Acquisitions

On December 30, 2014 the Company acquired 100% of the outstanding common shares of Stahlhammer Bommern GmbH (“STB”) located in Hamm, Germany, a privately-owned company with annual sales of approximately $16,000,000. STB manufactures a large range of lifting tools and forged parts that are able to withstand particularly heavy, static and dynamic loads, including single and ramshorn lifting hooks. The Company believes STB is a strong strategic fit allowing further expansion of the rigging business globally. The results of STB are included in the Company’s consolidated financial statements from the date of acquisition. The acquisition of STB is not considered significant to the Company’s consolidated financial position and results of operations.

The acquisition of STB was funded with existing cash. The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed as of the date of acquisition. The excess consideration of $7,818,000 has preliminarily been recorded as goodwill. The identifiable intangible assets acquired include customer relationships of $2,957,000, trademark and trade names of $1,301,000, non-compete agreements of $221,000, backlog of $74,000, and patents of $82,000. During the period ending June 30, 2015, the Company has increased the value of its customer relationships by $1,227,000 and decreased the liability for contingent consideration by $810,000 due to modifications made during the measurement period. Both of these adjustments have reduced goodwill at June 30, 2015 by $1,669,000 and increased long term deferred tax liabilities by $368,000 as of the opening balance sheet date.

The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 9 years at the time of acquisition. Goodwill recorded in connection with the acquisition is not deductible for income tax purposes. The terms of the acquisition require the Company to pay additional consideration to the seller if certain performance measures are met by STB. The potential additional consideration ranges from $0 to $3,681,000. The Company had preliminarily estimated the fair value of the liability related to this contingent consideration to be $982,000 at March 31, 2015. The Company has adjusted this preliminary estimate to $172,000 during the quarter ended June 30, 2015. This liability is included in the Company's consolidated balance sheet within other non-current liabilities. The value has been estimated by simulating the future performance of STB in a Geometric Brownian Motion model. Key assumptions used in this model include a volatility factor of 45% and a credit risk adjusted discount rate of 3%. External acquisition related costs totaling $150,000 were expensed in fiscal 2015.

The preliminary assignment of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):



Working capital	$	9,444
Property, plant and equipment	13,616
Intangible assets	4,561
Other long term assets	67
Debt	(6,487		)
Other liabilities	(3,596		)
Goodwill	7,818
Total	$	25,423

At June 30, 2015, the Company revalued the contingent consideration based on updated performance forecasts. Based on this revaluation, the liability related to the contingent consideration has been reduced to $13,000 with the resulting gain recorded in Cost of products sold on the Company's Condensed Consolidated Statements of Operations and Retained Earnings.

In connection with the acquisition of STB, the Company withheld $5,431,000 to be paid to the seller upon satisfaction of certain conditions. Of this amount, $5,431,000 and $822,000 is expected to be paid to the seller within one year of the periods ending June 30, 2015 and March 31, 2015, respectively. At March 31, 2015, $4,609,000 was expected to be paid to the seller in a time period exceeding one year. The Company has recorded assets on its condensed consolidated balance sheets of $5,431,000 and $822,000 within prepaid expenses and other at June 30, 2015 and March 31, 2015, respectively. Long term restricted cash of $4,609,000 is recorded in other assets at March 31, 2015. Further, the Company has recorded a short term liability to the seller of $5,431,000 and $822,000 within accrued liabilities at June 30, 2015 and March 31, 2015, respectively. A long term liability to the seller of $4,609,000 is recorded within other non current liabilities at March 31, 2015.

For the STB acquisition, goodwill represents future economic benefits arising from other assets acquired that do not meet the criteria for separate recognition apart from goodwill, including assembled workforce, growth opportunities and increased presence in the markets served by the target companies.

See Note 3 for assumptions used in valuing of the intangible assets acquired.

On July 26, 2015, the Company entered into an agreement and plan of merger with Magnetek, Inc. (“Magnetek”), a designer and manufacturer of digital power and motion control solutions for material handling, elevators, and mining applications. The planned transaction is expected to combine Magnetek's technology with the Company's broad line of lifting and positioning mechanical products to create a more comprehensive solution for customers. Pursuant to the merger, the Company has agreed to commence a tender offer to acquire all of the outstanding shares of common stock of Magnetek at a purchase price of $50.00 per share in cash for a total value of approximately $188,900,000. The obligation for the Company to purchase the shares of common stock of Magnetek is subject to the satisfaction of a number of conditions, as set forth in the merger agreement. After completion of the tender offer, the Company expects to complete the acquisition of the remaining shares of common stock of Magnetek pursuant to a merger of the Company’s wholly owned subsidiary with Magnetek, with Magnetek surviving as a wholly owned subsidiary of the Company.

In connection with the Magnetek transaction, on July 26, 2015 the Company, JPMorgan Chase Bank, N.A. (“JP Morgan Chase Bank”) and J.P. Morgan Securities LLC entered into a commitment letter in which JPMorgan Chase Bank committed to extend $75,000,000 of incremental revolving commitments to the Company’s existing credit agreement dated as of January 23, 2015. JPMorgan Chase Bank’s commitments will be used to finance a portion of the Magnetek acquisition, and to pay related fees, expenses, and transaction costs. The remaining balance of the purchase price will be funded primarily through the Company's existing credit lines. The incremental revolving commitments will be on terms and conditions consistent with the Company’s existing revolving credit facility under the Credit Agreement.