Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Nov. 30, 2017 | Dec. 31, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | CHASE CORP | |
Entity Central Index Key | 830,524 | |
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --11-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 9,374,840 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 54,262 | $ 47,354 |
Accounts receivable, less allowance for doubtful accounts of $333 and $456 | 34,976 | 38,051 |
Inventory | 27,331 | 25,618 |
Prepaid expenses and other current assets | 3,847 | 3,098 |
Due from sale of business | 400 | |
Assets held for sale | 14 | 14 |
Prepaid income taxes | 641 | |
Total current assets | 121,471 | 114,135 |
Property, plant and equipment, less accumulated depreciation of $45,614 and $44,277 | 34,430 | 34,760 |
Other Assets: | ||
Goodwill | 50,911 | 50,784 |
Intangible assets, less accumulated amortization of $44,817 and $42,206 | 44,607 | 46,846 |
Cash surrender value of life insurance, less current portion | 4,530 | 4,530 |
Restricted investments | 1,057 | 964 |
Funded pension plan | 549 | 566 |
Deferred income taxes | 1,570 | 1,614 |
Other assets | 129 | 539 |
Total assets | 259,254 | 254,738 |
Current Liabilities: | ||
Accounts payable | 13,114 | 14,455 |
Accrued payroll and other compensation | 4,404 | 6,500 |
Accrued expenses | 3,826 | 4,052 |
Dividend payable | 7,498 | |
Accrued income taxes | 2,333 | |
Total current liabilities | 28,842 | 27,340 |
Deferred compensation | 1,071 | 979 |
Accumulated pension obligation | 12,368 | 12,666 |
Other liabilities | 1,612 | 1,567 |
Accrued income taxes | 1,257 | 1,257 |
Commitments and Contingencies (Note 10) | ||
Equity: | ||
First Serial Preferred Stock, $1.00 par value: Authorized 100,000 shares; none issued | ||
Common stock, $.10 par value: Authorized 20,000,000 shares; 9,374,840 shares at November 30, 2017 and 9,354,136 shares at August 31, 2017 issued and outstanding | 937 | 935 |
Additional paid-in capital | 14,734 | 14,060 |
Accumulated other comprehensive loss | (11,788) | (13,469) |
Retained earnings | 210,221 | 209,403 |
Total equity | 214,104 | 210,929 |
Total liabilities and equity | $ 259,254 | $ 254,738 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 333 | $ 456 |
Property, plant and equipment, accumulated depreciation (in dollars) | 45,614 | 44,277 |
Intangible assets, accumulated amortization (in dollars) | $ 44,817 | $ 42,206 |
First Serial Preferred Stock, par value (in dollars per share) | $ 1 | $ 1 |
First Serial Preferred Stock, Authorized shares | 100,000 | 100,000 |
First Serial Preferred Stock, issued shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, Authorized shares | 20,000,000 | 20,000,000 |
Common stock, shares issued | 9,374,840 | 9,354,136 |
Common stock, shares outstanding | 9,374,840 | 9,354,136 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Revenue | ||
Sales | $ 60,577 | $ 60,269 |
Royalties and commissions | 1,340 | 1,088 |
Total revenues | 61,917 | 61,357 |
Costs and Expenses | ||
Cost of products and services sold | 36,895 | 35,289 |
Selling, general and administrative expenses | 12,059 | 11,752 |
Acquisition related costs (Note 14) | 27 | |
Exit costs related to idle facility (Note 15) | 584 | |
Operating income | 12,963 | 13,705 |
Interest expense | (45) | (246) |
Gain on sale of real estate (Note 9) | 792 | |
Other income (expense) | (319) | 399 |
Income before income taxes | 12,599 | 14,650 |
Income taxes | 4,284 | 4,287 |
Net income | $ 8,315 | $ 10,363 |
Net income available to common shareholders, per common and common equivalent share (Note 4) | ||
Basic (in dollars per share) | $ 0.89 | $ 1.11 |
Diluted (in dollars per share) | $ 0.88 | $ 1.10 |
Weighted average shares outstanding | ||
Basic (in shares) | 9,281,877 | 9,228,338 |
Diluted (in shares) | 9,384,426 | 9,321,002 |
Annual cash dividends declared per share | $ 0.80 | $ 0.70 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 8,315 | $ 10,363 |
Other comprehensive income: | ||
Net unrealized gain (loss) on restricted investments, net of tax | 31 | 13 |
Change in funded status of pension plans, net of tax | 80 | 147 |
Foreign currency translation adjustment | 1,570 | (2,098) |
Total other comprehensive income (loss) | 1,681 | (1,938) |
Comprehensive income | $ 9,996 | $ 8,425 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - 3 months ended Nov. 30, 2017 - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total |
Balance at Aug. 31, 2017 | $ 935 | $ 14,060 | $ (13,469) | $ 209,403 | $ 210,929 |
Balance (in shares) at Aug. 31, 2017 | 9,354,136 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Restricted stock grants, net of forfeitures | $ 1 | (1) | |||
Restricted stock grants, net of forfeitures (in shares) | 13,121 | ||||
Amortization of restricted stock grants | 421 | 421 | |||
Amortization of stock option grants | 112 | 112 | |||
Exercise of stock options | $ 1 | 448 | 449 | ||
Exercise of stock options (in shares) | 10,859 | ||||
Common stock received for payment of stock option exercises | (306) | (306) | |||
Common stock received for payment of stock option exercises (in shares) | (3,276) | ||||
Cash dividend accrued, $0.80 per share | (7,497) | (7,497) | |||
Change in funded status of pension plan, net of tax $41 | 80 | 80 | |||
Foreign currency translation adjustment | 1,570 | 1,570 | |||
Net unrealized gain on restricted investments, net of tax $15 | 31 | 31 | |||
Net income | 8,315 | 8,315 | |||
Balance at Nov. 30, 2017 | $ 937 | $ 14,734 | $ (11,788) | $ 210,221 | $ 214,104 |
Balance (in shares) at Nov. 30, 2017 | 9,374,840 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) $ in Thousands | 3 Months Ended |
Nov. 30, 2017USD ($)$ / shares | |
CONDENSED CONSOLIDATED STATEMENT OF EQUITY | |
Annual cash dividends declared per share | $ / shares | $ 0.80 |
Change in funded status of pension plans, tax | $ 41 |
Net unrealized gain (loss) on restricted investments, tax | $ 15 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 8,315 | $ 10,363 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Gain on sale of real estate | (792) | |
Depreciation | 1,254 | 1,335 |
Amortization | 2,314 | 2,176 |
Cost of sale of inventory step-up | 190 | |
Recovery of allowance for doubtful accounts | (126) | (5) |
Stock-based compensation | 533 | 528 |
Realized gain on restricted investments | (1) | (3) |
Deferred taxes | 10 | |
Increase (decrease) from changes in assets and liabilities | ||
Accounts receivable | 3,329 | 5 |
Inventory | (1,593) | (1,397) |
Prepaid expenses and other assets | (725) | (535) |
Accounts payable | (1,348) | (12) |
Accrued compensation and other expenses | (2,397) | (2,755) |
Accrued income taxes | (3,001) | (771) |
Net cash provided by operating activities | 6,554 | 8,337 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment | (851) | (652) |
Cost to acquire intangible assets | (1) | (14) |
Payment for acquisition | (30,435) | |
Proceeds from sale of real estate | 1,382 | |
Net proceeds from sale of businesses | 229 | |
Increase in restricted investments | (46) | (47) |
Proceeds from settlement of life insurance policies | 1,504 | |
Net cash used in investing activities | (898) | (28,033) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments of principal on debt | (2,100) | |
Proceeds from exercise of common stock options | 143 | 33 |
Payments of taxes on stock options and restricted stock | (993) | |
Net cash provided by (used in) financing activities | 143 | (3,060) |
INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS | 5,799 | (22,756) |
Effect of foreign exchange rates on cash | 1,109 | (1,331) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 47,354 | 73,411 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 54,262 | 49,324 |
Non-cash Investing and Financing Activities | ||
Common stock received for payment of stock option exercises | 306 | 846 |
Property, plant & equipment additions included in accounts payable | 176 | 47 |
Annual cash dividend declared | $ 7,497 | $ 6,532 |
Basis of Financial Statement Pr
Basis of Financial Statement Presentation | 3 Months Ended |
Nov. 30, 2017 | |
Basis of Financial Statement Presentation | |
Basis of Financial Statement Presentation | Note 1 — Basis of Financial Statement Presentatio Description of Business Chase Corporation (the “Company,” “Chase,” “we,” or “us”), founded in 1946, is a leading manufacturer of protective materials for high-reliability applications. Our strategy is to maximize the performance of our core businesses and brands while seeking future opportunities through strategic acquisitions. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“US GAAP”) for interim financial reporting, and instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of Chase Corporation’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. Chase Corporation filed audited consolidated financial statements, which included all information and notes necessary for such a complete presentation, for the three years ended August 31, 2017, in conjunction with its 2017 Annual Report on Form 10-K. Certain immaterial reclassifications have been made to the prior year amounts to conform to the current year’s presentation. The results of operations for the interim period ended November 30, 2017 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended August 31, 2017, which are contained in the Company’s 2017 Annual Report on Form 10-K. The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring items) that are, in the opinion of management, necessary for a fair statement of the Company’s financial position as of November 30, 2017, the results of its operations, comprehensive income and cash flows for the interim periods ended November 30, 2017 and 2016, and changes in equity for the interim period ended November 30, 2017. The financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the U.S. dollar as the reporting currency for financial reporting. The financial position and results of operations of the Company’s U.K.