Guarantor Subsidiaries

6 Months Ended

Feb. 28, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Guarantor Subsidiaries

Guarantor Subsidiaries

As discussed in Note 8, “Debt” on April 16, 2012, Actuant Corporation (the “Parent”) issued $300.0 million of 5.625% Senior Notes, of which $288.1 million remains outstanding as of February 28, 2017. All of our material domestic wholly owned subsidiaries (the “Guarantors”) fully and unconditionally guarantee the 5.625% Senior Notes on a joint and several basis. There are no significant restrictions on the ability of the Guarantors to make distributions to the Parent. The following tables present the results of operations, financial position and cash flows of Actuant Corporation and its subsidiaries, the Guarantor and non-Guarantor entities, and the eliminations necessary to arrive at the information for the Company on a consolidated basis.

Certain assets, liabilities and expenses have not been allocated to the Guarantors and non-Guarantors and therefore are included in the Parent column in the accompanying condensed consolidating financial statements. These items are of a corporate or consolidated nature and include, but are not limited to, tax provisions and related assets and liabilities, certain employee benefit obligations, prepaid and accrued insurance and corporate indebtedness. Intercompany activity primarily includes loan activity, purchases and sales of goods or services, investments and dividends. Intercompany balances also reflect certain non-cash transactions including transfers of assets and liabilities between the Parent, Guarantor and non-Guarantor, allocation of non-cash expenses from the Parent to the Guarantors and non-Guarantors, non-cash intercompany dividends and the impact of foreign currency rate changes.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Three Months Ended February 28, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	34,953		$	80,973		$	142,943		$	—		$	258,869
Cost of products sold	10,049			61,821			99,673			—			171,543
Gross profit	24,904			19,152			43,270			—			87,326
Selling, administrative and engineering expenses	18,553			16,549			31,855			—			66,957
Amortization of intangible assets	318			2,918			1,833			—			5,069
Restructuring charges	372			441			1,288			—			2,101
Operating profit (loss)	5,661			(756		)	8,294			—			13,199
Financing costs (income), net	7,430			—			(96		)	—			7,334
Intercompany (income) expense, net	(7,882		)	11,242			(3,360		)	—			—
Intercompany dividends	—			(4,258		)	—			4,258			—
Other (income) expense, net	(48		)	(4		)	643			—			591
Earnings (loss) before income taxes	6,161			(7,736		)	11,107			(4,258		)	5,274
Income tax expense (benefit)	151			(667		)	716			—			200
Net earnings (loss) before equity in (loss) earnings of subsidiaries	6,010			(7,069		)	10,391			(4,258		)	5,074
Equity in earnings (loss) of subsidiaries	(936		)	8,057			(268		)	(6,853		)	—
Net earnings	$	5,074		$	988		$	10,123		$	(11,111	)	$	5,074
Comprehensive income	$	8,185		$	1,324		$	12,828		$	(14,152	)	$	8,185

