Guarantor Subsidiaries

3 Months Ended

Nov. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Guarantor Subsidiaries

Note 16. 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 remained outstanding as of November 30, 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 November 30, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	38,622		$	10,771		$	97,281		$	—		$	146,674
Cost of products sold	12,354			5,848			59,784			—			77,986
Gross profit	26,268			4,923			37,497			—			68,688
Selling, administrative and engineering expenses	22,245			4,131			25,455			—			51,831
Amortization of intangible assets	318			285			1,269			—			1,872
Restructuring charges	459			819			694			—			1,972
Impairment & divestiture (benefit) charges	(2,578		)	—			1,222			—			(1,356		)
Operating profit (loss)	5,824			(312		)	8,857			—			14,369
Financing costs (income), net	6,795			—			(66		)	—			6,729
Intercompany (income) expense, net	1,748			9,163			2,247			(13,158		)	—
Intercompany dividends	(4,577		)	—			—			4,577			—
Other (income) expense, net	(179		)	214			283			—			318
Earnings before income tax expense	2,037			(9,689		)	6,393			8,581			7,322
Income tax (benefit) expense	(2,462		)	(1,217		)	4,629			—			950
Earnings (loss) from continuing operations	4,499			(8,472		)	1,764			8,581			6,372
Earnings (loss) from discontinued operations	18,087			(21,134		)	7,377			(8,581		)	(4,251		)
Net earnings (loss) before equity in loss of subsidiaries	22,586			(29,606		)	9,141			—			2,121
Equity in earnings (loss) of subsidiaries	(20,465		)	31,434			48,756			(59,725		)	—
Net earnings (loss)	2,121			1,828			57,897			(59,725		)	2,121
Comprehensive income	$	63,048		$	470		$	120,191		$	(120,661	)	$	63,048

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Three Months Ended November 30, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	40,289		$	19,726		$	98,536		$	—		$	158,551
Cost of products sold	10,046			12,317			65,876			—			88,239
Gross profit	30,243			7,409			32,660			—			70,312
Selling, administrative and engineering expenses	21,147			5,627			26,347			—			53,121
Amortization of intangible assets	318			723			1,256			—			2,297
Restructuring charges	—			(93		)	64			—			(29		)
Impairment & divestiture charges	—			—			23,477			—			23,477
Operating profit (loss)	8,778			1,152			(18,484		)	—			(8,554		)
Financing costs (income), net	7,551			—			(253		)	—			7,298
Intercompany (income) expense, net	(4,053		)	5,033			(3,202		)	2,222			—
Intercompany dividends	—			—			—			—			—
Other (income) expense, net	(216		)	12			709			—			505
Earnings before income tax (benefit) expense	5,496			(3,893		)	(15,738		)	(2,222		)	(16,357		)
Income tax (benefit) expense	(1,114		)	(250		)	1,430			—			66
Earnings (loss) from continuing operations	6,610			(3,643		)	(17,168		)	(2,222		)	(16,423		)
(Loss) earnings from discontinued operations	265			2,740			(6,256		)	2,222			(1,029		)
Net earnings (loss) before equity in (loss) earnings of subsidiaries	6,875			(903		)	(23,424		)	—			(17,452		)
Equity in (loss) earnings of subsidiaries	(24,327		)	(4,507		)	1,769			27,065			—
Net (loss) earning	(17,452		)	(5,410		)	(21,655		)	27,065			(17,452		)
Comprehensive income (loss)	$	(25,396	)	$	(5,410	)	$	(29,330	)	$	34,740		$	(25,396	)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	November 30, 2019
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	11,951	$	—	$	194,829	$	—		$	206,780
Accounts receivable, net	20,986		8,749		92,292		—			122,027
Inventories, net	29,975		7,532		42,001		—			79,508
Assets held for sale	—		—		1,697		—			1,697
Other current assets	21,964		1,773		18,983		—			42,720
Total current assets	84,876		18,054		349,802		—			452,732
Property, plant & equipment, net	8,112		5,159		42,823		—			56,094
Goodwill	43,502		57,342		163,125		—			263,969
Other intangibles, net	5,293		8,166		37,776		—			51,235
Investment in subsidiaries	1,320,696		1,162,632		486,807		(2,970,135		)	—
Intercompany receivable	—		—		1,064,972		(1,064,972		)	—
Other long-term assets	36,515		5,833		42,134		—			84,482
Total assets	$	1,498,994	$	1,257,186	$	2,187,439	$	(4,035,107	)	$	908,512
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	16,763		2,320		49,707		—			68,790
Accrued compensation and benefits	11,761		648		12,872		—			25,281
Current maturities of debt	—		—		—		—			—
Income taxes payable	—		—		6,853		—			6,853
Liabilities held for sale	—		—		1,697		—			1,697
Other current liabilities	26,196		3,525		24,928		—			54,649
Total current liabilities	54,720		6,493		96,057		—			157,270
Long-term debt	286,236		—		—		—			286,236
Deferred income taxes	—		—		1,567		—			1,567
Pension and post-retirement benefit liabilities	11,558		—		8,248		—			19,806
Other long-term liabilities	64,239		4,250		21,891		—			90,380
Intercompany payable	728,988		335,984		—		(1,064,972		)	—
Shareholders’ equity	353,253		910,459		2,059,676		(2,970,135		)	353,253
Total liabilities and shareholders’ equity	$	1,498,994	$	1,257,186	$	2,187,439	$	(4,035,107	)	$	908,512

