Guarantor Subsidiaries

6 Months Ended

Feb. 28, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 $287.6 million remains outstanding as of February 28, 2018. 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.

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.

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.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)



	Three Months Ended February 28, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	36,219		$	83,072		$	155,874		$	—		$	275,165
Cost of products sold	5,848			63,979			115,642			—			185,469
Gross profit	30,371			19,093			40,232			—			89,696
Selling, administrative and engineering expenses	18,190			17,232			33,080			—			68,502
Amortization of intangible assets	318			2,861			1,989			—			5,168
Restructuring charges	194			909			2,347			—			3,450
Impairment & divestiture charges	4,217			—			(1,230		)	—			2,987
Operating profit (loss)	7,452			(1,909		)	4,046			—			9,589
Financing costs (income), net	7,777			22			(195		)	—			7,604
Intercompany (income) expense, net	(5,042		)	5,419			(377		)	—			—
Other expense, net	90			49			228			—			367
Earnings (loss) before income taxes	4,627			(7,399		)	4,390			—			1,618
Income tax expense (benefit)	10,612			(2,234		)	11,461			—			19,839
Net loss before equity in loss of subsidiaries	(5,985		)	(5,165		)	(7,071		)	—			(18,221		)
Equity in loss of subsidiaries	(12,236		)	(9,454		)	(1,459		)	23,149			—
Net loss	$	(18,221	)	$	(14,619	)	$	(8,530	)	$	23,149		$	(18,221	)
Comprehensive income (loss)	$	62,788		$	(14,619	)	$	74,820		$	(60,201	)	$	62,788

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)



	Six Months Ended February 28, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	71,929		$	170,906		$	321,285		$	—		$	564,120
Cost of products sold	12,811			128,553			232,149			—			373,513
Gross profit	59,118			42,353			89,136			—			190,607
Selling, administrative and engineering expenses	37,905			35,680			69,395			—			142,980
Amortization of intangible assets	636			5,722			3,941			—			10,299
Restructuring charges	5,550			1,078			3,451			—			10,079
Impairment & divestiture charges	4,217			—			(1,230		)	—			2,987
Operating profit (loss)	10,810			(127		)	13,579			—			24,262
Financing costs (income), net	15,400			43			(325		)	—			15,118
Intercompany (income) expense, net	(9,919		)	10,903			(984		)	—			—
Other expense, net	40			94			562			—			696
Earnings (loss) before income taxes	5,289			(11,167		)	14,326			—			8,448
Income tax expense (benefit)	10,327			(1,797		)	12,913			—			21,443
Net (loss) earnings before equity in loss of subsidiaries	(5,038		)	(9,370		)	1,413			—			(12,995		)
Loss in earnings of subsidiaries	(7,957		)	(661		)	(1,505		)	10,123			—
Net loss	$	(12,995	)	$	(10,031	)	$	(92	)	$	10,123		$	(12,995	)
Comprehensive income (loss)	$	71,039		$	(10,031	)	$	86,386		$	(76,355	)	$	71,039

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 BALANCE SHEETS

(in thousands)



	February 28, 2018
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	4,276	$	—	$	149,319	$	—		$	153,595
Accounts receivable, net	19,641		52,171		138,838		—			210,650
Inventories, net	26,915		61,363		77,949		—			166,227
Other current assets	14,186		3,263		43,120		—			60,569
Total current assets	65,018		116,797		409,226		—			591,041
Property, plant and equipment, net	8,076		31,661		62,674		—			102,411
Goodwill	38,846		201,578		305,711		—			546,135
Other intangibles, net	7,521		132,320		76,529		—			216,370
Investment in subsidiaries	1,902,303		1,274,274		806,292		(3,982,869		)	—
Intercompany receivable	—		564,517		208,983		(773,500		)	—
Other long-term assets	7,407		1,864		15,077		—			24,348
Total assets	$	2,029,171	$	2,323,011	$	1,884,492	$	(4,756,369	)	$	1,480,305
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$	15,469	$	31,079	$	90,393	$	—		$	136,941
Accrued compensation and benefits	13,376		5,239		22,903		—			41,518
Current maturities of debt and short-term borrowings	30,000		—		—		—			30,000
Income taxes payable	152		—		7,535		—			7,687
Other current liabilities	13,683		7,951		36,734		—			58,368
Total current liabilities	72,680		44,269		157,565		—			274,514
Long-term debt, net	517,318		—		—		—			517,318
Deferred income taxes	17,631		—		5,631		—			23,262
Pension and postretirement benefit liabilities	11,942		—		7,396		—			19,338
Other long-term liabilities	48,651		383		7,558		—			56,592
Intercompany payable	771,668		—		1,832		(773,500		)	—
Shareholders’ equity	589,281		2,278,359		1,704,510		(3,982,869		)	589,281
Total liabilities and shareholders’ equity	$	2,029,171	$	2,323,011	$	1,884,492	$	(4,756,369	)	$	1,480,305

