — 785,240 Property, plant & equipment, net 7,050 22,801 171,645 — 201,496 Goodwill 62,543 264,502 407,907 — 734,952 Other intangibles, net 13,247 141,258 222,187 — 376,692 Investment in subsidiaries 2,086,534 201,779 96,333 (2,384,646 ) — Intercompany receivable — 480,633 360,620 (841,253 ) — Other long-term assets 12,654 22 8,276 — 20,952 Total assets $ 2,266,420 $ 1,383,378 $ 1,695,433 $ (3,225,899 ) $ 2,119,332 LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable $ 22,194 $ 30,637 $ 101,218 $ — $ 154,049 Accrued compensation and benefits 13,835 2,716 27,249 — 43,800 Income taxes payable 8,135 — 5,879 — 14,014 Other current liabilities 21,268 4,630 31,001 — 56,899 Liabilities of discontinued operations — 23,466 29,614 53,080 Total current liabilities 65,432 61,449 194,961 — 321,842 Long-term debt 515,000 — — — 515,000 Deferred income taxes 64,358 — 51,507 — 115,865 Pension and postretirement benefit liabilities 16,267 — 4,431 — 20,698 Other long-term liabilities 51,479 390 13,791 — 65,660 Intercompany payable 473,617 — 367,636 (841,253 ) — Shareholders’ equity 1,080,267 1,321,539 1,063,107 (2,384,646 ) 1,080,267 Total liabilities and shareholders’ equity $ 2,266,420 $ 1,383,378 $ 1,695,433 $ (3,225,899 ) $ 2,119,332 Three Months Ended November 30, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated $ (658 ) $ 4,779 $ 8,154 $ — $ 12,275 571 14 392 — 977 (399 ) (1,291 ) (5,999 ) — (7,689 ) — — (83 ) — (83 ) 172 (1,277 ) (5,690 ) — (6,795 ) (1,250 ) — — — (1,250 ) (4,991 ) (3,593 ) 8,584 — — (7,142 ) — — — (7,142 ) 5,473 — — — 5,473 (2,911 ) — — — (2,911 ) (10,821 ) (3,593 ) 8,584 — (5,830 ) — — 477 — 477 (11,307 ) (91 ) 11,525 — 127 12,401 91 55,692 — 68,184 $ 1,094 $ — $ 67,217 $ — $ 68,311 Three Months Ended, November 30, 2013 Parent Guarantors Non-Guarantors Eliminations Consolidated Operating Activities Net cash provided by operating activities $ 17,415 $ 3,461 $ 12,070 $ — $ 32,946 Investing Activities Proceeds from sale of property, plant and equipment — 36 1,877 — 1,913 Capital expenditures (1,208 ) (1,270 ) (8,779 ) — (11,257 ) Cash used in investing activities (1,208 ) (1,234 ) (6,902 ) — (9,344 ) Financing Activities Net repayments on revolver (12,000 ) — — — (12,000 ) Intercompany loan activity (9,951 ) (2,227 ) 12,178 — — Purchase of treasury shares (15,352 ) — — — (15,352 ) Stock option exercises and related tax benefits 10,562 — — — 10,562 Payment of contingent acquisition consideration — — (414 ) — (414 ) Cash dividend (2,919 ) — — — (2,919 ) Cash provided by (used in) financing activities (29,660 ) (2,227 ) 11,764 — (20,123 ) Effect of exchange rate changes on cash — — 2,077 — 2,077 Net increase (decrease) in cash and cash equivalents (13,453 ) — 19,009 — 5,556 Cash and cash equivalents—beginning of period 16,122 — 87,864 — 103,986 Cash and cash equivalents—end of period $ 2,669 $ — $ 106,873 $ — $ 109,542 Three Months Ended November 30, 2011 Parent Guarantors Non-Guarantors Eliminations Consolidated $ (10,089 ) $ 7,121 $ 23,443 $ — $ 20,475 — 68 5,850 — 5,918 (2,206 ) (571 ) (2,818 ) — (5,595 ) (290 ) — — — (290 ) (2,496 ) (503 ) 3,032 — 33 4,700 — 109 — 4,809 28,060 (6,618 ) (21,442 ) — — (20,410 ) — — — (20,410 ) 2,782 �� — — — 2,782 (2,748 ) — — — (2,748 ) 12,384 (6,618 ) (21,333 ) — (15,567 ) — — (1,043 ) — (1,043 ) (201 ) — 4,099 — 3,898 872 — 43,349 — 44,221 $ 671 $ — $ 47,448 $ — $ 48,119 Three Months Ended, November 30, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated Operating Activities Net cash (used in) provided by operating activities $ (658 ) $ 4,779 $ 8,154 $ — $ 12,275 Investing Activities Proceeds from sale of property, plant and equipment 571 14 392 — 977 Capital expenditures (399 ) (1,291 ) (5,999 ) — (7,689 ) Business acquisitions, net of cash acquired — — (83 ) — (83 ) Cash provided by (used in) investing activities 172 (1,277 ) (5,690 ) — (6,795 ) Financing Activities Principal repayments of term loans (1,250 ) — — — (1,250 ) Intercompany loan activity (4,991 ) (3,593 ) 8,584 — — Purchase of treasury shares (7,142 ) — — — (7,142 ) Stock option exercises and related tax benefits 5,473 — — — 5,473 Cash dividend (2,911 ) — — — (2,911 ) Cash provided by (used in) financing