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	August 31, 2019
	Parent			Guarantors			Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	47,581		$	—		$	163,570	$	—		$	211,151
Accounts receivable, net	20,322			11,358			94,203		—			125,883
Inventories, net	26,737			6,566			43,884		—			77,187
Assets from discontinued operations	295			145,239			140,044		—			285,578
Other current assets	12,116			1,797			16,613		—			30,526
Total current assets	107,051			164,960			458,314		—			730,325
Property, plant & equipment, net	8,515			5,193			43,021		—			56,729
Goodwill	38,847			57,342			164,226		—			260,415
Other intangible assets, net	5,611			8,451			38,313		—			52,375
Investment in subsidiaries	1,323,587			912,297			417,022		(2,652,906		)	—
Intercompany receivables	—			—			979,889		(979,889		)	—
Other long-term assets	27,510			(13,424		)	10,344		—			24,430
Total assets	$	1,511,121		$	1,134,819		$	2,111,129	$	(3,632,795	)	$	1,124,274
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$	23,678		$	3,231		$	50,005	$	—		$	76,914
Accrued compensation and benefits	11,495			1,657			13,269		—			26,421
Current maturities of debt	7,500			—			—		—			7,500
Income taxes payable	—			—			4,838		—			4,838
Liabilities from discontinued operations	1,217			29,292			113,254		—			143,763
Other current liabilities	17,556			2,388			21,021		—			40,965
Total current liabilities	61,446			36,568			202,387		—			300,401
Long-term debt	452,945			—			—		—			452,945
Deferred income taxes	(4		)	—			1,568		—			1,564
Pension and post-retirement benefit liabilities	12,005			—			8,208		—			20,213
Other long-term liabilities	44,621			114			3,237		—			47,972
Intercompany payable	638,929			340,960			—		(979,889		)	—
Shareholders’ equity	301,179			757,177			1,895,729		(2,652,906		)	301,179
Total liabilities and shareholders’ equity	$	1,511,121		$	1,134,819		$	2,111,129	$	(3,632,795	)	$	1,124,274

