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Business Acquisition
6 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Business Acquisition

2. Business Acquisition 

On April 8, 2016, the Company acquired the outstanding shares of Harris Corporation’s composite aerostructures business for cash of $187 million, plus the assumption of certain liabilities. The Company funded the cash payable at closing by utilizing proceeds from a $550 million, unsecured credit facility agreement that was completed April 8, 2016 (see Note 14). The seller has provided representations, warranties and indemnities customary for acquisition transactions, including indemnities for certain customer claims identified before closing. The acquired entity has been renamed Albany Aerostructures Composites LLC (“AAC”), and is part of the Albany Engineered Composites (“AEC”) segment.

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

(in thousands)  April 8 , 2016
Assets acquired    
Accounts receivable  $16,264 
Inventories  29,739 
Prepaid expenses and other current assets  402 
Property, plant and equipment  85,802 
Intangibles  59,360 
Goodwill  31,327 
Total assets acquired  $222,894 
     
Liabilities assumed    
Accounts payable  $8,745 
Accrued liabilities  2,364 
Capital lease obligation  23,815 
Other noncurrent liabilities  970 
Total liabilities assumed  $35,894 
     
Net assets acquired  $187,000 

 

Whereas the acquisition occurred during this quarterly reporting period, the Company is continuing to perform procedures to verify the value of all assets and liabilities acquired, and the useful lives of amortizable assets. Accordingly, adjustments to the values in the above table may be required in future periods. The Company has attributed the goodwill of $31.3 million which is assigned to the AEC segment. Management believes that the acquisition broadens and deepens AEC’s products, experience and manufacturing capabilities, and significantly increases opportunities for future growth. The goodwill is expected to be non-deductible for tax purposes.

The following tables presents operational results of AAC that are included in the Consolidated Statements of Income:

(in thousands, except per share amounts)  April 8 to
June 30,
2016
Net sales  $25,636 
Operating income  1,709 
Income before income taxes  1,266 
Net Income attributable to the Company  760 
     
Earnings per share:    
Basic  $0.02 
Diluted  $0.02 

 

 

The Consolidated Statements of Income reflect operational activity of AAC for only the period subsequent to the closing, which affects comparability of results. The following table shows total Company pro forma statements of operations for the three- and six-month periods ended June 30, 2016 and 2015, as if the acquisition had occurred on January 1, 2015. This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisitions had occurred as of the date indicated, or what such results would be for any future periods.

   Unaudited - Pro forma
  

Three months ended

June 30,

 

Six months ended

June 30,

(in thousands, except per share amounts)  2016  2015  2016  2015
        
Combined Net sales  $204,371   $192,508   $397,706   $392,988 
                 
Combined Income/(loss) before income taxes  $15,765   ($1,798)  $38,915   $19,357 
                 
Pro forma adjustments:                
Acquisition expenses  3,771   -   5,367   - 
Purchase accounting depreciation and amortization expense  (119)  (1,541)  (1,660)  (3,081)
Interest expense  (99)  (1,283)  (1,382)  (2,567)
Income/(loss) before income taxes  19,318   (4,622)  41,240   13,709 
                 
Net Income/(loss) attributable to the Company  $12,289   ($3,380)  $26,748   $7,462 
                 
Pro forma earnings/(loss) per share attributable to Company shareholders:
Basic  $0.38   ($0.11)  $0.83   $0.23 
Diluted  $0.38   ($0.11)  $0.83   $0.23