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Three Months Ended February 29, 2016
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	32,399		$	84,099		$	146,791		$	—		$	263,289
Cost of products sold	12,077			61,815			98,367			—			172,259
Gross profit	20,322			22,284			48,424			—			91,030
Selling, administrative and engineering expenses	17,117			17,309			32,746			—			67,172
Amortization of intangible assets	318			3,336			2,226			—			5,880
Restructuring charges	79			2,446			1,057			—			3,582
Impairment charges	—			49,012			137,499			—			186,511
Operating profit (loss)	2,808			(49,819		)	(125,104		)	—			(172,115		)
Financing costs (income), net	7,308			—			(442		)	—			6,866
Intercompany (income) expense, net	(5,465		)	(1,072		)	6,537			—			—
Intercompany dividends	—			—			(5,338		)	5,338			—
Other expense (income), net	200			(28		)	63			—			235
Earnings (loss) before income taxes	765			(48,719		)	(125,924		)	(5,338		)	(179,216		)
Income tax benefit	(1,648		)	(1,000		)	(17,378		)	—			(20,026		)
Net earnings (loss) before equity in (loss) earnings of subsidiaries	2,413			(47,719		)	(108,546		)	(5,338		)	(159,190		)
Equity in (loss) earnings of subsidiaries	(161,603		)	(97,943		)	229			259,317			—
Net loss	$	(159,190	)	$	(145,662	)	$	(108,317	)	$	253,979		$	(159,190	)
Comprehensive loss	$	(173,341	)	$	(162,285	)	$	(106,174	)	$	268,459		$	(173,341	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Six Months Ended February 28, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	66,682		$	165,249		$	292,731		$	—		$	524,662
Cost of products sold	17,143			123,237			203,889			—			344,269
Gross profit	49,539			42,012			88,842			—			180,393
Selling, administrative and engineering expenses	36,520			33,185			65,856			—			135,561
Amortization of intangible assets	636			5,994			3,700			—			10,330
Restructuring charges	727			1,164			3,157			—			5,048
Director & officer transition charges	7,784			—			—			—			7,784
Operating profit	3,872			1,669			16,129			—			21,670
Financing costs (income), net	14,756			—			(289		)	—			14,467
Intercompany (income) expense, net	(12,950		)	10,156			2,794			—			—
Intercompany dividends	—			(59,401		)	—			59,401			—
Other expense (income), net	2,037			(74		)	(2,001		)	—			(38		)
Earnings before income taxes	29			50,988			15,625			(59,401		)	7,241
Income tax (benefit) expense	(2,563		)	(697		)	462			—			(2,798		)
Net earnings before equity in earnings of subsidiaries	2,592			51,685			15,163			(59,401		)	10,039
Equity in earnings of subsidiaries	7,447			13,682			2,862			(23,991		)	—
Net earnings	$	10,039		$	65,367		$	18,025		$	(83,392	)	$	10,039
Comprehensive (loss) income	$	(12,972	)	$	47,616		$	13,459		$	(61,075	)	$	(12,972	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Six Months Ended February 29, 2016
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	67,089		$	185,040		$	316,171		$	—		$	568,300
Cost of products sold	19,248			134,153			215,308			—			368,709
Gross profit	47,841			50,887			100,863			—			199,591
Selling, administrative and engineering expenses	36,877			35,839			67,367			—			140,083
Amortization of intangible assets	636			6,644			4,499			—			11,779
Restructuring charges	957			2,568			4,437			—			7,962
Impairment charges	—			49,012			137,499			—			186,511
Operating profit (loss)	9,371			(43,176		)	(112,939		)	—			(146,744		)
Financing costs (income), net	14,763			—			(781		)	—			13,982
Intercompany (income) expense, net	(11,294		)	(6,897		)	18,191			—			—
Intercompany dividends	—			—			(5,338		)	5,338			—
Other expense, net	603			31			221			—			855
Earnings (loss) before income taxes	5,299			(36,310		)	(125,232		)	(5,338		)	(161,581		)
Income tax (benefit) expense	(1,057		)	657			(17,439		)	—			(17,839		)
Net earnings (loss) before equity in earnings (loss) of subsidiaries	6,356			(36,967		)	(107,793		)	(5,338		)	(143,742		)
Equity in (loss) earnings of subsidiaries	(150,098		)	(95,069		)	2,087			243,080			—
Net loss	$	(143,742	)	$	(132,036	)	$	(105,706	)	$	237,742		$	(143,742	)
Comprehensive loss	$	(178,827	)	$	(160,882	)	$	(112,155	)	$	273,037		$	(178,827	)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	February 28, 2017
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	6,509	$	—	$	165,381	$	—		$	171,890
Accounts receivable, net	16,364		48,848		136,702		—			201,914
Inventories, net	20,486		43,861		63,226		—			127,573
Other current assets	8,666		3,540		41,778		—			53,984
Total current assets	52,025		96,249		407,087		—			555,361
Property, plant and equipment, net	6,801		26,357		82,034		—			115,192
Goodwill	38,847		200,498		269,733		—			509,078
Other intangibles, net	8,793		143,763		73,003		—			225,559
Investment in subsidiaries	1,893,280		1,402,022		531,353		(3,826,655		)	—
Intercompany receivable	—		700,169		191,146		(891,315		)	—
Other long-term assets	5,430		10		16,404		—			21,844
Total assets	$	2,005,176	$	2,569,068	$	1,570,760	$	(4,717,970	)	$	1,427,034
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$	12,838	$	22,627	$	89,484	$	—		$	124,949
Accrued compensation and benefits	15,032		4,886		22,445		—			42,363
Current maturities of debt and short-term borrowings	26,250		—		—		—			26,250
Income taxes payable	1,113		—		—		—			1,113
Other current liabilities	16,710		5,038		27,481		—			49,229
Total current liabilities	71,943		32,551		139,410		—			243,904
Long-term debt, net	547,058		—		—		—			547,058
Deferred income taxes	21,503		—		9,534		—			31,037
Pension and postretirement benefit liabilities	15,863		—		8,279		—			24,142
Other long-term liabilities	47,024		417		8,443		—			55,884
Intercompany payable	776,776		—		114,539		(891,315		)	—
Shareholders’ equity	525,009		2,536,100		1,290,555		(3,826,655		)	525,009
Total liabilities and shareholders’ equity	$	2,005,176	$	2,569,068	$	1,570,760	$	(4,717,970	)	$	1,427,034

