Acquisitions, Goodwill And Other Intangible Assets | 6 Months Ended |
Jun. 30, 2014 |
Acquisitions, Goodwill And Other Intangible Assets [Abstract] | ' |
Acquisitions, Goodwill And Other Intangible Assets | ' |
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS |
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Acquisitions in 2014 |
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Power Gear and Kwikee Brands |
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On June 13, 2014, the Company acquired the RV business of Actuant Corporation, which manufactures leveling systems, slideout mechanisms and steps, primarily for motorhome RVs, under the Power Gear and Kwikee brands. Sales of the acquired business for the twelve months ended May 2014 were approximately $28 million, consisting of sales to OEMs and the aftermarket. The purchase price was $35.5 million, paid at closing. The results of the acquired business have been included in the Company's RV Segment and in the Consolidated Statement of Operations since the acquisition date. |
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The acquisition of this business was preliminarily recorded on the acquisition date as follows (in thousands): |
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Cash consideration | $ | 35,500 | | | | | | | | | | | | | |
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Customer relationships | $ | 12,300 | | | | | | | | | | | | | |
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Patents | 5,300 | | | | | | | | | | | | | |
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Other identifiable intangible assets | 2,130 | | | | | | | | | | | | | |
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Net tangible assets | 2,299 | | | | | | | | | | | | | |
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Total fair value of net assets acquired | $ | 22,029 | | | | | | | | | | | | | |
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Goodwill (tax deductible) | $ | 13,471 | | | | | | | | | | | | | |
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The customer relationships intangible asset is being amortized over its estimated useful life of 14 years and the patents are being amortized over their estimated useful life of 8 years. The consideration given was greater than the fair value of the assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. |
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Star Design, LLC |
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On March 14, 2014, the Company acquired the business and certain assets of Star Design, LLC. Star Design had annual sales of approximately $10 million in 2013, comprised primarily of thermoformed sheet plastic products for the RV, bus and specialty vehicle industries. The purchase price was $12.2 million paid at closing. The results of the acquired business have been included in the Company's RV Segment and in the Consolidated Statement of Operations since the acquisition date. |
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The acquisition of this business was recorded on the acquisition date as follows (in thousands): |
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Cash consideration | $ | 12,232 | | | | | | | | | | | | | |
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Customer relationships | $ | 4,400 | | | | | | | | | | | | | |
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Other identifiable intangible assets | 610 | | | | | | | | | | | | | |
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Net tangible assets | 2,108 | | | | | | | | | | | | | |
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Total fair value of net assets acquired | $ | 7,118 | | | | | | | | | | | | | |
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Goodwill (tax deductible) | $ | 5,114 | | | | | | | | | | | | | |
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The customer relationships intangible asset is being amortized over its estimated useful life of 14 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates leveraging its existing experience and manufacturing capacity with respect to these product lines, and also believes the diversified customer base will further its expansion into adjacent industries. |
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Innovative Design Solutions, Inc. |
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On February 27, 2014, the Company acquired Innovative Design Solutions, Inc. (“IDS”), a designer, developer and manufacturer of electronic systems encompassing a wide variety of RV applications. IDS also manufactures electronic systems for automotive, medical and industrial applications. IDS had annual sales of approximately $19 million in 2013, of which $13 million were to the Company. The purchase price was $36.6 million, of which $34.2 million was paid at closing, with the balance to be paid out annually over the subsequent three years, plus contingent consideration based on future sales of this operation. The results of the acquired business have been included in the Company's RV Segment and in the Consolidated Statement of Operations since the acquisition date. |
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The acquisition of this business was preliminarily recorded on the acquisition date as follows (in thousands): |
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Cash consideration | $ | 34,175 | | | | | | | | | | | | | |
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Present value of future payments | 1,739 | | | | | | | | | | | | | |
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Contingent consideration | 710 | | | | | | | | | | | | | |
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Total fair value of consideration given | $ | 36,624 | | | | | | | | | | | | | |
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Patents | $ | 6,000 | | | | | | | | | | | | | |
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Customer relationships | 4,000 | | | | | | | | | | | | | |
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Other identifiable intangible assets | 3,130 | | | | | | | | | | | | | |
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Net tangible assets | 2,049 | | | | | | | | | | | | | |
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Total fair value of net assets acquired | $ | 15,179 | | | | | | | | | | | | | |
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Goodwill (tax deductible) | $ | 21,445 | | | | | | | | | | | | | |