-based operations are measured using the British Pound Sterling as the functional currency. The financial position and results of operations of the Company’s operations based in France are measured using the euro as the functional currency. The financial position and results of the Company’s HumiSeal India Private Limited business are measured using the Indian rupee as the functional currency. The functional currency for all our other operations is the U.S. dollar. Foreign currency translation gains and losses are determined using current exchange rates for monetary items and historical exchange rates for other balance sheet items, and are recorded as a change in other comprehensive income. Transaction gains and losses generated from the remeasurement of assets and liabilities denominated in currencies other than the functional currency of each applicable operation are included in other income (expense) on the condensed consolidated statements of operations and were ($353) and $399 for the three-month periods ended November 30, 2017 and 2016, respectively. Other Business Developments On December 29, 2017, Chase entered an agreement to acquire Stewart Superabsorbents, LLC (“SSA, LLC”), an advanced superabsorbent polymer (SAP) formulator and solutions provider, with operations located in Hickory and McLeansville, NC. The transaction closed on December 31, 2017. In the most recently completed fiscal year, SSA, LLC, and its recently acquired ZappaTec business (collectively “Zappa Stewart”), had combined revenue in excess of $24,000. Chase expects this acquisition to be immediately accretive to its earnings. The business was acquired for a purchase price of $71,382, net of cash acquired, pending any working capital adjustments and excluding acquisition-related costs. As part of this transaction, Chase acquired all assets of the business, and entered multiyear leases at both locations. The purchase was funded from a combination of Chase’s existing revolving credit facility and available cash on hand. Zappa Stewart’s protective materials technology is complementary to Chase’s current specialty chemical offerings. This acquisition is aligned with the Company’s core strategies and extends its reach into growing medical, environmental and consumer applications. The Company is currently in the process of finalizing purchase accounting, and anticipates completion during fiscal 2018. Following the effective date of the acquisition (which occurred subsequent to November 30, 2017), the financial results of Zappa Stewart operations will be included in the Company’s financial statements within the specialty chemical intermediates product line, contained within the Industrial Materials operating segment. See Note 19 to the Condensed Consolidated Financial Statements for additional information on the acquisition of Zappa Stewart. On April 3, 2017, Chase executed an agreement with an unrelated third party to sell all inventory, machinery and equipment and intangible assets of the Company’s fiber optic cable components product line for proceeds of $3,858, net of transaction costs and following certain working capital adjustments. The resulting pre-tax gain on sale of $2,013 was recognized in the third quarter of fiscal 2017 as gain on sale of businesses within the condensed consolidated statement of operations. Further, the purchaser entered a multiyear lease for a portion of the manufacturing space at the Company’s Granite Falls, NC facility. Chase will provide ongoing manufacturing and administrative support to the purchaser for which the Company will receive additional consideration upon the performance of services. The Company’s fiber optic cable components product line was formerly a part of the Company’s Industrial Materials operating segment. See Note 8 to the condensed consolidated financial statements for additional information on the sale of the fiber optic cable components product line. On September 30, 2016, the Company acquired certain assets of Resin Designs, LLC (“Resin Designs”), an advanced adhesives and sealants manufacturer, with locations in Woburn, MA and Newark, CA. The business was acquired for a purchase price of $30,270, after final working capital adjustments and excluding acquisition-related costs. As part of this transaction, Chase acquired all working capital and fixed assets of the business, and entered multiyear leases at both locations. The Company expensed $584 of acquisition-related costs associated with this acquisition during the first quarter of fiscal 2017. The purchase was funded entirely with available cash on hand. Resin Designs is a formulator of customized adhesive and sealant systems used in high-reliability electronic applications. The acquisition broadens the Company’s adhesives and sealants product offering and manufacturing capabilities, and expands its market reach. Since the effective date of the acquisition, the financial results of Resin Designs’ operations have been included in the Company’s financial statements within the electronic and industrial coatings product line, contained within the Industrial Materials operating segment. See Note 14 to the condensed consolidated financial statements for additional information on the acquisition of the assets and operations of Resin Designs. |
Recent Accounting Standards
Recent Accounting Standards | 3 Months Ended |
Nov. 30, 2017 | |
Recent Accounting Standards | |
Recent Accounting Standards | Note 2 — Recent Accounting Standards Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which will replace most of the existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. In March, April and May 2016, the FASB issued ASU 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU 2016-10 “Identifying Performance Obligations and Licensing,” and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients” all of which provide further clarification to be considered when implementing ASU 2014-09. The ASU will be effective for the Company beginning September 1, 2018 (fiscal 2019), including interim periods in its fiscal year 2019, and allows for either retrospective or modified retrospective methods of adoption. The Company expects to utilize the modified retrospective method of adoption. From a timing of revenue recognition standpoint (point in time versus over time), it is anticipated that certain specialized products will be more affected than other products sold. The Company continues to assess the full impact the adoption will have on its consolidated financial statements and disclosures thereto. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Changes were made to align lessor accounting with the lessee accounting model and ASU No. 2014-09, “Revenue from Contracts with Customers.” The ASU will be effective for the Company beginning September 1, 2019 (fiscal 2020). Early application is permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the impact of the application of this ASU on our consolidated financial statements and disclosures thereto. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230).” This ASU provides guidance on the presentation and classification of specific cash flow items to improve consistency within the statement of cash flows. The effective date for adoption of this guidance will be our fiscal year beginning September 1, 2018 (fiscal 2019), with early adoption permitted. The Company is currently evaluating the effect that ASU No. 2016-15 will have on its financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The new guidance dictates that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, it should be treated as an acquisition or disposal of an asset. The guidance will be effective for the fiscal year beginning on September 1, 2018 (fiscal 2019), including interim periods within that year, with early adoption permitted. In March 2017, the FASB issued ASU No. 2017-07, “Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation — Retirement Benefits. The ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The ASU also allows only the service cost component to be eligible for capitalization when applicable (e.g., as a cost of internally manufactured inventory or a self-constructed asset). The required effective date for adoption of this guidance for the Company will be our fiscal year beginning September 1, 2018 (fiscal 2019), including interim periods within that annual period. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The Company is currently evaluating the effect that ASU No. 2017-07 will have on its financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, "Scope of Modification Accounting." This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. The Company is currently in the process of evaluating the impact of ASU 2017-09 on our financial position and result of operations. |
Inventory
Inventory | 3 Months Ended |
Nov. 30, 2017 | |
Inventory | |
Inventory | Note 3 — Inventory Inventory consisted of the following as of November 30, 2017 and August 31, 2017: November 30, August 31, 2017 2017 Raw materials $ 12,874 $ 11,636 Work in process 6,897 6,877 Finished goods 7,560 7,105 Total Inventory $ 27,331 $ 25,618 |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Nov. 30, 2017 | |
Net Income Per Share | |
Net Income Per Share | Note 4 — Net Income Per Share The Company has unvested share-based payment awards with a right to receive nonforfeitable dividends which are considered participating securities under ASC Topic 260, “Earnings Per Share.” The Company allocates earnings to participating securities and computes earnings per share using the two-class method. The determination of earnings per share under the two-class method is as follows: Three Months Ended November 30, 2017 2016 Basic Earnings per Share Net income $ 8,315 $ 10,363 Less: Allocated to participating securities Net income available to common shareholders $ 8,236 $ 10,250 Basic weighted average shares outstanding Net income per share - Basic $ 0.89 $ 1.11 Diluted Earnings per Share Net income $ 8,315 $ 10,363 Less: Allocated to participating securities Net income available to common shareholders $ 8,236 $ 10,250 Basic weighted average shares outstanding Additional dilutive common stock equivalents Diluted weighted average shares outstanding Net income per share - Diluted $ 0.88 $ 1.10 For the three months ended November 30, 2017 and 2016, stock options to purchase 9,622 and 38,591 shares of common stock were outstanding, but were not included in the calculation of diluted income per share because their inclusion would be anti-dilutive. Included in the calculation of dilutive common stock equivalents are the unvested portion of restricted stock and stock options. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Nov. 30, 2017 | |
Stock Based Compensation | |
