Business Acquisition

12 Months Ended

Dec. 31, 2020

24. Business Acquisition

On November 20, 2019, the Company acquired CirComp GmbH, a privately-held developer and manufacturer of high-performance composite components located in Kaiserslautern, Germany for $32.4 million. The Company also agreed to pay approximately $5.5 million that will become due, as certain post-closing obligations are performed. Expense related to that agreement will be recognized over the five-year performance period. The Company funded the acquisition using a combination of cash on hand and funds drawn on its revolving credit facility (see Note 17). In March 2020, the Company purchased, in cash, the primary operating facility in Germany for $5.8 million, which resulted in the recording of land and building assets, and the removal of the Right of use assets and associated lease liabilities included in the acquisition-date balance sheet.

The seller provided representations, warranties and indemnities customary for acquisition transactions, including indemnities for certain customer claims identified, before closing. The acquired entity is part of the AEC segment. CirComp specializes in designing and manufacturing customized engineered composite components for aerospace and other demanding industrial applications.

The following table summarizes the allocation of the purchase price to the fair value of the assets and liabilities acquired:


(in thousands)	November 20, 2019
Assets acquired
Cash	$	1,607
Accounts receivable	986
Contract assets	1,992
Inventories	525
Prepaid expenses and other current assets	452
Right of use assets related to finance lease	5,686
Property, plant and equipment	4,884
Amortizable intangible assets (see Note 15)	10,302
Goodwill	17,676
Total assets acquired	$	44,110

Liabilities assumed
Accounts payable	$	65
Accrued liabilities	2,777
Lease liabilities	502
Deferred income taxes	3,182
Other noncurrent liabilities	5,184
Total liabilities assumed	$	11,710
Net assets acquired	$	32,400
Purchase of business, net of cash acquired	$	30,793

During the first six months of 2020, management identified adjustments to the provisional value of assets and liabilities acquired reported in the Form 10-K for the year ended December 31, 2019, which resulted in a decrease to Contract assets of $0.3 million, an increase to Accrued liabilities of $0.5 million, an increase to Amortizable intangible assets of $0.3 million, a decrease to Deferred income tax liabilities of $0.2 million, and an increase to Goodwill of $0.3 million. Management's review of the purchase price allocation has been completed.

Acquired Goodwill of $17.7 million reflects the Company’s belief that the acquisition complements and expands Albany’s portfolio of proprietary, advanced manufacturing technologies for composite components, increases the Company’s position as a leading innovator in advanced materials processing and automation, and opens a geographic footprint in Europe to better serve our global customer base. The acquisition significantly increases the Company’s opportunities for future growth. The goodwill is non-deductible for tax purposes.

The following table presents operational results of the acquired entity that are included in the Consolidated Statements of Income (unaudited):


(in thousands, except per share amounts)	November 20 to December 31, 2019
Net sales	$	485
Operating loss	(162)
Loss before income taxes	(199)
Net loss attributable to the Company	(324)

Loss per share:
Basic	$	(0.01)
Diluted	$	(0.01)

Results in the above table include $0.1 million of expenses related to the $5.5 million of deferred payments noted above. In addition to the amounts reported in the above table, the Company incurred approximately $0.5 million of expenses, principally professional fees, related to the acquisition. The Consolidated Statements of Income reflect operational activity of the acquired business for only the period subsequent to the closing, which has an effect, however insignificant, on the comparability of results.