Guarantor Subsidiaries

9 Months Ended

May 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Guarantor Subsidiaries

Note 15. 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 $287.6 million remains outstanding as of May 31, 2019. Certain 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 the subsidiaries that do not guarantee the 5.625% Senior Notes (the "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 the Parent, the Guarantors and the non-Guarantors and the eliminations necessary to arrive at the information for the Company on a consolidated basis. As a result of the refinancing of the Senior Credit Facility in March 2019, certain domestic subsidiaries that were previously Guarantors of the Senior Notes are now non-Guarantors. As such, prior period financial information has been recast to reflect the current Parent, Guarantor, and non-Guarantor structure.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended May 31, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	42,915		$	67,493		$	184,858		$	—		$	295,266
Cost of products sold	11,238			45,853			126,274			—			183,365
Gross profit	31,677			21,640			58,584			—			111,901
Selling, administrative and engineering expenses	20,766			11,823			37,023			—			69,612
Amortization of intangible assets	318			1,532			2,561			—			4,411
Restructuring charges	574			205			336			—			1,115
Impairment & divestiture charges (benefit)	—			876			(11,473		)	—			(10,597		)
Operating profit	10,019			7,204			30,137			—			47,360
Financing costs, net	7,221			—			34			—			7,255
Intercompany (income) expense, net	(2,627		)	5,711			(3,084		)	—			—
Intercompany dividends	(74,593		)	(39,208		)	—			113,801			—
Other (income) expense, net	(52		)	(14		)	444			—			378
Earnings before income tax expense	80,070			40,715			32,743			(113,801		)	39,727
Income tax expense	2,067			1,304			3,938			—			7,309
Net earnings before equity in (loss) earnings of subsidiaries	78,003			39,411			28,805			(113,801		)	32,418
Equity in (loss) earnings of subsidiaries	(45,585		)	19,556			6,080			19,949			—
Net earnings	$	32,418		$	58,967		$	34,885		$	(93,852	)	$	32,418
Comprehensive income	$	18,618		$	58,967		$	21,141		$	(80,108	)	$	18,618

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended May 31, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	41,851		$	67,677		$	207,568		$	—		$	317,096
Cost of products sold	6,394			46,823			147,370			—			200,587
Gross profit	35,457			20,854			60,198			—			116,509
Selling, administrative and engineering expenses	22,373			12,276			42,814			—			77,463
Amortization of intangible assets	318			1,582			3,284			—			5,184
Restructuring charges	661			215			294			—			1,170
Operating profit	12,105			6,781			13,806			—			32,692
Financing costs (income), net	7,847			—			(91		)	—			7,756
Intercompany (income) expense, net	(2,123		)	9,272			(7,149		)	—			—
Other (income) expense, net	(144		)	(25		)	88			—			(81		)
Earnings (loss) before income tax (benefit) expense	6,525			(2,466		)	20,958			—			25,017
Income tax (benefit) expense	(11,354		)	(193		)	7,552			—			(3,995		)
Net earnings (loss) before equity in earnings (loss) of subsidiaries	17,879			(2,273		)	13,406			—			29,012
Equity in earnings (loss) of subsidiaries	11,133			(1,253		)	638			(10,518		)	—
Net earnings (loss)	$	29,012		$	(3,526	)	$	14,044		$	(10,518	)	$	29,012
Comprehensive income (loss)	$	8,059		$	(3,527	)	$	(7,523	)	$	11,050		$	8,059

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)

	Nine Months Ended May 31, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	124,295		$	189,752		$	545,657		$	—		$	859,704
Cost of products sold	31,096			133,547			380,666			—			545,309
Gross profit	93,199			56,205			164,991			—			314,395
Selling, administrative and engineering expenses	64,346			35,888			113,314			—			213,548
Amortization of intangible assets	954			4,596			6,581			—			12,131
Restructuring charges	574			112			892			—			1,578
Impairment & divestiture (benefit) charges	(904		)	1,783			31,862			—			32,741
Operating profit	28,229			13,826			12,342			—			54,397
Financing costs (income), net	22,047			—			(344		)	—			21,703
Intercompany (income) expense, net	(12,797		)	20,168			(7,371		)	—			—
Intercompany dividends	(320,841		)	(39,208		)	—			360,049			—
Other (income) expense, net	(433		)	(20		)	2,399			—			1,946
Earnings before income tax (benefit) expense	340,253			32,886			17,658			(360,049		)	30,748
Income tax (benefit) expense	(218		)	289			12,958			—			13,029
Net earnings before equity in (loss) earnings of subsidiaries	340,471			32,597			4,700			(360,049		)	17,719
Equity in (loss) earnings of subsidiaries	(322,752		)	9,150			8,901			304,701			—
Net earnings	$	17,719		$	41,747		$	13,601		$	(55,348	)	$	17,719
Comprehensive income	$	38,412		$	41,747		$	34,432		$	(76,179	)	$	38,412