activities (10,821 ) (3,593 ) 8,584 — (5,830 ) Effect of exchange rate changes on cash — — 477 — 477 Net (decrease) increase in cash and cash equivalents (11,307 ) (91 ) 11,525 — 127 Cash and cash equivalents—beginning of period 12,401 91 55,692 — 68,184 Cash and cash equivalents—end of period $ 1,094 $ — $ 67,217 $ — $ 68,311 fourthree operating and reportable segments: Industrial, Energy Electrical and Engineered Solutions.drive cost reductions, develop additional cross-selling opportunities, and deepen customer relationships.relationships and leverage costs. We also focus on profit margin expansion and cash flow generation to achieve our financial and EPS growth goals. Our LEAD (“Lean Enterprise Across Disciplines”) process utilizes various continuous improvement techniques to drive out costs and improve efficiencies across all locations and functions worldwide, thereby expanding profit margins. Strong cash flow generation is achieved by maximizing returns on net assets and minimizing primary working capital needs. Our LEAD efforts also support our Growth + Innovation (“G+I”) initiative, a process focused on improving core sales growth. The cash flow that results from efficient asset management and improved profitability is primarily used to fund strategic acquisitions, common stock repurchases and internal growth opportunities. Three months ended November 30, 2013 2012 Net sales $ 340 100.0 % $ 308 100.0 % Cost of products sold 208 61.2 % 183 59.6 % Gross profit 132 38.8 % 124 40.4 % Selling, administrative and engineering expenses 82 24.1 % 75 24.4 % Amortization of intangible assets 6 1.8 % 6 1.9 % Operating profit 44 12.9 % 43 14.1 % Financing costs, net 7 2.0 % 6 1.9 % Other expense, net 1 0.3 % 1 0.3 % Earnings from continuing operations before income tax expense 36 10.6 % 37 11.9 % Income tax expense 3 0.8 % 6 1.9 % Earnings from continuing operations 33 9.8 % 31 10.0 % Income from discontinued operations, net of income taxes 3 0.9 % 6 1.9 % Net earnings $ 36 10.7 % $ 36 11.9 % Diluted earnings from continuing operations per share $ 0.44 $ 0.41 Diluted earnings per share $ 0.48 $ 0.49 the operating results for the three months ended November 30, 2012 to the prior year period has been impacted by acquisitions, changes in foreign currency translation rates and the generally weaker economic conditions that existed in the end markets we serve. Listed below are the significant acquisitions completed since September 1, 2011.BusinessSegmentAcquisition DateCrossControl ABEngineered SolutionsJuly 2012Turotest Medidores LtdaEngineered SolutionsMarch 2012Jeyco Pty LtdEnergyFebruary 2012In addition to acquisitions, changes in foreign currency exchange rates also influence our financial results as(as approximately one-half of our sales are denominated in currencies other than the U.S. dollar. The year-over-year weakening ofdollar), acquisitions, divestitures and the Euro duringeconomic conditions in the end markets we serve. Consolidated sales for the first quarter of fiscal 2013 has unfavorably impacted our operating results due2014 increased 10% to the translation of non-U.S. dollar denominated results.Results of OperationsGlobal economic uncertainty has created a challenging business environment which has impacted our businesses. Most of our businesses have experienced softening end market demand over the past several quarters. Overall, results of operations for the three months ended November 30, 2012 reflect a negative core sales trend as the European recession, inventory destocking by OEMs in the Engineered Solutions segment and a significantly weaker European solar market in the Electrical segment have lead to double digit core sales declines in both segments. However, our two most profitable segments, Industrial and Energy continued to generate positive core sales growth, as a result of maintenance demand in oil & gas, power generation and industrial markets. In response to the overall economic slow-down, we are taking various actions to lower our cost structure including reductions in workforce, consolidation of facilities and management, as well as product sourcing initiatives. Our priorities during the remainder of fiscal 