Acquisitions | 6 Months Ended |
Apr. 30, 2015 |
Acquisitions [Abstract] | |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | —Acquisitions |
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Radar Industries, Inc. |
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On September 30, 2014, the Company, through a wholly-owned subsidiary, consummated the transactions contemplated by the Asset Purchase Agreement, dated September 30, 2014 (the "Radar Agreement"), with Radar Industries, Inc., and Radar Mexican Investments, LLC which produce engineered metal stampings and machined parts for the motor vehicle industry. |
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The Company acquired Radar in order to further its investment in stamping technologies and expand the diversity of its customer base, product offering and geographic footprint. Radar's results of operations are reflected in the Company's condensed consolidated statements of income from the acquisition date. |
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The aggregate fair value of consideration transferred in connection with the Radar Agreement was $57,874 ($57,799 net of cash acquired) in cash on the date of acquisition. Of this amount, $6,500 in cash was placed into escrow, and will serve as security for any indemnification claims made by the Company under the Radar Agreement. |
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The acquisition of Radar Industries Inc. has been accounted for using the acquisition method in accordance with the FASB ASC Topic 805, Business Combinations. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The fair values of identifiable intangible assets were based on valuations using the income approach and estimates provided by management. The excess of the purchase price over the estimated fair values of the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price is based upon a valuation of certain assets acquired and liabilities assumed. The preliminary purchase price allocation was as follows: |
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Cash and cash equivalents | | $ | 75 | | | | | | | | | | | | | |
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Accounts receivable | | 14,374 | | | | | | | | | | | | | |
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Inventory | | 15,729 | | | | | | | | | | | | | |
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Prepaid assets and other | | 95 | | | | | | | | | | | | | |
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Property, plant and equipment | | 26,612 | | | | | | | | | | | | | |
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Goodwill | | 13,184 | | | | | | | | | | | | | |
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Intangible assets | | 6,090 | | | | | | | | | | | | | |
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Accounts payable and other | | (18,285 | ) | | | | | | | | | | | | |
Net assets acquired | | $ | 57,874 | | | | | | | | | | | | | |
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The purchase price allocation is provisional, pending completion of the valuation of acquired assets, property, plant and equipment and inventories. The Company is utilizing a third party to assist in the fair value determination of certain components of the purchase price allocation, namely inventory, property, plant and equipment, intangible assets and goodwill. The final valuation may change the allocation of the purchase price, which could affect the fair values assigned to the assets. |
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The Company believes the amount of goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the synergies expected after the Company's acquisition of Radar. All of the goodwill was allocated to a wholly owned subsidiary of the Company. The total amount of goodwill expected to be deductible for tax purposes is $29,569 and is estimated to be deductible over approximately 15 years. |
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Of the $6,090 of acquired intangible assets, $3,710 was assigned to customers that have a useful life of approximately 14 years, and $2,300 was assigned to developed technologies with an estimated useful life of approximately 10 years and $80 was assigned to a non-compete agreement with an estimated useful life of 5 years. The Company utilized a third party to assist in assigning a fair value to acquired assets. The total amount of identifiable intangible assets expected to be deductible for tax purposes is $6,090 and is estimated to be deductible over approximately 15 years. |
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Finnveden Metal Structures |
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On June 30, 2014, Shiloh Holdings Sweden AB, a wholly-owned subsidiary of the Company, entered into and consummated the transactions contemplated by the Share Sale and Purchase Agreement dated May 21, 2014 with FinnvedenBultenAB and Finnveden AB ("Finnveden"), a wholly-owned subsidiary of FinnvedenBulten AB, a producer of aluminum and steel stampings and magnesium die cast and machined parts for the motor vehicle industry. |
The Company acquired Finnveden in order to expand our stamping capabilities while adding magnesium die casting to our product line, a key growth segment, and technology being used to address the lightweighting needs of automakers. Additionally, the Finnveden acquisition adds strategic European locations in Poland and Sweden while diversifying our customer base. Finnveden's results of operations are reflected in the Company's condensed consolidated statements of income from the acquisition date. |