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)

	Nine Months Ended May 31, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	113,780		$	180,385		$	587,051		$	—		$	881,216
Cost of products sold	19,205			129,964			424,931			—			574,100
Gross profit	94,575			50,421			162,120			—			307,116
Selling, administrative and engineering expenses	60,009			36,863			123,356			—			220,228
Amortization of intangible assets	954			4,746			9,783			—			15,483
Restructuring charges	6,211			634			4,404						11,249
Impairment & divestiture charges (benefit)	4,217			—			(1,230		)	—			2,987
Operating profit	23,184			8,178			25,807			—			57,169
Financing costs (income), net	23,247			—			(373		)	—			22,874
Intercompany (income) expense, net	(11,987		)	16,179			(4,192		)	—			—
Other expense, net	56			49			725			—			830
Earnings (loss) before income tax (benefit) expense	11,868			(8,050		)	29,647			—			33,465
Income tax (benefit) expense	(1,028		)	(1,087		)	19,563			—			17,448
Net earnings (loss) before equity in earnings (loss) of subsidiaries	12,896			(6,963		)	10,084			—			16,017
Equity in earnings (loss) of subsidiaries	3,121			(13,286		)	(1,550		)	11,715			—
Net earnings (loss)	$	16,017		$	(20,249	)	$	8,534		$	11,715		$	16,017
Comprehensive income (loss)	$	79,098		$	(20,250	)	$	73,445		$	(53,195	)	$	79,098

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	May 31, 2019
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	7,453	$	—	$	193,881	$	—		$	201,334
Accounts receivable, net	19,675		39,103		144,030		—			202,808
Inventories, net	28,842		40,665		98,085		—			167,592
Other current assets	11,006		2,506		30,963		—			44,475
Total current assets	66,976		82,274		466,959		—			616,209
Property, plant & equipment, net	7,557		16,286		66,130		—			89,973
Goodwill	38,847		178,097		274,555		—			491,499
Other intangibles, net	5,929		84,155		68,098		—			158,182
Investment in subsidiaries	1,630,936		1,028,078		374,724		(3,033,738		)	—
Intercompany receivable	—		—		929,356		(929,356		)	—
Other long-term assets	14,610		300		22,383		—			37,293
Total assets	$	1,764,855	$	1,389,190	$	2,202,205	$	(3,963,094	)	$	1,393,156
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	16,185		12,902		97,058		—			126,145
Accrued compensation and benefits	12,642		3,260		24,027		—			39,929
Current maturities of debt	6,250		—		—		—			6,250
Income taxes payable	1,013		—		7,749		—			8,762
Other current liabilities	18,786		4,493		29,198		—			52,477
Total current liabilities	54,876		20,655		158,032		—			233,563
Long-term debt	468,984		—		—		—			468,984
Deferred income taxes	2,533		13,360		5,208		—			21,101
Pension and post-retirement benefit liabilities	7,330		—		6,945		—			14,275
Other long-term liabilities	43,394		256		4,159		—			47,809
Intercompany payable	580,314		349,042		—		(929,356		)	—
Shareholders’ equity	607,424		1,005,877		2,027,861		(3,033,738		)	607,424
Total liabilities and shareholders’ equity	$	1,764,855	$	1,389,190	$	2,202,205	$	(3,963,094	)	$	1,393,156