2013 include the execution of certain restructuring activities, continued working capital management and investments in growth initiatives, including strategic acquisitions and G+I opportunities.The following table sets forth our results of operations (in millions): Three Months Ended November 30, 2012 2011 $ 377 100 % $ 393 100 % 230 61 % 240 61 % 147 39 % 153 39 % 88 23 % 88 22 % 8 2 % 7 2 % 51 14 % 57 15 % 6 2 % 8 2 % 1 0 % 1 0 % 44 12 % 48 12 % 8 2 % 11 3 % $ 36 10 % $ 37 9 % Fiscal 2013 first quarter consolidated net sales were $377$340 million 4% lower than the $393from $308 million in the comparable prior year period. Excluding the $18 million year-over-year increaseCore sales (sales excluding acquisitions, divestitures and changes in sales from acquisitions and the $5 million unfavorable impact of foreign currency exchange rate changes, fiscal 2013 firstrates) increased 5%, while acquisitions added 6% to net sales and currency translation reduced sales by 1%. Core sales growth in the quarter consolidated core sales declined 7% compared towas primarily driven by a broad based rebound in demand in the prior year.Engineered Solutionsforin the first quarter of fiscal 2013 was $51$44 million, compared to $57$43 million in the comparable prior year period. Reduced sales volumes, unfavorableUnfavorable segment and product mix, restructuring costs and investmentsthe inclusion of the Viking acquisition resulted in growth initiatives drove this year-over-year decline in operating profit. We were able to largely offset the decline in consolidated operating profit with lower borrowing costsmargin. Fiscal 2014 first quarter net earnings and income taxes, resulting in net income and diluted earnings per diluted share down only modestlywere $36 million and $0.48, respectively, while earnings from continuing operations were $33 million, or $0.44 per diluted share (7% higher than the prior year. The changes in sales and operating profit at the segment level are discussed in further detail below.tothat are used in maintenance and other applications in the maintenance, industrial, energy, infrastructure and production automation markets. DuringDespite tepid economic conditions globally we believe the first quarter,Industrial segment will generate single digit core sales growth induring the segment wasremainder of the fiscal year, driven by higher global Integrated Solutions activityour vertical market initiatives, new product introductions and steady industrial demand in most regions outsidethe benefit of Western Europe. The Industrial segment focuses on providing customers with innovative lifting solutions, commercializing new products and expanding in faster growing regions and vertical markets.G+I activities. The following table sets forth the results of operations for the Industrial segment (in millions): Three Months Ended November 30, 2012 2011 $ 101 $ 100 27 28 27 % 28 % Three months ended November 30, 2013 2012 Net sales $ 99 $ 101 Operating profit 27 27 Operating profit % 27.3 % 26.7 % 2013 2014 first quarter net sales were $101decreased $2 million a 1% increase from(2%) to $99 million compared to the comparable prior year period. Excluding the impact of foreign currency rate changes (which unfavorably impacted sales comparisons by $2$1 million), core sales increaseddecreased 2%. Unfavorable product mix along with incremental G+I investments resulted in slightlythe first quarter, due to lower global Integrated Solutions shipments compared to the robust prior year level. Despite lower sales levels, first quarter operating profit margins.toprimarily used in maintenance activities in the global energy market. The Energy segment continues to focus on expanding its presence in the global energy markets and successfully integrating the recent Viking acquisition. The Energy segment is expected to generate single digit core sales growth during the remainder of fiscal 2014, the result of solid maintenance and oil & gas power generationactivity and other energy markets. Worldwide requirements for energyimproved market demand from non-energy markets (defense, marine and supportive oil prices have encouraged customers and asset owners to