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)



	August 31, 2017
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	34,715	$	—	$	194,856	$	—		$	229,571
Accounts receivable, net	17,498		50,749		121,959		—			190,206
Inventories, net	23,308		48,492		71,851		—			143,651
Assets held for sale	—		—		21,835		—			21,835
Other current assets	23,576		3,619		34,468		—			61,663
Total current assets	99,097		102,860		444,969		—			646,926
Property, plant & equipment, net	7,049		26,130		61,342		—			94,521
Goodwill	38,847		200,499		290,735		—			530,081
Other intangibles, net	8,156		138,042		74,291		—			220,489
Investment in subsidiaries	1,832,472		1,186,715		805,016		(3,824,203		)	—
Intercompany receivable	—		589,193		205,183		(794,376		)	—
Other long-term assets	8,377		812		15,749		—			24,938
Total assets	$	1,993,998	$	2,244,251	$	1,897,285	$	(4,618,579	)	$	1,516,955
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$	15,412	$	27,168	$	90,807	$	—		$	133,387
Accrued compensation and benefits	19,082		7,672		24,185		—			50,939
Current maturities of debt and short-term borrowings	30,000		—		—		—			30,000
Income taxes payable	153		—		5,927		—			6,080
Liabilities held for sale	—		—		101,083		—			101,083
Other current liabilities	18,512		7,169		31,764		—			57,445
Total current liabilities	83,159		42,009		253,766		—			378,934
Long-term debt	531,940		—		—		—			531,940
Deferred income taxes	24,164		—		5,695		—			29,859
Pension and post-retirement benefit liabilities	12,540		—		7,322		—			19,862
Other long-term liabilities	48,692		352		6,777		—			55,821
Intercompany payable	792,964		—		1,412		(794,376		)	—
Shareholders’ equity	500,539		2,201,890		1,622,313		(3,824,203		)	500,539
Total liabilities and shareholders’ equity	$	1,993,998	$	2,244,251	$	1,897,285	$	(4,618,579	)	$	1,516,955

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)



	Six Months Ended February 28, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
Operating Activities
Net cash (used in) provided by operating activities	$	(14,509	)	$	6,923		$	(14,520	)	$	—	$	(22,106	)
Investing Activities
Capital expenditures	(1,982		)	(5,274		)	(5,291		)	—		(12,547		)
Proceeds from sale of property, plant and equipment	—			83			30			—		113
Rental asset buyout for Viking divestiture	—			—			(27,718		)	—		(27,718		)
Proceeds from sale of business, net of transactions costs	198			—			8,582			—		8,780
Cash paid for business acquisitions, net of cash acquired	—			(1,732		)	(14,785		)	—		(16,517		)
Cash used in investing activities	(1,784		)	(6,923		)	(39,182		)	—		(47,889		)
Financing Activities
Principal repayments on term loan	(15,000		)	—			—			—		(15,000		)
Stock option exercises and other	10,305			—			—			—		10,305
Taxes paid related to the net share settlement of equity awards	(1,107		)	—			—			—		(1,107		)
Cash dividend	(2,390		)	—			—			—		(2,390		)
Intercompany loan activity	(5,954		)	—			5,954			—		—
Cash (used in) provided by financing activities	(14,146		)	—			5,954			—		(8,192		)
Effect of exchange rate changes on cash	—			—			2,211			—		2,211
Net decrease in cash and cash equivalents	(30,439		)	—			(45,537		)	—		(75,976		)
Cash and cash equivalents—beginning of period	34,715			—			194,856			—		229,571
Cash and cash equivalents—end of period	$	4,276		$	—		$	149,319		$	—	$	153,595

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)



	Six Months Ended February 28, 2017
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Net provided by operating activities	$	59,275		$	5,902		$	8,906		$	(59,401	)	$	14,682
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 and other	5,949			—			—			—			5,949
Cash dividend	(2,358		)	—			(59,401		)	59,401			(2,358		)
Intercompany loan activity	(53,734		)	—			53,734			—			—
Cash used in financing activities	(58,563		)	—			(5,667		)	59,401			(4,829		)
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