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	August 31, 2016
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	7,953	$	71	$	171,580	$	—		$	179,604
Accounts receivable, net	13,692		41,715		131,422		—			186,829
Inventories, net	19,897		44,283		66,576		—			130,756
Other current assets	7,754		3,858		33,851		—			45,463
Total current assets	49,296		89,927		403,429		—			542,652
Property, plant and equipment, net	5,927		23,511		84,577		—			114,015
Goodwill	38,847		200,499		279,930		—			519,276
Other intangibles, net	9,429		149,757		80,289		—			239,475
Investment in subsidiaries	1,915,367		578,423		465,736		(2,959,526		)	—
Intercompany receivable	—		1,159,672		—		(1,159,672		)	—
Other long-term assets	5,702		10		17,530		—			23,242
Total assets	$	2,024,568	$	2,201,799	$	1,331,491	$	(4,119,198	)	$	1,438,660
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$	11,529	$	20,669	$	82,853	$	—		$	115,051
Accrued compensation and benefits	17,506		5,754		23,641		—			46,901
Current maturities of debt and short-term borrowings	18,750		—		—		—			18,750
Income taxes payable	1,886		—		7,368		—			9,254
Other current liabilities	20,459		6,989		24,508		—			51,956
Total current liabilities	70,130		33,412		138,370		—			241,912
Long-term debt, net	561,681		—		—		—			561,681
Deferred income taxes	30,666		—		690		—			31,356
Pension and postretirement benefit liabilities	16,803		—		8,864		—			25,667
Other long-term liabilities	47,739		588		8,767		—			57,094
Intercompany payable	776,599		—		383,073		(1,159,672		)	—
Shareholders’ equity	520,950		2,167,799		791,727		(2,959,526		)	520,950
Total liabilities and shareholders’ equity	$	2,024,568	$	2,201,799	$	1,331,491	$	(4,119,198	)	$	1,438,660

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Six Months Ended February 28, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Net cash provided by operating activities	$	58,626		$	5,902		$	8,906		$	(59,401	)	$	14,033
Investing Activities
Capital expenditures	(2,156		)	(6,108		)	(6,431		)	—			(14,695		)
Proceeds from sale of property, plant and equipment	—			135			109			—			244
Cash used in investing activities	(2,156		)	(5,973		)	(6,322		)	—			(14,451		)
Financing Activities
Principal repayments on term loan	(7,500		)	—			—			—			(7,500		)
Taxes paid related to the net share settlement of equity awards	(920		)	—			—			—			(920		)
Stock option exercises, related tax benefits and other	6,598			—			—			—			6,598
Cash dividend	(2,358		)	—			(59,401		)	59,401			(2,358		)
Intercompany loan activity	(53,734		)	—			53,734			—			—
Cash used in financing activities	(57,914		)	—			(5,667		)	59,401			(4,180		)
Effect of exchange rate changes on cash	—			—			(3,116		)	—			(3,116		)
Net decrease in cash and cash equivalents	(1,444		)	(71		)	(6,199		)	—			(7,714		)
Cash and cash equivalents—beginning of period	7,953			71			171,580			—			179,604
Cash and cash equivalents—end of period	$	6,509		$	—		$	165,381		$	—		$	171,890

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Six Months Ended February 29, 2016
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Net cash (used in) provided by operating activities	$	(1,531	)	$	5,293		$	30,439		$	(5,338	)	$	28,863
Investing Activities
Capital expenditures	(339		)	(3,194		)	(7,471		)	—			(11,004		)
Proceeds from sale of property, plant and equipment	13			2,672			1,951			—			4,636
Business acquisitions, net of cash acquired	—			—			(15,026		)	—			(15,026		)
Cash used in investing activities	(326		)	(522		)	(20,546		)	—			(21,394		)
Financing Activities
Net repayments on revolver and other debt	—			—			(210		)	—			(210		)
Purchase of treasury shares	(9,352		)	—			—			—			(9,352		)
Taxes paid related to the net share settlement of equity awards	(1,332		)	—			—			—			(1,332		)
Stock option exercises, related tax benefits and other	2,245			—			—			—			2,245
Cash dividend	(2,376		)	(5,338		)	—			5,338			(2,376		)
Intercompany loan activity	464			—			(464		)	—			—
Cash used in financing activities	(10,351		)	(5,338		)	(674		)	5,338			(11,025		)
Effect of exchange rate changes on cash	—			—			(10,619		)	—			(10,619		)
Net decrease in cash and cash equivalents	(12,208		)	(567		)	(1,400		)	—			(14,175		)
Cash and cash equivalents—beginning of period	18,688			567			149,591			—			168,846
Cash and cash equivalents—end of period	$	6,480		$	—		$	148,191		$	—		$	154,671