Stock Based Compensation | Note 5 — Stock-Based Compensation In August 2016, the Board of Directors of the Company approved the fiscal year 2017 Long Term Incentive Plan (“2017 LTIP”) for the executive officers and other members of management. The 2017 LTIP is an equity-based plan with a grant date of September 1, 2016 and contains a performance and service-based restricted stock grant of 5,399 shares in the aggregate, subject to adjustment, with a vesting date of August 31, 2019. Based on the fiscal year 2017 financial results, 5,399 additional shares of restricted stock (total of 10,798 shares) were earned and granted subsequent to the end of fiscal year 2017 in accordance with the performance measurement criteria. No further performance-based measurements apply to this award. Compensation expense is being recognized on a ratable basis over the vesting period. In August 2017, the Board of Directors of the Company approved the fiscal year 2018 Long Term Incentive Plan (“2018 LTIP”) for the executive officers and other members of management. The 2018 LTIP is an equity-based plan with a grant date of September 1, 2017 and contains the following equity components: Restricted Shares — (a) a performance and service-based restricted stock grant of 4,249 shares in the aggregate, subject to adjustment based on fiscal 2018 results, with a vesting date of August 31, 2020. Compensation expense is recognized on a ratable basis over the vesting period based on quarterly probability assessments; and (b) a time-based restricted stock grant of 3,473 shares in the aggregate, with a vesting date of August 31, 2020. Compensation expense is recognized on a ratable basis over the vesting period. Stock options — options to purchase 9,622 shares of common stock in the aggregate with an exercise price of $93.50 per share. The options will vest in three equal annual installments beginning on August 31, 2018 and ending on August 31, 2020. Of the options granted, 4,591 options will expire on August 31, 2027, and 5,031 options will expire on September 1, 2027. Compensation expense is recognized over the period of the award consistent with the vesting terms. |
Segment Data and Foreign Operat
Segment Data and Foreign Operations | 3 Months Ended |
Nov. 30, 2017 | |
Segment Data and Foreign Operations | |
Segment Data and Foreign Operations | Note 6 — Segment Data and Foreign Operations The Company is organized into two operating segments, an Industrial Materials segment and a Construction Materials segment. The segments are distinguished by the nature of the products and how they are delivered to their respective markets. The Industrial Materials segment includes specified products that are used in, or integrated into, another company’s product, with demand typically dependent upon general economic conditions. Industrial Materials products include insulating and conducting materials for wire and cable manufacturers, moisture protective coatings for electronics, laminated durable papers, laminates for the packaging and industrial laminate markets, custom manufacturing services, pulling and detection tapes used in the installation, measurement and location of fiber optic cables and water and natural gas lines, cover tapes essential to delivering semiconductor components via tape and reel packaging, composite materials and elements, polymeric microspheres and polyurethane dispersions. Beginning September 30, 2016, the Industrial Materials segment includes the acquired operations of Resin Designs, LLC, which was obtained through acquisition and is included in the Company’s electronic and industrial coatings product line. Prior to the April 3, 2017 sale of the business, the segment’s products also included glass-based strength elements, designed to allow fiber optic cables to withstand mechanical and environmental strain and stress. The Construction Materials segment is principally composed of project-oriented product offerings that are primarily sold and used as “Chase” branded products. Construction Materials products include protective coatings for pipeline applications, coating and lining systems for use in liquid storage and containment applications, adhesives and sealants used in architectural and building envelope waterproofing applications, high-performance polymeric asphalt additives, and expansion and control joint systems for use in the transportation and architectural markets. The following tables summarize information about the Company’s reportable segments: Three Months Ended November 30, 2017 2016 Revenue Industrial Materials $ 49,985 $ 49,024 Construction Materials 11,932 12,333 Total $ 61,917 $ 61,357 Income before taxes Industrial Materials $ 15,365 $ 16,415 (a) Construction Materials 4,246 5,150 Total for reportable segments 19,611 21,565 Corporate and common costs (7,012) (6,915) (b) Total $ 12,599 $ 14,650 Includes the following costs by segment: Industrial Materials Interest $ 36 $ 184 Depreciation 800 1,062 Amortization 1,987 1,862 Construction Materials Interest $ 9 $ 62 Depreciation 190 158 Amortization 327 314 (a) Includes $190 of expenses related to inventory step-up in fair value attributable to the September 2016 acquisition of certain assets of Resin Designs, LLC (b) Includes $584 in acquisition-related expenses attributable to the September 2016 acquisition of certain assets of Resin Designs, LLC, facility exit and demolition costs of $27 related to the Company’s Randolph, MA location, and a $792 gain related to the November 2016 sale of the Company’s Paterson, NJ location Total assets for the Company’s reportable segments as of November 30, 2017 and August 31, 2017 were: November 30, August 31, 2017 2017 Total Assets Industrial Materials $ 156,903 $ 156,263 Construction Materials 34,274 38,162 Total for reportable segments 191,177 194,425 Corporate and common assets 68,077 60,313 Total $ 259,254 $ 254,738 The Company’s products are sold worldwide. Revenue for the three-month periods ended November 30, 2017 and 2016 are attributed to operations located in the following countries: Three Months Ended November 30, 2017 2016 Revenue United States $ 52,477 $ 51,808 United Kingdom 4,397 4,759 All other foreign (1) 5,043 4,790 Total $ 61,917 $ 61,357 (1) Comprises sales originated from our Paris, France location, royalty revenue attributable to our licensed manufacturer in Asia, and Chase foreign manufacturing operations. As of November 30, 2017 and August 31, 2017, the Company had long-lived assets ( defined as tangible assets providing the Company with a future economic benefit beyond the current year or operating period, including buildings, equipment and leasehold improvements) and goodwill and intangible assets, less accumulated amortization, in the following countries: November 30, August 31, 2017 2017 Long-lived Assets United States Property, plant and equipment, net $ 29,855 $ 30,253 Goodwill and Intangible assets, less accumulated amortization 88,484 90,673 United Kingdom Property, plant and equipment, net 3,253 3,184 Goodwill and Intangible assets, less accumulated amortization 5,770 5,685 All other foreign Property, plant and equipment, net 1,322 1,323 Goodwill and Intangible assets, less accumulated amortization 1,264 1,272 Total Property, plant and equipment, net $ 34,430 $ 34,760 Goodwill and Intangible assets, less accumulated amortization $ 95,518 $ 97,630 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 3 Months Ended |
Nov. 30, 2017 | |
Goodwill and Other Intangibles | |
Goodwill and Other Intangibles | Note 7 — Goodwill and Other Intangibles The changes in the carrying value of goodwill are as follows: Industrial Construction Materials Consolidated Balance at August 31, 2017 $ 40,091 $ 10,693 $ 50,784 Foreign currency translation adjustment 119 8 127 Balance at November 30, 2017 $ 40,210 $ 10,701 $ 50,911 The Company’s goodwill is allocated to each reporting unit based on the nature of the products manufactured by the respective business combinations that originally created the goodwill. The Company has identified eleven reporting units within its two operating segments that are used to evaluate the possible impairment of goodwill. Goodwill impairment exists when the carrying value of goodwill exceeds its fair value. Assessments of possible impairment of goodwill are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. Additionally, testing for possible impairment of recorded goodwill and certain intangible asset balances is required annually. The amount and timing of any impairment charges based on these assessments require the estimation of future cash flows and the fair market value of the related assets based on management’s best estimates of certain key factors, including future selling prices and volumes; operating, raw material and energy costs; and various other projected operating and economic factors. When testing, fair values of the reporting units and the related implied fair values of their respective goodwill are established using discounted cash flows. The Company evaluates the possible impairment of goodwill annually during the fourth quarter, and whenever events or circumstances indicate the carrying value of goodwill may not be recoverable. Intangible assets subject to amortization consist of the following as of November 30, 2017 and August 31, 2017: Weighted Average Gross Carrying Accumulated Net Carrying Amortization Period Value Amortization Value November 30, 2017 Patents and agreements years $ 1,851 $ 1,673 $ 178 Formulas and technology years 9,353 5,721 3,632 Trade names years 7,738 6,103 1,635 Customer lists and relationships years 70,482 31,320 39,162 $ 89,424 $ 44,817 $ 44,607 August 31, 2017 Patents and agreements years $ 1,845 $ 1,671 $ 174 Formulas and technology years 9,318 5,387 3,931 Trade names years 7,709 5,813 1,896 Customer lists and relationships years 70,180 29,335 40,845 $ 89,052 $ 42,206 $ 46,846 Aggregate amortization expense related to intangible assets for the three months ended November 30, 2017 and 2016 was $2,314 and $2,176, respectively. Estimated amortization expense for the remainder of fiscal year 2018 and for the next five years is as follows: Years ending August 31, 2018 (remaining 9 months) $ 6,818 2019 8,462 2020 7,594 2021 7,064 2022 6,171 2023 2,971 |
Sale of Business
Sale of Business | 3 Months Ended |
Nov. 30, 2017 | |
Sale of Business | |
Sale of Business | Note 8 — Sale of Business Sale of Fiber Optic Cable Components Product Line On April 3, 2017, Chase executed an agreement with an unrelated party to sell all inventory, machinery and equipment and intangible assets of the Company’s fiber optic cable components product line for proceeds of $3,858, net of transaction costs and following certain working capital adjustments. Given its low-growth and low-margin prospects, and a customer, supplier and equipment base separate from our other businesses, the fiber optic cable components product line, which was formerly part of the Company’s Industrial Materials segment, was determined to not be part of Chase’s long-term strategy. The divestiture was accounted for under ASC Topic 360, “Disclosure - Impairment or Disposal of Long-Lived Assets.” In accordance with this accounting standard, the resulting pre-tax gain on sale of $2,013 was recognized in the third quarter of fiscal 2017 as gain on sale of businesses within the condensed consolidated statement of operations. Chase received $3,458, net of transaction costs, in the third quarter of fiscal 2017, with the remaining $400 placed in escrow; the portion of the sale price held in escrow was recorded as a non-current asset within other assets as of August 31, 2017 and as a current asset (Due from sale of business) as of November 30, 2017, and is available to resolve any submitted claims or adjustments up to 18 months from the closing date of the sale. Subsequent to the sale, Chase will provide ongoing manufacturing and administrative support to the purchaser for which the Company will receive additional consideration upon the performance of services; this arrangement is anticipated to last for multiple years. In the quarter ended November 30, 2017, Chase charged the purchaser $470 for manufacturing services, which the Company recognized as revenue within the Industrial Materials segment, and $60 for selling and administrative expenses, which the Company recognized as an offset to selling, general and administrative expenses. Further, the purchaser entered a multiyear lease for a portion of the manufacturing space at the Company’s Granite Falls, NC facility. Chase received $33 in rental income during the first quarter of fiscal 2018 related to this lease, which the Company recognized within other income (expense) on the condensed consolidated statement of operations |