maintain or increase production, invest in capital projects and complete previously deferred maintenance activities. As a result, we are seeing broad-based strength across this segment.aerospace). The following table sets forth the results of operations for the Energy segment (in millions): Three Months Ended November 30, 2012 2011 $ 91 $ 80 15 13 17 % 16 % Three months ended November 30, 2013 2012 Net sales $ 108 $ 91 Operating profit 9 15 Operating profit % 8.3 % 17.0 % Three months ended November 30, 2013 2012 Net sales $ 133 $ 116 Operating profit 13 8 Operating profit % 9.9 % 6.6 % 2012 increased by $112013 the Company liquidated a foreign entity which generated a $7.3 million (13%) to $91 million compared to the prior year period. Excluding salesdiscrete income tax benefit from the Jeyco acquisition ($7 million), core sales grew 4% forresulting net operating loss carryforwards. Similarly, the first quarter of fiscal 2013 income tax provision included $5.5 million of discrete period income tax benefits, the result of continued robust maintenancechanges to deferred income tax balances and capital spending in oil & gas, nuclear, power generation and other energy markets. Improvedthe recognition of a net operating profit margins during the quarter were primarily driven by favorable sales mix.Electrical Segmentloss carryforward of $3.4 million.Weak end market demand in European solar (difficult prior year comparable sales levels, overall economic conditions, changes in government regulations and weak consumer confidence) was the primary reason for the core sales decline in the quarter. This segment continues to focus on driving cost savings from the recently completed North American manufacturing facility consolidation and being responsive to end market demand. The following table sets forth the results of operations for the Electrical segment (in millions): Three Months Ended November 30, 2012 2011 $ 69 $ 83 8 5 11 % 6 % Electrical segment first quarter net sales were $69 million, 16% lower than the comparable prior year quarter. The decline in core sales (16%) was largely due to significantly lower solar inverter shipments, the result of weak current year demand and aggressive sales promotions in the prior year. In addition, the impact of channel inventory reductions across the segment’s served North American markets and lower industrial transformer demand contributed to the sales decline. The benefit of prior year restructuring actions,have been reported as well as a fire related insurance recovery at our Mastervolt business, drove the improvement in operating profit margins.Engineered Solutions SegmentThe Engineered Solutions segment provides highly engineered position and motion control systems to OEMs in a variety of markets. As anticipated, this segment experienced a core sales decline in the first quarter as challenging end market conditions are now broad based across the segment. European truck and automotive volumes remain at reduced levels, while the global agriculture and North American truck and construction equipment markets have seen recent declines. This segment continues to focus on integrating the recently acquired Turotest and CrossControl businesses and reducing its cost structure in line with reduced OEM build rates.discontinued operations for all periods presented. The following table sets forthsummarizes the results of discontinued operations for the Engineered Solutions segment (in millions): Three Months Ended November 30, 2012 2011 $ 116 $ 129 8 19 7 % 15 % Net sales in the Engineered Solutions Three months ended November 30, 2013 2012 Net sales $ 63 $ 69 Operating income from discontinued operations 5 8 Income tax expense (2 ) (2 ) Income from discontinued operations, net of taxes $ 3 $ 6 decreased by $13 million (10%), from $129 million for the three months ended November 30, 2011 to $116 million for the three months ended November 30, 2012. Excluding the unfavorable impact of changes in foreign currency exchange rates ($3 million) and the $11 million of sales from recent acquisitions, core salesoperating income declined 17%. First quarter net sales levels reflect concerted actions by our OEM customers