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The aggregate fair value of consideration transferred in connection with the FMS Agreement was $72,618, ($66,396 net of cash acquired), in cash on the date of acquisition. |
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The acquisition of Finnveden has been accounted for using the acquisition method in accordance with FASB ASC Topic 805, Business Combinations. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The fair values of identifiable intangible assets were based on valuations using the income approach and estimates provided by management. The excess of the purchase price over the estimated fair values of the tangible assets, identifiable intangible assets and assumed liabilities were recorded as goodwill. The allocation of the purchase price is based upon a valuation of certain assets acquired and liabilities assumed. The preliminary purchase price allocation was as follows: |
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Cash and cash equivalents | | $ | 6,222 | | | | | | | | | | | | | |
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Accounts receivable | | 29,744 | | | | | | | | | | | | | |
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Inventory | | 26,858 | | | | | | | | | | | | | |
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Prepaid expenses | | 3,681 | | | | | | | | | | | | | |
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Property, plant and equipment | | 35,408 | | | | | | | | | | | | | |
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Goodwill | | 7,804 | | | | | | | | | | | | | |
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Intangible assets | | 1,136 | | | | | | | | | | | | | |
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Other non-current assets | | 3,830 | | | | | | | | | | | | | |
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Accounts payable and other | | (36,416 | ) | | | | | | | | | | | | |
Long term liabilities | | (5,649 | ) | | | | | | | | | | | | |
Net assets acquired | | $ | 72,618 | | | | | | | | | | | | | |
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The purchase price allocation is provisional, pending completion of the valuation of acquired intangible assets, property, plant and equipment, and inventories. The Company is utilizing a third party to assist in the fair value determination of certain components of the purchase price allocation, namely inventory, property, plant and equipment and intangible assets. The final valuation may change the allocation of the purchase price, which could affect the fair values assigned to the assets. |
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The Company believes the amount of goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergies after the Company's acquisition of Finnveden. All of the goodwill was allocated to a wholly owned subsidiary of the Company. The Company does not expect that the amount of goodwill will be deductible for tax purposes under current Polish or Swedish tax law. |
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The $1,136 of acquired intangible assets was assigned to customers that have a useful life of approximately 10 years. The fair value assigned to identifiable intangible assets acquired have been determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The Company is utilizing a third party to assist in assigning a fair value to acquired intangible assets. The Company does not expect that the total amount of identifiable intangible assets will be deductible for tax purposes under current Polish or Swedish tax law. |
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Pro Forma Consolidated Results |
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The following supplemental pro forma information presents the actual financial results for the three and six months ended April 30, 2015, and pro forma financial results for the three and six months ended April 30, 2014 as if the acquisitions of Radar and Finnveden had occurred on November 1, 2013. The pro forma results do not include any anticipated cost synergies, costs or other effects of the integration of Radar Industries, Inc. and Finnveden. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on the dates indicated, nor are they indicative of the future operating results of the combined Company. In addition, the pro forma information includes amortization expense related to the intangible assets acquired of $247 and $388 for the three and six months ended April 30, 2015, respectively. |
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Pro forma consolidated results | | Three months ended April 30, | | Six months ended April 30, |
(in thousands, except for per share data): | | 2015 | | 2014 | | 2015 | | 2014 |
Revenue | | $ | 280,378 | | | $ | 303,448 | | | $ | 537,455 | | | $ | 578,924 | |
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Net income | | $ | 7,195 | | | $ | 11,258 | | | $ | 10,868 | | | $ | 17,448 | |
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Basic earnings per share | | $ | 0.42 | | | $ | 0.66 | | | $ | 0.63 | | | $ | 1.02 | |
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Diluted earnings per share | | $ | 0.42 | | | $ | 0.66 | | | $ | 0.63 | | | $ | 1.02 | |
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The above pro forma consolidated results include the impact of foreign currency translation. For the three and six months ended April 30, 2015, the average currency rate of the USD to the Swedish krona was 8.519 and 8.097, respectively. For the three and six month ended April 30, 2014, the average currency rate of the USD to the Swedish krona was 6.488 and 6.512, respectively. |