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	August 31, 2018
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	67,945	$	—	$	182,545	$	—		$	250,490
Accounts receivable, net	19,969		37,787		129,993		—			187,749
Inventories, net	22,646		35,840		97,870		—			156,356
Assets held for sale	—		—		23,573		—			23,573
Other current assets	7,359		2,542		32,831		—			42,732
Total current assets	117,919		76,169		466,812		—			660,900
Property, plant & equipment, net	7,937		14,635		67,648		—			90,220
Goodwill	38,847		178,097		295,468		—			512,412
Other intangible assets, net	6,884		88,752		85,401		—			181,037
Investment in subsidiaries	1,836,879		918,050		301,782		(3,056,711		)	—
Intercompany receivables	—		—		937,259		(937,259		)	—
Other long-term assets	12,955		366		23,448		—			36,769
Total assets	$	2,021,421	$	1,276,069	$	2,177,818	$	(3,993,970	)	$	1,481,338
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$	16,186	$	16,496	$	98,156	$	—		$	130,838
Accrued compensation and benefits	22,171		5,930		26,407		—			54,508
Current maturities of debt	30,000		—		—		—			30,000
Income taxes payable	—		—		4,091		—			4,091
Liabilities held for sale	—		—		44,225		—			44,225
Other current liabilities	17,380		8,361		41,558		—			67,299
Total current liabilities	85,737		30,787		214,437		—			330,961
Long-term debt	502,695		—		—		—			502,695
Deferred income taxes	17,467		—		4,466		—			21,933
Pension and post-retirement benefit liabilities	7,765		—		7,104		—			14,869
Other long-term liabilities	45,483		299		6,386		—			52,168
Intercompany payable	803,562		133,697		—		(937,259		)	—
Shareholders’ equity	558,712		1,111,286		1,945,425		(3,056,711		)	558,712
Total liabilities and shareholders’ equity	$	2,021,421	$	1,276,069	$	2,177,818	$	(3,993,970	)	$	1,481,338

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended May 31, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Net cash (used in) provided by operating activities	$	(48,125	)	$	239,969		$	169,396		$	(360,049	)	$	1,191
Investing Activities
Capital expenditures	(1,314		)	(4,614		)	(17,791		)	—			(23,719		)
Proceeds from sale of property, plant and equipment	8			42			1,299			—			1,349
Intercompany investment	49,185			—			—			(49,185		)	—
Proceeds from sale of business, net of transaction costs	23,611			—			12,548			—			36,159
Cash provided by (used in) investing activities	71,490			(4,572		)	(3,944		)	(49,185		)	13,789
Financing Activities
Principal repayments on term loan	(57,500		)	—			—			—			(57,500		)
Payment for redemption of term loan	(200,000		)	—			—			—			(200,000		)
Proceeds from issuance of term loan	200,000			—			—			—			200,000
Payment of debt issuance costs	(2,125		)	—			—			—			(2,125		)
Stock option exercises, related tax benefits and other	1,352			—			—			—			1,352
Taxes paid related to the net share settlement of equity awards	(1,811		)	—			—			—			(1,811		)
Cash dividends	(2,439		)	(261,978		)	(98,071		)	360,049			(2,439		)
Intercompany loan activity	(21,334		)	26,581			(5,247		)	—			—
Intercompany capital contribution	—			—			(49,185		)	49,185			—
Cash used in financing activities	(83,857		)	(235,397		)	(152,503		)	409,234			(62,523		)
Effect of exchange rate changes on cash	—			—			(1,613		)	—			(1,613		)
Net (decrease) increase in cash and cash equivalents	(60,492		)	—			11,336			—			(49,156		)
Cash and cash equivalents—beginning of period	67,945			—			182,545			—			250,490
Cash and cash equivalents—end of period	$	7,453		$	—		$	193,881		$	—		$	201,334

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended May 31, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Net cash provided by operating activities	$	25,851		$	5,587		$	4,151		$	—		$	35,589
Investing Activities
Capital expenditures	(2,455		)	(3,944		)	(12,317		)	—			(18,716		)
Proceeds from sale of property, plant and equipment	—			89			59			—			148
Rental asset buyout for Viking divestiture	—			—			(27,718		)	—			(27,718		)
Proceeds from sale of business, net of transaction costs	198			—			8,582			—			8,780
Cash paid for business acquisitions, net of cash acquired	—			(1,732		)	(20,594		)	—			(22,326		)
Intercompany investment	(100		)	—			—			100			—
Cash used in investing activities	(2,357		)	(5,587		)	(51,988		)	100			(59,832		)
Financing Activities
Principal repayments on term loan	(22,500		)	—			—			—			(22,500		)
Stock option exercises, related tax benefits and other	10,435			—			—			—			10,435
Taxes paid related to the net share settlement of equity awards	(1,279		)	—			—			—			(1,279		)
Cash dividends	(2,390		)	—			—			—			(2,390		)
Intercompany loan activity	(5,954		)	—			5,954			—			—
Intercompany capital contribution	—			—			100			(100		)	—
Cash (used in) provided by financing activities	(21,688		)	—			6,054			(100		)	(15,734		)
Effect of exchange rate changes on cash	—			—			(104		)	—			(104		)
Net increase (decrease) in cash and cash equivalents	1,806			—			(41,887		)	—			(40,081		)
Cash and cash equivalents—beginning of period	34,982			—			194,589			—			229,571
Cash and cash equivalents—end of period	$	36,788		$	—		$	152,702		$	—		$	189,490