Sale of Real Estate
Sale of Real Estate | 3 Months Ended |
Nov. 30, 2017 | |
Sale of Real Estate | |
Sale of Real Estate | Note 9 — Sale of Real Estate Sale of Paterson, NJ Location In November 2016, the Company finalized the sale of its Paterson, NJ property for cash proceeds in the amount of $1,382. This transaction resulted in a gain of $792, which was recorded in the Company’s condensed consolidated statement of operations as a gain on sale of real estate during the fiscal quarter ended November 30, 2016. The Company had previously reclassified the related long-lived assets to assets held for sale after committing to a plan in the second quarter of fiscal 2016 to actively market the property. Sale of Former Corporate Headquarters in Bridgewater, MA In October 2016, Chase entered into an agreement to sell its former corporate headquarters and executive offices in Bridgewater, MA. In December 2016, during the second quarter of fiscal 2017, the sale was finalized for gross cash proceeds in the amount of $740, resulting in a gain on sale of $68. See Note 17 to the condensed consolidated financial statements for additional information on the sale of the Bridgewater, MA location. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Nov. 30, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10 — Commitments and Contingencies The Company is involved from time to time in litigation incidental to the conduct of its business. Although the Company does not expect that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition, results of operations or cash flows, litigation is inherently unpredictable. Therefore, judgments could be rendered or settlements agreed to that could adversely affect the Company’s operating results or cash flows in a particular period. The Company routinely assesses all its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where we assess the likelihood of loss as probable. |
Pensions and Other Postretireme
Pensions and Other Postretirement Benefits | 3 Months Ended |
Nov. 30, 2017 | |
Pensions and Other Postretirement Benefits | |
Pensions and Other Postretirement Benefits | Note 11 — Pensions and Other Postretirement Benefits The components of net periodic benefit cost for the three months ended November 30, 2017 and 2016 are as follows: Three Months Ended November 30, 2017 2016 Components of net periodic benefit cost Service cost $ 71 $ 72 Interest cost 157 170 Expected return on plan assets (116) (132) Amortization of prior service cost 1 1 Amortization of accumulated loss 121 224 Net periodic benefit cost $ 234 $ 335 When funding is required, the Company’s policy is to contribute amounts that are deductible for federal income tax purposes. As of November 30, 2017, the Company has made contributions of $389 in the current fiscal year to fund its obligations under its pension plans, and plans to make the necessary contributions over the remainder of fiscal 2018 to ensure the qualified plans continue to be adequately funded given the current market conditions. The Company made contributions of $21 in the first three months of the prior year. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Nov. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | Note 12 — Fair Value Measurements The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values. These tiers are: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company utilizes the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The financial assets classified as Level 1 and Level 2 as of November 30, 2017 and August 31, 2017 represent investments that are restricted for use in a nonqualified retirement savings plan for certain key employees and directors. The following table sets forth the Company’s financial assets that were accounted for at fair value on a recurring basis as of November 30, 2017 and August 31, 2017: Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Assets: Restricted investments November 30, 2017 $ 1,057 $ 1,006 51 — Restricted investments August 31, 2017 $ 964 $ 926 38 — The following table presents the fair value of the Company’s long-term debt (including the current portion of long-term debt) as of November 30, 2017 and August 31, 2017, which is recorded at its carrying value: Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Liabilities: Long-term debt November 30, 2017 $ — $ — — — Long-term debt August 31, 2017 $ — $ — — — The long-term debt had no outstanding balance at either November 30, 2017 or August 31, 2017. Generally, the carrying value of the long-term debt approximates its fair value, as the interest rate is set based on the movement of the underlying market rates. In December 2016, Chase refinanced its term debt with a new revolving credit agreement. See Note 18 to the condensed consolidated financial statements for additional information on the refinancing. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Nov. 30, 2017 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | Note 13 — Accumulated Other Comprehensive Income The changes in accumulated other comprehensive income (loss), net of tax, were as follows: Change in Funded Foreign Currency Restricted Status of Translation Investments Pension Plan Adjustment Total Balance at August 31, 2016 $ 54 $ (7,336) $ (8,197) $ (15,479) Other comprehensive gains (losses) before reclassifications (1) 14 — (2,098) (2,084) Reclassifications to net income of previously deferred (gains) losses (2) (1) 147 — 146 Other comprehensive income (loss) 13 147 (2,098) (1,938) Balance at November 30, 2016 $ 67 $ (7,189) $ (10,295) $ (17,417) Balance at August 31, 2017 $ 121 $ (6,181) $ (7,409) $ (13,469) Other comprehensive gains (losses) before reclassifications (3) 31 — 1,570 1,601 Reclassifications to net income of previously deferred (gains) losses (4) — 80 — 80 Other comprehensive income (loss) 31 80 1,570 1,681 Balance at November 30, 2017 $ 152 $ (6,101) $ (5,839) $ (11,788) (1) Net of tax expense of $8, $0 and $0, respectively. (2) Net of tax expense of $1, tax benefit of $78 and $0, respectively. (3) Net of tax benefit of $16, $0 and $0, respectively. (4) Net of tax expense of $1, tax benefit of $41 and $0, respectively . The following table summarizes the reclassifications from accumulated other comprehensive income (loss) to the unaudited condensed consolidated statements of income: Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income Three Months Ended November 30, Location of Gain (Loss) Reclassified from Accumulated 2017 2016 Other Comprehensive Income (Loss) into Income Gains on Restricted Investments: Realized gain on sale of restricted investments $ (1) $ (2) Selling, general and administrative expenses Tax expense (benefit) 1 1 Gain net of tax $ — $ (1) Loss on Funded Pension Plan adjustments: Amortization of prior pension service costs and unrecognized losses $ 28 $ 26 Cost of products and services sold Amortization of prior pension service costs and unrecognized losses $ 94 $ 199 Selling, general and administrative expenses Tax expense (benefit) (42) (78) Loss net of tax $ 80 $ 147 Total net loss reclassified for the period $ 80 $ 146 |
Acquisitions
Acquisitions | 3 Months Ended |
Nov. 30, 2017 | |
Acquisitions | |
Acquisitions | Note 14 — Acquisitions Acquisition of Resin Designs, LLC On September 30, 2016, the Company acquired certain assets of Resin Designs, LLC (“Resin Designs”), an advanced adhesives and sealants manufacturer, with locations in Woburn, MA and Newark, CA. This business was acquired for a purchase price of $30,270, after final working capital adjustments and excluding acquisition-related costs. As part of this transaction, Chase acquired all working capital and fixed assets of the business, and entered into multiyear leases at both locations. Resin Designs is a formulator of customized adhesive and sealant systems used in high-reliability electronic applications. The acquisition broadens the Company’s adhesives and sealants product offering and manufacturing capabilities, and expands its market reach. The purchase was funded entirely with available cash on hand. Since the effective date for this acquisition, September 30, 2016, the financial results of the acquired business have been included in the Company’s financial statements within the Industrial Materials operating segment, within the electronic and industrial coatings product line. The acquisition was accounted for as a business combination under ASC Topic 805, “Business Combinations.” In accordance with this accounting standard, the Company expensed $584 of acquisition-related costs during the first fiscal quarter of 2017 to acquisition-related costs. The purchase price has been allocated to the acquired tangible and identifiable intangible assets assumed, based on their fair values as of the date of the acquisition: Assets & Liabilities Amount Accounts receivable $ 1,877 Inventory 1,300 Prepaid expenses and other current assets 63 Property, plant & equipment 623 Goodwill 7,592 Intangible assets 19,450 Accounts payable and accrued liabilities (635) Total purchase price $ 30,270 The excess of the purchase price over the net tangible and intangible assets acquired resulted in goodwill of $7,592 that is largely attributable to the synergies and economies of scale from combining the operations, technologies and research and development capabilities of Resin Designs and Chase, particularly as it pertains to the expansion of the Company's product and service offerings, the established workforce and marketing efforts. This goodwill is deductible for income tax purposes. All assets, including goodwill, acquired as part of the Resin Designs acquisition are included in the Industrial Materials operating segment. Identifiable intangible assets purchased with this transaction are as follows: Intangible Asset Amount Useful life Customer relationships $ 17,500 10 years Technology 1,200 4 years Trade names 750 7 years Total intangible assets $ 19,450 Supplemental Pro Forma Data The following table presents the pro forma results of the Company for the three-month period ended November 30, 2016 as though the Resin Designs acquisition described above occurred on September 1, 2015 (the first day of fiscal 2016). The actual revenue and expenses for the acquired business are included in the Company’s consolidated results beginning on September 30, 2016. For the three months ended November 30, 2017, revenue and net income for the Resin Designs operations included in the condensed consolidated statement of operations were $3,738 and $348, respectively. The pro forma results include adjustments for the estimated amortization of intangibles, acquisition-related costs, sale of inventory step-up cost and the income tax impact of the pro forma adjustments at the statutory rate of 35%. The following pro forma information is not necessarily indicative of the results that would have been achieved if the acquisition had been effective on September 1, 2015. Three Months Ended November 30, 2016 Revenue $ 62,942 Net income 11,034 Net income available to common shareholders, per common and common equivalent share Basic earnings per share $ 1.18 Diluted earnings per share $ 1.17 |