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The patents are being amortized over their estimated useful life of 10 years and the customer relationships intangible asset is being amortized over its estimated useful life of 12 years. The consideration given was greater than the fair value of the assets acquired, resulting in goodwill, because the Company anticipates an increase in the markets for the acquired products, market share growth in both existing and new markets, as well as attainment of synergies. |
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Acquisitions in 2013 |
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Midstates Tool & Die and Engineering, Inc. |
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On June 24, 2013, the Company acquired the business and certain assets of Midstates Tool & Die and Engineering, Inc. (“Midstates”). Midstates is a manufacturer of tools and dies, as well as automation equipment. The acquired business had annualized sales of approximately $2 million. The results of the acquired business have been included in the Company's RV Segment and in the Condensed Consolidated Statements of Income since the acquisition date. |
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The acquisition of this business was recorded on the acquisition date as follows (in thousands): |
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Cash consideration | $ | 1,451 | | | | | | | | | | | | | |
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Non-compete agreement | $ | 40 | | | | | | | | | | | | | |
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Net tangible assets | 1,043 | | | | | | | | | | | | | |
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Total fair value of net assets acquired | $ | 1,083 | | | | | | | | | | | | | |
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Goodwill (tax deductible) | $ | 368 | | | | | | | | | | | | | |
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The consideration given was greater than the fair value of assets acquired, resulting in goodwill, because the Company anticipates the automation capabilities of the acquired business will help to improve its operating efficiencies. |
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Sale of Extrusion Assets |
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In April 2014, the Company entered into a six-year aluminum extrusion supply agreement, and concurrently sold certain aluminum extrusion assets. The Company recorded a pre-tax loss of $2.0 million in the second quarter of 2014 on the sale of the aluminum extrusion-related assets. In connection with the sale, the Company received $0.3 million at closing and a $7.2 million note receivable payable over the next four years, recorded at its present value of $6.4 million on the date of closing. During the second quarter of 2014, the Company received the first installment of $0.8 million under the note. At June 30, 2014, the present value of the remaining amount due under the note receivable was $5.7 million. |
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Goodwill |
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Goodwill by reportable segment was as follows: |
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(In thousands) | RV Segment | | MH Segment | | Total | | | | |
Accumulated cost – December 31, 2013 | $ | 62,047 | | | $ | 10,025 | | | $ | 72,072 | | | | | |
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Accumulated impairment – December 31, 2013 | (41,276 | ) | | (9,251 | ) | | (50,527 | ) | | | | |
Net balance – December 31, 2013 | 20,771 | | | 774 | | | 21,545 | | | | | |
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Acquisitions – 2014 | 40,385 | | | — | | | 40,385 | | | | | |
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Net balance – June 30, 2014 | $ | 61,156 | | | $ | 774 | | | $ | 61,930 | | | | | |
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Goodwill represents the excess of the total consideration given in an acquisition of a business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but instead is tested at the reporting unit level for impairment annually in November, or more frequently if certain circumstances indicate a possible impairment may exist. No impairment tests were required or performed during the six months ended June 30, 2014. |
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Other Intangible Assets |
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Other intangible assets consisted of the following at June 30, 2014: |
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(In thousands) | Gross | | Accumulated | | Net | | Estimated Useful |
Cost | Amortization | Balance | Life in Years |
Customer relationships | $ | 70,761 | | | $ | 24,094 | | | $ | 46,667 | | | 6 | to | 16 |
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Patents | 52,150 | | | 19,544 | | | 32,606 | | | 3 | to | 19 |
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Tradenames | 8,273 | | | 3,955 | | | 4,318 | | | 3 | to | 15 |
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Non-compete agreements | 3,918 | | | 1,869 | | | 2,049 | | | 3 | to | 6 |
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Other | 360 | | | 43 | | | 317 | | | 2 | to | 12 |
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Purchased research and development | 6,697 | | | — | | | 6,697 | | | Indefinite |
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Other intangible assets | $ | 142,159 | | | $ | 49,505 | | | $ | 92,654 | | | | | |
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Other intangible assets consisted of the following at December 31, 2013: |
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(In thousands) | Gross | | Accumulated | | Net | | Estimated Useful |
Cost | Amortization | Balance | Life in Years |
Customer relationships | $ | 50,105 | | | $ | 21,999 | | | $ | 28,106 | | | 6 | to | 16 |
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Patents | 41,651 | | | 18,461 | | | 23,190 | | | 3 | to | 19 |
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Tradenames | 7,959 | | | 5,976 | | | 1,983 | | | 5 | to | 15 |
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Non-compete agreements | 3,866 | | | 2,210 | | | 1,656 | | | 3 | to | 6 |
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Purchased research and development | 4,457 | | | — | | | 4,457 | | | Indefinite |
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Other intangible assets | $ | 108,038 | | | $ | 48,646 | | | $ | 59,392 | | | | | |
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