to reduce their inventory levels and production schedules in response to lower demand at the dealer level. Segment operating profit declined from the prior year period,over year as the impact of restructuring costs and the reduced volume (under-absorption of operating costs) was only partially offset by lower incentive compensation costs.General CorporateGeneral corporate expenses were $7 million and $8 million for the three months ended November 30, 2012 and 2011, respectively. The reduction is primarily due to lower incentive compensation costs during the quarter.Financing Costs, netAll debt is considered to be for general corporate purposes and therefore financing costs have not been allocated to our segments. Financing costs, net were $6 million and $8 million for the three months ended November 30, 2012 and 2011, respectively. The reduction in interest expense in the first quarter of fiscal 2013 reflects the conversion of our 2% Convertible Notes into common stock, as well as the benefita result of lower borrowing costs from the refinancingsales volume and disposition related costs. Three Months
Ended
November 30, 2012 2011 $ 12 $ 20 (7 ) — (6 ) (15 ) 1 (1 ) $ — $ 4 Three months ended November 30, 2013 2012 Net cash provided by operating activities $ 33 $ 12 Net cash used in investing activities (9 ) (7 ) Net cash used in financing activities (20 ) (6 ) Effect of exchange rates on cash 2 1 Net increase in cash and cash equivalents $ 6 $ — Cash flows from operating activities during the three months ended November 30, 2011 were $20 million, the result of net earnings, offset by the payment of $28 million of fiscal 2011 incentive compensation costs and increased accounts receivable and inventory levels. These operating cash flows and borrowings under the Senior Credit Facility funded the repurchase of approximately 1 million shares of the Company’s common stock ($20 million). Proceeds from the sale of property, plant and equipment (which included the sale-leaseback of certain equipment) more than offset the $6 million of capital expenditures during the first quarter of fiscal 2012.the componentsa comparison of the metric at November 30 (in millions): 2012 PWC% 2011 PWC% $ 232 15 % $ 227 15 % 225 15 % 219 14 % (164 ) -11 % (163 ) -11 % $ 293 19 % $ 283 18 % Our primary working capital and PWC % increased on a year-over-year basis as a result of increased inventory, resulting from our inability to quickly reduce incoming purchases to balance reduced customer production levels. November 30, 2013 November 30, 2012 $ PWC% $ PWC% Accounts receivable, net $ 222 16 % $ 194 16 % Inventory, net 155 11 % 160 13 % Accounts payable (159 ) (12 )% (143 ) (12 )% Net primary working capital $ 218 16 % $ 211 17 % LiquidityFebruary 23, 2016,July 18, 2018, includes a $600$600 million revolving credit facility,line, a $100$90 million term loan and a $300$350 million expansion option, subject to certain conditions. Quarterly principal payments of $1.25$1 million began begin on the $100 million term loan on March 31, 2012,September 30, 2014, increasing to $2.5$2 million per quarter beginning on March 31, 2013,September 30, 2015, with the remaining principal due at maturity. At November 30, 2012, we had $68 million of cash and cash equivalents and $596 million of available liquidity under our Senior Credit Facility. We believe that the availability under the Senior Credit Facility, combined with our existing cash on hand, proceeds from the sale of the Electrical segment and funds generated from operations will be adequate to meet operating, debt service, stock buyback, acquisition funding and capital expenditure requirements for the foreseeable future.See Note 6, “Debt” in the notes to the condensed consolidated financial statements for further discussion on the Senior Credit Facility.$12$11 million at November 30, 2012.