Exit Costs Related to Idle Faci
Exit Costs Related to Idle Facility | 3 Months Ended |
Nov. 30, 2017 | |
Exit Costs Related to Idle Facility | |
Exit Costs Related to Idle Facility | Note 15 — Exit Costs Related to Idle Facility In the three-month period ended November 30, 2016, the Company recognized $27 in expenses to raze and exit its Randolph, MA facility, which had been idle regarding production for several years; no expense was recognized in the quarter ended November 30, 2017. The Company began marketing the site for sale and reclassified the net book value of the facility to assets held for sale in the second quarter of fiscal 2016, and recognized a total of $70 and $935 in expenses associated with the project during fiscal 2017 and 2016, respectively. These actions were taken as part of the Company’s on-going facility consolidation and rationalization initiative. The Company substantially completed the demolition of the structure in the fourth fiscal quarter of 2016, and completed other environmental aspects of the project during fiscal 2017. The sale of the property is anticipated to follow in a subsequent period, and any future expenses related to the project are anticipated to not be material. See Note 16 to the condensed consolidated financial statements for additional information on assets held for sale. |
Assets Held for Sale
Assets Held for Sale | 3 Months Ended |
Nov. 30, 2017 | |
Assets Held for Sale | |
Assets Held for Sale | Note 16 — Assets Held for Sale The Company periodically reviews long-lived assets against its plans to retain or ultimately dispose of these assets. If the Company decides to dispose of an asset and commits to a plan to actively market and sell the asset, it will be moved to assets held for sale. The Company analyzes market conditions each reporting period, and, if applicable, records additional impairments due to declines in market values of like assets. The fair value of the asset is determined by observable inputs such as appraisals and prices of comparable assets in active markets for assets like the Company's. Gains are not recognized until the assets are sold. Assets held for sale as of November 30, 2017 and August 31, 2017 were: November 30, 2017 August 31, 2017 Randolph, MA - Property (1) $ 14 $ 14 Total $ 14 $ 14 (1) See Note 15 to the condensed consolidated financial statements for additional information on Randolph, MA location assets held for sale as of November 30, 2017 and August 31, 2017. |
Related Party Agreements
Related Party Agreements | 3 Months Ended |
Nov. 30, 2017 | |
Related Party Agreements | |
Related Party Agreements | Note 17 — Related Party Agreements Reimbursements Related to Life Insurance Policies During the fourth quarter of fiscal 2016 and the first quarter of fiscal 2017, the Edward L. Chase Trust (the “Trust”), owners of two insurance policies on the life of Claire E. Chase, reimbursed the Company for premiums paid on the policies in exchange for the Company’s release of any claims on the policies. In August 2016 (the fourth quarter of fiscal 2016), the Company received $1,238 related to the John Hancock (formerly Manufacturers’ Life Insurance Company) policy, the full value of premiums paid to date by the Company. In September 2016 (the first quarter of fiscal 2017), the Company received $1,504 related to the Metropolitan Life Insurance policy, its then cash surrender value, plus an additional prepaid premium related to the policy. Claire E. Chase is the spouse of a former executive of the Company, Edward L. Chase (deceased), and who in each case are the parents of Peter R. Chase (the Executive Chairman of the Company) and Mary Claire Chase (Director) and the grandparents of Adam P. Chase (the President and CEO of the Company). The Trust is the beneficial owner of more than 5% of the Company’s common stock. Terms and conditions of these transactions were reviewed and approved by the independent members of the Company's Board of Directors in advance. Sale of Former Corporate Headquarters in Bridgewater, MA In October 2016, Chase entered an agreement to sell its former corporate headquarters and executive offices in Bridgewater, MA. In December 2016, the sale was finalized for gross proceeds of $740, resulting in a gain on sale of $68, which was recognized in the second quarter of fiscal 2017. The buyer, Bridgewater State University Foundation, Inc., was deemed a related party because of previously existing professional connections between it and two members of the Company’s Board of Directors, including Peter R. Chase (the Executive Chairman of the Company) and Dana Mohler-Faria (Director). The terms and conditions of the proposed transaction were reviewed and approved by all members of the Company's Board of Directors who were not parties related to the potential buyer, prior to entering the October 2016 agreement. They concluded that the sale price was appropriate, after considering a recent market appraisal of the land and building performed by an independent third-party valuation firm. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Nov. 30, 2017 | |
Long-Term Debt. | |
Long-Term Debt | Note 18 — Long-Term Debt On December 15, 2016, the Company entered an Amended and Restated Credit Agreement (the “New Credit Agreement”) with Bank of America, acting as administrative agent, and with participation from Citizens Bank and JPMorgan Chase Bank (collectively with Bank of America, the “Lenders”). The New Credit Agreement is initially an all-revolving credit facility with a borrowing capacity of $150,000, which can be increased by an additional $50,000 at the request of the Company and the individual or collective option of any of the Lenders. The New Credit Agreement contains customary affirmative and negative covenants that, among other things, restrict our ability to incur additional indebtedness and require certain lender approval for acquisitions by the Company and its subsidiaries over a certain size. It also requires us to maintain certain financial ratios on a consolidated basis, including a consolidated net leverage ratio (as defined in the facility) of no more than 3.25 to 1.00, and a consolidated fixed charge coverage ratio (as defined in the facility) of at least 1.25 to 1.00. We were in compliance with our debt covenants as of November 30, 2017. The New Credit Agreement is guaranteed by all of Chase’s direct and indirect domestic subsidiaries, including NEPTCO, which had a carrying value of $162,794 at November 30, 2017. The New Credit Agreement was entered both to refinance our previously existing term loan and revolving line of credit, and to provide for additional liquidity to finance potential acquisitions, working capital, capital expenditures, and for other general corporate purposes. The applicable interest rate for the revolver portion of the New Credit Agreement (the “New Revolving Facility”) and any New Term Loan (defined below) is based on the effective London Interbank Offered Rate (LIBOR) plus an additional amount in the range of 1.00% to 1.75%, depending on the consolidated net leverage ratio of Chase and its subsidiaries. At November 30, 2017, there was no outstanding principal balance, and as such no applicable interest rate. The New Credit Agreement has a five-year term with interest payments due at the end of the applicable LIBOR period (but in no event less frequently than the three-month anniversary of the commencement of such LIBOR period) and principal payment due at the expiration of the agreement, December 15, 2021. In addition, the Company may elect a base rate option for all or a portion of the New Revolving Facility, in which case, interest payments shall be due with respect to such portion of the New Revolving Facility on the last business day of each quarter. Subject to certain conditions set forth in the New Credit Agreement, the Company may elect to convert all or a portion of the outstanding New Revolving Facility into a term loan (each, a “New Term Loan”), which shall be payable quarterly in equal installments sufficient to amortize the original principal amount of such New Term Loan on a seven year amortization schedule; provided, however, that the final principal repayment installment shall be repaid on December 15, 2021 and in any event shall be in an amount equal to the aggregate principal amount of all Term Loans outstanding on such date. Prepayment is allowed by the New Credit Agreement at any time during the term of the agreement, subject to customary notice requirements. In connection with entry into the New Credit Agreement, Chase applied proceeds to refinance in full the outstanding principal balance of its preexisting term debt, simultaneously terminating both our previously existing term loan agreement and the previously existing revolving line of credit, which was fully available as of December 15, 2016. In December 2017, the Company utilized $65,000 of the New Credit Agreement to finance a portion of the acquisition cost of Stewart Superabsorbents, LLC. See Note 19 to the condensed consolidated financial statements for additional information on this acquisition completed during the second fiscal quarter. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Nov. 30, 2017 | |
Subsequent Events. | |