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended November 30, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Cash (used in) provided by operating activities - continuing operations	$	(97,861	)	$	1,202		$	96,525		$	(3,961	)	$	(4,095	)
Cash provided by (used in) operating activities - discontinued operations	17,187			3,966			(39,369		)	(616		)	(18,832		)
Cash (used in) provided by operating activities	(80,674		)	5,168			57,156			(4,577		)	(22,927		)
Investing Activities
Capital expenditures	(1,240		)	(416		)	(1,531		)	—			(3,187		)
Proceeds from sale of property, plant and equipment	—			131			31			—			162
Proceeds from sale of business, net of transaction costs	6,000			—			2,726			—			8,726
Intercompany investment	21,877			—			(16,406		)	(5,471		)	—
Cash provided by (used in) investing activities - continuing operations	26,637			(285		)	(15,180		)	(5,471		)	5,701
Cash provided by (used in) investing activities - discontinued operations	208,901			(474		)	(786		)	—			207,641
Cash provided by (used in) investing activities	235,538			(759		)	(15,966		)	(5,471		)	213,342
Financing Activities
Principal repayments on term loan	(175,000		)	—			—			—			(175,000		)
Borrowings on revolving credit facility	100,000			—			—			—			100,000
Principal repayments on revolving credit facility	(100,000		)	—			—			—			(100,000		)
Purchase of treasury shares	(17,805		)	—			—			—			(17,805		)
Taxes paid related to the net share settlement of equity awards	(2,638		)	—			—			—			(2,638		)
Stock option exercises, related tax benefits and other	2,640			—			—			—			2,640
Cash dividends	(2,419		)	—			—			—			(2,419		)
Intercompany loan activity	4,728			—			83,851			(88,579		)	—
Cash (used in) provided by financing activities - continuing operations	(190,494		)	—			83,851			(88,579		)	(195,222		)
Cash (used in) provided by financing activities - discontinued operations	—			(4,409		)	(94,218		)	98,627			—
Cash (used in) provided by financing activities	(190,494		)	(4,409		)	(10,367		)	10,048			(195,222		)
Effect of exchange rate changes on cash	—			—			436			—			436
Net (decrease) increase in cash and cash equivalents	(35,630		)	—			31,259			—			(4,371		)
Cash and cash equivalents—beginning of period	47,581			—			163,570			—			211,151
Cash and cash equivalents—end of period	$	11,951		$	—		$	194,829		$	—		$	206,780

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended November 30, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Cash (used in) provided by operating activities - continuing operations	$	(20,566	)	$	7,714		$	313		$	1,865		$	(10,674	)
Cash provided by (used in) operating activities - discontinued operations	4,291			(5,935		)	(14,927		)	(1,865		)	(18,436		)
Cash (used in) provided by operating activities	(16,275		)	1,779			(14,614		)	—			(29,110		)
Investing Activities													—
Capital expenditures	(423		)	(680		)	(3,466		)	—			(4,569		)
Proceeds from sale of property, plant and equipment	8			—			3			—			11
Cash used in investing activities - continuing operations	(415		)	(680		)	(3,463		)	—			(4,558		)
Cash used in investing activities - discontinued operations	—			(1,099		)	(1,998		)	—			(3,097		)
Cash used in investing activities	(415		)	(1,779		)	(5,461		)	—			(7,655		)
Financing Activities
Principal repayments on term loan	(7,500		)	—			—			—			(7,500		)
Taxes paid related to the net share settlement of equity awards	(201		)	—			—			—			(201		)
Stock option exercises, related tax benefits and other	552			—			—			—			552
Cash dividends	(2,439		)	—			—			—			(2,439		)
Cash used in financing activities - continuing operations	(9,588		)	—			—			—			(9,588		)
Cash used in financing activities - discontinued operations	—			—			—			—			—
Cash used in financing activities	(9,588		)	—			—			—			(9,588		)
Effect of exchange rate changes on cash	—			—			(694		)	—			(694		)
Net decrease in cash and cash equivalents	(26,278		)	—			(20,769		)	—			(47,047		)
Cash and cash equivalents—beginning of period	67,649			—			182,841			—			250,490
Cash and cash equivalents—end of period	$	41,371		$	—		$	162,072		$	—		$	203,443