$11$11 million and $8 million at both November 30, 20122013 and August 31, 2012, respectively,2013, the majority of which secure self-insured workers compensation liabilities.2012,2013, and, as of November 30, 2012,2013, have not materially changed.There has been no significant We manage interest expense using a mixture of fixed-rate and variable-rate debt. A change in interest rates on our exposure to market risk during5.625% Senior Notes impacts the fair value of the notes, but not our earnings or cash flow because the interest on such debt is fixed. Our variable-rate debt obligations consist primarily of revolver and term loan borrowings under our Senior Credit Facility (see Note 6, “Debt” for further details). A 10% increase in the average cost of our variable rate debt (which is based on LIBOR interest rates) would result in an increase in interest expense (pre-tax) of approximately $0.2 million for the three months ended November 30, 2012. For a discussion of2013. From time to time, we may enter into interest rate swap agreements to manage our exposure to marketinterest rate changes. At November 30, 2013, we were not a party to any interest rate swap derivatives.referrelating to Item 7A, Quantitativereceipts from customers, payments to suppliers and Qualitative Disclosures about Market Risk, containedintercompany transactions denominated in foreign currencies. Under certain conditions, we enter into hedging transactions (primarily forward foreign currency swaps) that enable us to mitigate the potential adverse impact of foreign currency exchange rate risk (see Note 8, “Derivatives” for further information). We do not engage in trading or other speculative activities with these transactions, as established policies require that these hedging transactions relate to specific currency exposures.Annual Reportresults of operations and financial position as the results of foreign operations are translated into U.S. dollars. To illustrate the potential impact of changes in foreign currency exchange rates on Form 10-Kthe translation of our results of operations, quarterly sales and operating profit were remeasured assuming a ten percent decrease in foreign exchange rates compared with the U.S. dollar. Using this method, quarterly sales and operating profit would have been $20 million and $2 million lower, respectively, for the fiscal yearthree months ended August 31, 2012.November 30, 2013. This sensitivity analysis assumes that each exchange rate would change in the same direction relative to the U.S. dollar and excludes the potential effects that changes in foreign currency exchange rates may have on sales levels or local currency prices. Similarly, a ten percent decline in foreign currency exchange rates on our November 30, 2013 financial position would result in a $90 million decrease to equity (accumulated other comprehensive loss), as a result of non U.S. dollar denominated assets and liabilities being translated into U.S. dollars, our reporting currency.20122013 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.2012.2013. All of the shares were repurchased as part of the publicly announced program. Total Number
of Shares
Purchased Average Price
Paid per Share Maximum
Number of
Shares That
May Yet Be
Purchased
Under the
Program — — 4,341,249 159,200 $ 27.95 4,182,049 100,000 26.84 4,082,049 259,200 27.53 September 1 to September 30, 2013 — — 3,016,487 October 1 to October 31, 2013 — — 3,016,487 November 1 to November 30, 2013 400,000 $ 38.35 2,616,487 400,000 $ 38.35 26,30, which is incorporated herein by reference.ACTUANT CORPORATION(Registrant)ACTUANT CORPORATION (Registrant) Date: January 8, 20132014 By: Andrew G. Lampereur Andrew G. LampereurExecutive Vice President and Chief Financial Officer (Principal Financial Officer) NovemberNOVEMBER 30, 2012Exhibit Description IncorporatedHereinBy ReferenceTo FiledHerewith Exhibit Description Furnished Herewith 2.1 Purchase Agreement between Power Products, LLC and Actuant Corporation dated as of October 30, 2013 Exhibit 2.1 to the Registrant's Form 8-K filed on December 19, 2013 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes- OxleySarbanes-Oxley Act of 2002 X 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes- OxleySarbanes-Oxley Act of 2002 X 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 101*101 The following materials from the Actuant Corporation Form 10-Q for the quarter ended November 30, 20122013 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements. X *Furnished herewith26