Subsequent Events | Note 19 — Subsequent Events Acquisition of Zappa Stewart On December 29, 2017, Chase entered an agreement to acquire Stewart Superabsorbents, LLC (“SSA, LLC”), an advanced superabsorbent polymer (SAP) formulator and solutions provider, with operations located in Hickory and McLeansville, NC. The transaction closed on December 31, 2017. In the most recently completed fiscal year, SSA, LLC, and its recently acquired ZappaTec business (collectively “Zappa Stewart”), had combined revenue in excess of $24,000. Chase expects this acquisition to be immediately accretive to its earnings. The business was acquired for a purchase price of $71,382, net of cash acquired, pending any working capital adjustments and excluding acquisition-related costs. Chase acquired all equity of the business, and entered multiyear leases at both locations. The purchase was funded from a combination of Chase’s existing revolving credit facility and available cash on hand. Zappa Stewart’s protective materials technology is complementary to Chase’s current specialty chemical offerings. This acquisition is in line with our core strategies and extends our reach into growing medical and consumer applications. Tax Cuts and Jobs Act of 2017 On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (H.R. 1) (the "Act"). The Act includes a number of changes in existing U.S. tax law impacting the Company's income taxes including, among other things, permanent reduction in the U.S. corporate income tax rate from 35% to 21%, repeal of Section 199 domestic manufacturing deduction, and deemed repatriation on U.S. shareholders’ pro rata share of certain non-U.S. subsidiaries’ earnings not previously taxed by the United States of America. The Company is currently reviewing the components of the Act and evaluating its impact, which could be material on the Company’s fiscal year 2018 consolidated financial statements and related disclosures, including a one-time, non-cash expense related to a decrease in the value of the Company’s net deferred tax assets. At this time, the Company’s revaluation of its deferred tax assets has not been estimated, and the Company is unable to make a final determination of the effect on quarterly and annual earnings for the period ending August 31, 2018. The Company does not assert permanent reinvestment of its undistributed non-U.S. subsidiaries' earnings and has previously recognized a deferred tax liability for the estimated future tax effects attributable to temporary differences due to these undistributed earnings. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Inventory | |
Schedule of inventory | November 30, August 31, 2017 2017 Raw materials $ 12,874 $ 11,636 Work in process 6,897 6,877 Finished goods 7,560 7,105 Total Inventory $ 27,331 $ 25,618 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Net Income Per Share | |
Schedule of determination of earnings per share under the two-class method | Three Months Ended November 30, 2017 2016 Basic Earnings per Share Net income $ 8,315 $ 10,363 Less: Allocated to participating securities Net income available to common shareholders $ 8,236 $ 10,250 Basic weighted average shares outstanding Net income per share - Basic $ 0.89 $ 1.11 Diluted Earnings per Share Net income $ 8,315 $ 10,363 Less: Allocated to participating securities Net income available to common shareholders $ 8,236 $ 10,250 Basic weighted average shares outstanding Additional dilutive common stock equivalents Diluted weighted average shares outstanding Net income per share - Diluted $ 0.88 $ 1.10 |
Segment Data and Foreign Oper30
Segment Data and Foreign Operations (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Segment Data and Foreign Operations | |
Summary of information about the Company's reportable segments | Three Months Ended November 30, 2017 2016 Revenue Industrial Materials $ 49,985 $ 49,024 Construction Materials 11,932 12,333 Total $ 61,917 $ 61,357 Income before taxes Industrial Materials $ 15,365 $ 16,415 (a) Construction Materials 4,246 5,150 Total for reportable segments 19,611 21,565 Corporate and common costs (7,012) (6,915) (b) Total $ 12,599 $ 14,650 Includes the following costs by segment: Industrial Materials Interest $ 36 $ 184 Depreciation 800 1,062 Amortization 1,987 1,862 Construction Materials Interest $ 9 $ 62 Depreciation 190 158 Amortization 327 314 (a) Includes $190 of expenses related to inventory step-up in fair value attributable to the September 2016 acquisition of certain assets of Resin Designs, LLC (b) Includes $584 in acquisition-related expenses attributable to the September 2016 acquisition of certain assets of Resin Designs, LLC, facility exit and demolition costs of $27 related to the Company’s Randolph, MA location, and a $792 gain related to the November 2016 sale of the Company’s Paterson, NJ location Total assets for the Company’s reportable segments as of November 30, 2017 and August 31, 2017 were: November 30, August 31, 2017 2017 Total Assets Industrial Materials $ 156,903 $ 156,263 Construction Materials 34,274 38,162 Total for reportable segments 191,177 194,425 Corporate and common assets 68,077 60,313 Total $ 259,254 $ 254,738 The Company’s products are sold worldwide. Revenue for the three-month periods ended November 30, 2017 and 2016 are attributed to operations located in the following countries: Three Months Ended November 30, 2017 2016 Revenue United States $ 52,477 $ 51,808 United Kingdom 4,397 4,759 All other foreign (1) 5,043 4,790 Total $ 61,917 $ 61,357 (1) Comprises sales originated from our Paris, France location, royalty revenue attributable to our licensed manufacturer in Asia, and Chase foreign manufacturing operations. |
Schedule of total assets for the Company's reportable segments | November 30, August 31, 2017 2017 Long-lived Assets United States Property, plant and equipment, net $ 29,855 $ 30,253 Goodwill and Intangible assets, less accumulated amortization 88,484 90,673 United Kingdom Property, plant and equipment, net 3,253 3,184 Goodwill and Intangible assets, less accumulated amortization 5,770 5,685 All other foreign Property, plant and equipment, net 1,322 1,323 Goodwill and Intangible assets, less accumulated amortization 1,264 1,272 Total Property, plant and equipment, net $ 34,430 $ 34,760 Goodwill and Intangible assets, less accumulated amortization $ 95,518 $ 97,630 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Goodwill and Other Intangibles | |
Schedule of changes in the carrying value of goodwill | Industrial Construction Materials Consolidated Balance at August 31, 2017 $ 40,091 $ 10,693 $ 50,784 Foreign currency translation adjustment 119 8 127 Balance at November 30, 2017 $ 40,210 $ 10,701 $ 50,911 |
Schedule of intangible assets subject to amortization | Weighted Average Gross Carrying Accumulated Net Carrying Amortization Period Value Amortization Value November 30, 2017 Patents and agreements years $ 1,851 $ 1,673 $ 178 Formulas and technology years 9,353 5,721 3,632 Trade names years 7,738 6,103 1,635 Customer lists and relationships years 70,482 31,320 39,162 $ 89,424 $ 44,817 $ 44,607 August 31, 2017 Patents and agreements years $ 1,845 $ 1,671 $ 174 Formulas and technology years 9,318 5,387 3,931 Trade names years 7,709 5,813 1,896 Customer lists and relationships years 70,180 29,335 40,845 $ 89,052 $ 42,206 $ 46,846 |
Schedule of estimated amortization expense related to intangible assets | Years ending August 31, 2018 (remaining 9 months) $ 6,818 2019 8,462 2020 7,594 2021 7,064 2022 6,171 2023 2,971 |
Pensions and Other Postretire32
Pensions and Other Postretirement Benefits (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Pensions and Other Postretirement Benefits | |
Schedule of components of net periodic benefit cost | Three Months Ended November 30, 2017 2016 Components of net periodic benefit cost Service cost $ 71 $ 72 Interest cost 157 170 Expected return on plan assets (116) (132) Amortization of prior service cost 1 1 Amortization of accumulated loss 121 224 Net periodic benefit cost $ 234 $ 335 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Fair Value Measurements | |
Schedule of financial assets that were accounted for at fair value on a recurring basis | Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Assets: Restricted investments November 30, 2017 $ 1,057 $ 1,006 51 — Restricted investments August 31, 2017 $ 964 $ 926 38 — |
Schedule of fair values of the Company's long-term debt | Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Liabilities: Long-term debt November 30, 2017 $ — $ — — — Long-term debt August 31, 2017 $ — $ — — — |
Accumulated Other Comprehensi34
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Accumulated Other Comprehensive Income | |
Schedule of components of accumulated other comprehensive income (loss) | Change in Funded Foreign Currency Restricted Status of Translation Investments Pension Plan Adjustment Total Balance at August 31, 2016 $ 54 $ (7,336) $ (8,197) $ (15,479) Other comprehensive gains (losses) before reclassifications (1) 14 — (2,098) (2,084) Reclassifications to net income of previously deferred (gains) losses (2) (1) 147 — 146 Other comprehensive income (loss) 13 147 (2,098) (1,938) Balance at November 30, 2016 $ 67 $ (7,189) $ (10,295) $ (17,417) Balance at August 31, 2017 $ 121 $ (6,181) $ (7,409) $ (13,469) Other comprehensive gains (losses) before reclassifications (3) 31 — 1,570 1,601 Reclassifications to net income of previously deferred (gains) losses (4) — 80 — 80 Other comprehensive income (loss) 31 80 1,570 1,681 Balance at November 30, 2017 $ 152 $ (6,101) $ (5,839) $ (11,788) (1) Net of tax expense of $8, $0 and $0, respectively. (2) Net of tax expense of $1, tax benefit of $78 and $0, respectively. (3) Net of tax benefit of $16, $0 and $0, respectively. (4) Net of tax expense of $1, tax benefit of $41 and $0, respectively . |
Summary of the reclassifications from accumulated other comprehensive income (loss) to the condensed consolidated statements of income | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income Three Months Ended November 30, Location of Gain (Loss) Reclassified from Accumulated 2017 2016 Other Comprehensive Income (Loss) into Income Gains on Restricted Investments: Realized gain on sale of restricted investments $ (1) $ (2) Selling, general and administrative expenses Tax expense (benefit) 1 1 Gain net of tax $ — $ (1) Loss on Funded Pension Plan adjustments: Amortization of prior pension service costs and unrecognized losses $ 28 $ 26 Cost of products and services sold Amortization of prior pension service costs and unrecognized losses $ 94 $ 199 Selling, general and administrative expenses Tax expense (benefit) (42) (78) Loss net of tax $ 80 $ 147 Total net loss reclassified for the period $ 80 $ 146 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Acquisitions | |
Schedule of allocation of acquisition cost to the acquired tangible and identifiable intangible assets and liabilities assumed based on their fair values as of the date of the acquisition | Assets & Liabilities Amount Accounts receivable $ 1,877 Inventory 1,300 Prepaid expenses and other current assets 63 Property, plant & equipment 623 Goodwill 7,592 Intangible assets 19,450 Accounts payable and accrued liabilities (635) Total purchase price $ 30,270 |
Schedule of identifiable intangible assets purchased as part of business acquisition | Intangible Asset Amount Useful life Customer relationships $ 17,500 10 years Technology 1,200 4 years Trade names 750 7 years Total intangible assets $ 19,450 |
Schedule of pro forma information | Three Months Ended November 30, 2016 Revenue $ 62,942 Net income 11,034 Net income available to common shareholders, per common and common equivalent share Basic earnings per share $ 1.18 Diluted earnings per share $ 1.17 |
Assets Held for Sale (Tables)
Assets Held for Sale (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Assets Held for Sale | |
Summary of information about assets held for sale | November 30, 2017 August 31, 2017 Randolph, MA - Property (1) $ 14 $ 14 Total $ 14 $ 14 (1) See Note 15 to the condensed consolidated financial statements for additional information on Randolph, MA location assets held for sale as of November 30, 2017 and August 31, 2017. |
Basis of Financial Statement 37
Basis of Financial Statement Presentation (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Apr. 03, 2017 | Sep. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 |
Contingent purchase price paid for acquisition | $ 30,435 | ||||
Foreign currency translation gain (loss) | $ (353) | 399 | |||
Resin Designs | |||||
Contingent purchase price paid for acquisition | $ 30,270 | ||||
Purchase price | $ 30,270 | ||||
Acquisition related expenses | $ 584 | ||||
SSA, LLC | |||||
Purchase price | $ 71,382 | ||||
SSA, LLC | Minimum | |||||
Combined revenue | 24,000 | ||||
Subsequent Events | SSA, LLC | |||||
Purchase price | 71,382 | ||||
Subsequent Events | SSA, LLC | Minimum | |||||
Combined revenue | $ 24,000 | ||||
Fiber Optic Cable Components Product Line | |||||
Sales price of assets sold | $ 3,858 | ||||
Gain on assets sold | $ 2,013 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Inventory | ||
Raw materials | $ 12,874 | $ 11,636 |
Work in process | 6,897 | 6,877 |
Finished goods | 7,560 | 7,105 |
Total Inventory | $ 27,331 | $ 25,618 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Basic Earnings per Share | ||
Net Income | $ 8,315 | $ 10,363 |
Less: Allocated to participating securities | 79 | 113 |
Net income available to common shareholders | $ 8,236 | $ 10,250 |
Basic weighted average shares outstanding | 9,281,877 | 9,228,338 |
Net income per share - Basic (in dollars per share) | $ 0.89 | $ 1.11 |
Diluted Earnings per Share | ||
Net Income | $ 8,315 | $ 10,363 |
Less: Allocated to participating securities | 79 | 113 |
Net income available to common shareholders | $ 8,236 | $ 10,250 |
Basic weighted average shares outstanding | 9,281,877 | 9,228,338 |
Additional dilutive common stock equivalents (in shares) | 102,549 | 92,664 |
Diluted weighted average shares outstanding | 9,384,426 | 9,321,002 |
Net income per share - Diluted (in dollars per share) | $ 0.88 | $ 1.10 |
Antidilutive securities | ||
Antidilutive stock options excluded from computation of earnings per share amount (in shares) | 9,622 | 38,591 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Executive officers and other members of management | Sep. 01, 2017item$ / sharesshares | Sep. 01, 2016shares | Nov. 30, 2017shares |
2017 LTIP | Performance and service based restricted stock | |||
Stock Based Compensation | |||
Shares granted | 5,399 | ||
Cumulative shares granted | 10,798 | ||
2017 LTIP | Performance and service based restricted stock | August 31, 2019 vesting date | |||
Stock Based Compensation | |||
Shares granted | 5,399 | ||
2018 LTIP | Performance and service based restricted stock | August 31, 2020 vesting date | |||
Stock Based Compensation | |||
Shares granted | 4,249 | ||
2018 LTIP | Time-based restricted stock | August 31, 2020 vesting date | |||
Stock Based Compensation | |||
Shares granted | 3,473 | ||
2018 LTIP | Stock options | |||
Stock Based Compensation | |||
Number Options Outstanding (in shares) | 9,622 | ||
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 93.50 | ||
Number of equal annual allotments in which awards will vest | item | 3 | ||
Stock options expiring on August 31, 2026 (in shares) | 4,591 | ||
Stock options expiring on September 1, 2026 (in shares) | 5,031 |
Segment Data and Foreign Oper41
Segment Data and Foreign Operations (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Dec. 31, 2016USD ($) | Nov. 30, 2017USD ($)segment | Nov. 30, 2016USD ($) | Aug. 31, 2017USD ($) | |
Segment data | ||||
Number of operating segments | segment | 2 | |||
Revenue | $ 61,917 | $ 61,357 | ||
Income before income taxes | 12,599 | 14,650 | ||
Total assets | 259,254 | $ 254,738 | ||
Interest | 45 | 246 | ||
Depreciation | 1,254 | 1,335 | ||
Amortization | 2,314 | 2,176 | ||
Cost of sale of inventory step-up | 190 | |||
Exit and demolition costs | 584 | |||
Resin Designs | ||||
Segment data | ||||
Acquisition related expenses | 584 | |||
Revenue | 3,738 | |||
Paterson NJ | ||||
Segment data | ||||
Gain on sale of business | 792 | |||
Bridgewater MA location | ||||
Segment data | ||||
Gain on sale of assets | $ 68 | |||
Industrial Materials | ||||
Segment data | ||||
Revenue | 49,985 | 49,024 | ||
Income before income taxes | 15,365 | 16,415 | ||
Total assets | 156,903 | 156,263 | ||
Interest | 36 | 184 | ||
Depreciation | 800 | 1,062 | ||
Amortization | 1,987 | 1,862 | ||
Industrial Materials | Resin Designs | ||||
Segment data | ||||
Cost of sale of inventory step-up | 190 | |||
Construction Materials | ||||
Segment data | ||||
Revenue | 11,932 | 12,333 | ||
Income before income taxes | 4,246 | 5,150 | ||
Total assets | 34,274 | 38,162 | ||
Interest | 9 | 62 | ||
Depreciation | 190 | 158 | ||
Amortization | 327 | 314 | ||
Reportable segments | ||||
Segment data | ||||
Income before income taxes | 19,611 | 21,565 | ||
Total assets | 191,177 | 194,425 | ||
Corporate and common costs | ||||
Segment data | ||||
Income before income taxes | (7,012) | (6,915) | ||
Total assets | $ 68,077 | $ 60,313 | ||
Corporate and common costs | Resin Designs | ||||
Segment data | ||||
Acquisition related expenses | 584 | |||
Corporate and common costs | Randolph MA | ||||
Segment data | ||||
Exit and demolition costs | $ 27 |
Segment Data and Foreign Oper42
Segment Data and Foreign Operations - Revenue and Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | |
Concentration risk | |||
Revenues | $ 61,917 | $ 61,357 | |
Property, plant and equipment, net | 34,430 | $ 34,760 | |
Goodwill and Intangible assets, less accumulated amortization | 95,518 | 97,630 | |
United States | |||
Concentration risk | |||
Revenues | 52,477 | 51,808 | |
Property, plant and equipment, net | 29,855 | 30,253 | |
Goodwill and Intangible assets, less accumulated amortization | 88,484 | 90,673 | |
United Kingdom | |||
Concentration risk | |||
Revenues | 4,397 | 4,759 | |
Property, plant and equipment, net | 3,253 | 3,184 | |
Goodwill and Intangible assets, less accumulated amortization | 5,770 | 5,685 | |
All other Foreign | |||
Concentration risk | |||
Revenues | 5,043 | $ 4,790 | |
Property, plant and equipment, net | 1,322 | 1,323 | |
Goodwill and Intangible assets, less accumulated amortization | $ 1,264 | $ 1,272 |
Goodwill and Other Intangible43
Goodwill and Other Intangibles - Goodwill (Details) $ in Thousands | 3 Months Ended |
Nov. 30, 2017USD ($)segment | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | $ 50,784 |
Foreign currency translation adjustment | 127 |
Balance at the end of the period | $ 50,911 |
Number of reportable segments | segment | 11 |
Number of operating segments | segment | 2 |
Industrial Materials | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | $ 40,091 |
Foreign currency translation adjustment | 119 |
Balance at the end of the period | 40,210 |
Construction Materials | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 10,693 |
Foreign currency translation adjustment | 8 |
Balance at the end of the period | $ 10,701 |
Goodwill and Other Intangible44
Goodwill and Other Intangibles - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2017 | Aug. 31, 2017 | Nov. 30, 2016 | |
Goodwill and intangible assets | |||
Gross Carrying Value | $ 89,424 | $ 89,052 | |
Accumulated Amortization | 44,817 | 42,206 | |
Net Carrying Value | 44,607 | $ 46,846 | |
Aggregate amortization expense | 2,314 | $ 2,176 | |
Estimated amortization expense | |||
2018 (remaining 9 months) | 6,818 | ||
2,019 | 8,462 | ||
2,020 | 7,594 | ||
2,021 | 7,064 | ||
2,022 | 6,171 | ||
2,023 | $ 2,971 | ||
Patents and agreements | |||
Goodwill and intangible assets | |||
Weighted-Average Amortization Period | 14 years 4 months 24 days | 14 years 4 months 24 days | |
Gross Carrying Value | $ 1,851 | $ 1,845 | |
Accumulated Amortization | 1,673 | 1,671 | |
Net Carrying Value | $ 178 | $ 174 | |
Formulas and technology | |||
Goodwill and intangible assets | |||
Weighted-Average Amortization Period | 7 years 9 months 18 days | 7 years 9 months 18 days | |
Gross Carrying Value | $ 9,353 | $ 9,318 | |
Accumulated Amortization | 5,721 | 5,387 | |
Net Carrying Value | $ 3,632 | $ 3,931 | |
Trade names | |||
Goodwill and intangible assets | |||
Weighted-Average Amortization Period | 6 years | 6 years | |
Gross Carrying Value | $ 7,738 | $ 7,709 | |
Accumulated Amortization | 6,103 | 5,813 | |
Net Carrying Value | $ 1,635 | $ 1,896 | |
Customer lists and relationships | |||
Goodwill and intangible assets | |||
Weighted-Average Amortization Period | 9 years 7 months 6 days | 9 years 7 months 6 days | |
Gross Carrying Value | $ 70,482 | $ 70,180 | |
Accumulated Amortization | 31,320 | 29,335 | |
Net Carrying Value | $ 39,162 | $ 40,845 |
Sale of Business (Details)
Sale of Business (Details) - USD ($) $ in Thousands | Apr. 03, 2017 | Nov. 30, 2017 | May 31, 2017 | Nov. 30, 2016 | Aug. 31, 2017 |
Sale of Businesses | |||||
Proceeds from the sale of property and assets | $ 229 | ||||
Revenue | |||||
Sale of Businesses | |||||
Manufacturing services | $ 470 | ||||
Selling, General and Administrative Expenses | |||||
Sale of Businesses | |||||
Administrative expense fees | 60 | ||||
Other Income (Expense) | |||||
Sale of Businesses | |||||
Rental income | 33 | ||||
Fiber Optic Cable Components Product Line | |||||
Sale of Businesses | |||||
Total proceeds to be received | $ 3,858 | ||||
Proceeds from the sale of property and assets | $ 3,458 | ||||
Pre-tax book gain from the sale of property and assets | $ 2,013 | ||||
Term of Escrow Deposit | 18 months | ||||
Fiber Optic Cable Components Product Line | Other Noncurrent Asset | |||||
Sale of Businesses | |||||
Sale price held in escrow | $ 400 | ||||
Fiber Optic Cable Components Product Line | Other Current Assets | |||||
Sale of Businesses | |||||
Sale price held in escrow | $ 400 |
Sale of Real Estate (Details)
Sale of Real Estate (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Dec. 31, 2016 | Nov. 30, 2016 | Nov. 30, 2016 | |
Paterson NJ | |||
Assets held for sale | |||
Proceeds from the sale of property | $ 1,382 | ||
Gain on sale of assets | $ 792 | ||
Bridgewater MA location | |||
Assets held for sale | |||
Proceeds from the sale of property | $ 740 | ||
Gain on sale of assets | $ 68 |
Pensions and Other Postretire47
Pensions and Other Postretirement Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Components of net periodic benefit cost | ||
Service cost | $ 71 | $ 72 |
Interest cost | 157 | 170 |
Expected return on plan assets | (116) | (132) |
Amortization of prior service cost | 1 | 1 |
Amortization of accumulated loss | 121 | 224 |
Net periodic benefit cost | 234 | 335 |
Employer contribution | $ 389 | $ 21 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Fair value measurements | ||
Restricted investments | $ 1,057 | $ 964 |
Quoted prices in active markets (Level 1) | ||
Fair value measurements | ||
Restricted investments | 1,006 | 926 |
Significant other observable inputs (Level 2) | ||
Fair value measurements | ||
Restricted investments | $ 51 | $ 38 |
Accumulated Other Comprehensi49
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Accumulated other comprehensive income | ||
Balance at the beginning of the period | $ (13,469) | $ (15,479) |
Other comprehensive gains (losses) before reclassifications | 1,601 | (2,084) |
Reclassifications to net income of previously deferred (gains) losses | 80 | 146 |
Total other comprehensive income (loss) | 1,681 | (1,938) |
Balance at the ending of the period | (11,788) | (17,417) |
Restricted investments, other comprehensive gains (losses) before reclassifications, tax benefit | (8) | |
Restricted investments, other comprehensive gains (losses) before reclassifications, tax expense | 16 | |
Change in funded status of pension plan, other comprehensive gains (losses) before reclassifications, tax (expense) benefit | 0 | 0 |
Foreign currency translation adjustment, other comprehensive gains (losses) before reclassifications, tax (expense) benefit | 0 | 0 |
Restricted investments, reclassifications to net income of previously deferred (gains) losses, tax (expense) benefit | 1 | 1 |
Change in funded status of pension plan, reclassifications to net income of previously deferred (gains) losses, tax (expense) benefit | 41 | 78 |
Foreign currency translation adjustment, reclassifications to net income of previously deferred (gains) losses, tax (expense) benefit | 0 | 0 |
Restricted investments | ||
Accumulated other comprehensive income | ||
Balance at the beginning of the period | 121 | 54 |
Other comprehensive gains (losses) before reclassifications | 31 | 14 |
Reclassifications to net income of previously deferred (gains) losses | (1) | |
Total other comprehensive income (loss) | 31 | 13 |
Balance at the ending of the period | 152 | 67 |
Change in funded status of pension plan | ||
Accumulated other comprehensive income | ||
Balance at the beginning of the period | (6,181) | (7,336) |
Reclassifications to net income of previously deferred (gains) losses | 80 | 147 |
Total other comprehensive income (loss) | 80 | 147 |
Balance at the ending of the period | (6,101) | (7,189) |
Foreign currency translation adjustment | ||
Accumulated other comprehensive income | ||
Balance at the beginning of the period | (7,409) | (8,197) |
Other comprehensive gains (losses) before reclassifications | 1,570 | (2,098) |
Total other comprehensive income (loss) | 1,570 | (2,098) |
Balance at the ending of the period | $ (5,839) | $ (10,295) |
Accumulated Other Comprehensi50
Accumulated Other Comprehensive Income - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Accumulated other comprehensive income | ||
Selling, general and administrative expenses | $ (12,059) | $ (11,752) |
Cost of products and services sold | (36,895) | (35,289) |
Tax expense (benefit) | (4,284) | (4,287) |
Net Income | 8,315 | 10,363 |
Net income (loss) | 8,315 | 10,363 |
Reclassification out of accumulated other comprehensive income (loss) | ||
Accumulated other comprehensive income | ||
Net Income | 80 | 146 |
Restricted investments | Reclassification out of accumulated other comprehensive income (loss) | ||
Accumulated other comprehensive income | ||
Selling, general and administrative expenses | (1) | (2) |
Tax expense (benefit) | 1 | 1 |
Net Income | (1) | |
Change in funded status of pension plan | Reclassification out of accumulated other comprehensive income (loss) | ||
Accumulated other comprehensive income | ||
Selling, general and administrative expenses | 94 | 199 |
Cost of products and services sold | 28 | 26 |
Tax expense (benefit) | (42) | (78) |
Net Income | $ 80 | $ 147 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Nov. 30, 2016 | Nov. 30, 2017 | Aug. 31, 2017 |
Acquisitions | ||||
Expenses related to acquisition | $ 27 | |||
Acquisition cost has been allocated to the acquired tangible and identifiable intangible assets and liabilities assumed based on their fair values | ||||
Goodwill | $ 50,911 | $ 50,784 | ||
Resin Designs | ||||
Acquisitions | ||||
Purchase price | $ 30,270 | |||
Expenses related to acquisition | $ 584 | |||
Acquisition cost has been allocated to the acquired tangible and identifiable intangible assets and liabilities assumed based on their fair values | ||||
Accounts receivable | 1,877 | |||
Inventory | 1,300 | |||
Prepaid expenses and other current assets | 63 | |||
Property, plant and equipment | 623 | |||
Goodwill | 7,592 | |||
Intangible assets | 19,450 | $ 19,450 | ||
Accounts payable and accrued expenses | (635) | |||
Total purchase price | 30,270 | |||
Goodwill related to acquisitions that is deductible for income taxes | $ 7,592 |
Acquisitions - By Acquiree (Det
Acquisitions - By Acquiree (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Sep. 30, 2016 | |
Pro Forma Information | |||
Revenues | $ 61,917 | $ 61,357 | |
Net Income | 8,315 | $ 10,363 | |
Resin Designs | |||
Acquisition of Specialty Chemical Intermediates Businesses | |||
Intangible assets | 19,450 | $ 19,450 | |
Pro Forma Information | |||
Revenues | 3,738 | ||
Net Income | 348 | ||
Statutory tax rate (as a percent) | 35.00% | ||
Revenue | $ 62,942 | ||
Net income | $ 11,034 | ||
Net income available to common shareholders, per common and common equivalent share | |||
Basic earnings per share (in dollars per share) | $ 1.18 | ||
Diluted earning per share (in dollars per share) | $ 1.17 | ||
Resin Designs | Customer Relationships | |||
Acquisition of Specialty Chemical Intermediates Businesses | |||
Intangible assets | $ 17,500 | ||
Useful life | 10 years | ||
Resin Designs | Technology | |||
Acquisition of Specialty Chemical Intermediates Businesses | |||
Intangible assets | $ 1,200 | ||
Useful life | 4 years | ||
Resin Designs | Trade names | |||
Acquisition of Specialty Chemical Intermediates Businesses | |||
Intangible assets | $ 750 | ||
Useful life | 7 years |
Exit Costs Related to Idle Fa53
Exit Costs Related to Idle Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | Aug. 31, 2016 | |
Exit Costs Related to Idle Facility | ||||
Exit and demolition costs | $ 584 | |||
Randolph MA | ||||
Exit Costs Related to Idle Facility | ||||
Exit and demolition costs | $ 0 | $ 27 | $ 70 | $ 935 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Assets held for sale | ||
Assets Held for sale | $ 14 | $ 14 |
Property | Randolph MA | ||
Assets held for sale | ||
Assets Held for sale | $ 14 | $ 14 |
Related Party Agreements (Detai
Related Party Agreements (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Dec. 31, 2016USD ($)individual | Sep. 30, 2016USD ($) | Nov. 30, 2016USD ($)policy | Aug. 31, 2016USD ($)policy | Nov. 30, 2017USD ($) | Aug. 31, 2017USD ($) | |
Related party transactions | ||||||
Proceeds from settlement of life insurance policies | $ 1,504 | |||||
Original book value | $ 89,424 | $ 89,052 | ||||
Net book value | $ 44,607 | $ 46,846 | ||||
John Hancock (formerly Manufacturers' Life Insurance Company) | ||||||
Related party transactions | ||||||
Proceeds from settlement of life insurance policies | $ 1,238 | |||||
Metropolitan Life Insurance | ||||||
Related party transactions | ||||||
Proceeds from settlement of life insurance policies | $ 1,504 | |||||
Trust | ||||||
Related party transactions | ||||||
Number of insurance policies | policy | 2 | 2 | ||||
Trust | Minimum | ||||||
Related party transactions | ||||||
Ownership interest (as a percent) | 5.00% | |||||
Bridgewater MA location | ||||||
Related party transactions | ||||||
Proceeds from the sale of property | $ 740 | |||||
Gain on sale of assets | $ 68 | |||||
Bridgewater MA location | Bridgewater State University Foundation | ||||||
Related party transactions | ||||||
Number of board members | individual | 2 | |||||
Proceeds from the sale of property | $ 740 | |||||
Gain on sale of assets | $ 68 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Thousands | Dec. 15, 2016USD ($) | Dec. 31, 2017USD ($) | Nov. 30, 2017USD ($) | Nov. 30, 2016USD ($) |
Long-term debt | ||||
Outstanding balance | $ 0 | |||
Principal payment | $ 2,100 | |||
New Credit Agreement | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 150,000 | |||
Additional borrowing capacity | $ 50,000 | |||
Carrying value of direct and indirect domestic subsidiaries | $ 162,794 | |||
Term of debt | 5 years | |||
Term of potential debt | 7 years | |||
Amount drew in relation to acquisition | $ 65,000 | |||
New Credit Agreement | Minimum | ||||
Long-term debt | ||||
Consolidated fixed charge coverage ratio | 1.25 | |||
New Credit Agreement | Maximum | ||||
Long-term debt | ||||
Net leverage ratio | 3.25 | |||
New Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||
Long-term debt | ||||
Interest payment due | 3 months | |||
New Credit Agreement | London Interbank Offered Rate (LIBOR) | Minimum | ||||
Long-term debt | ||||
Interest rate margin on variable rate basis (as a percent) | 1.00% | |||
New Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum | ||||
Long-term debt | ||||
Interest rate margin on variable rate basis (as a percent) | 1.75% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 |
Subsequent Events | ||
Subsequent Events | ||
Statutory tax rate (as a percent) | 21.00% | 35.00% |
SSA, LLC | ||
Subsequent Events | ||
Purchase price | $ 71,382 | |
SSA, LLC | Minimum | ||
Subsequent Events | ||
Combined revenue | 24,000 | |
SSA, LLC | Subsequent Events | ||
Subsequent Events | ||
Purchase price | 71,382 | |
SSA, LLC | Subsequent Events | Minimum | ||
Subsequent Events | ||
Combined revenue | $ 24,000 |