XML 67 R13.htm IDEA: XBRL DOCUMENT v3.25.0.1
Acquisitions and Divestitures
 12 Months Ended
Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Acquisitions and Divestitures Acquisitions and Divestitures
Industrial Systems Divestiture
On September 23, 2023, the Company signed an agreement to sell its industrial motors and generators businesses which represented the substantial majority of the Industrial Systems operating segment.
The transaction closed on April 30, 2024 for a total purchase price of $444.0 million. For the years ended December 31, 2024 and December 31, 2023, the Company recognized a Loss on Sale of Businesses related to the sale of the industrial motors and generators businesses of $7.7 million and $87.7 million, respectively, in the Consolidated Statements of Income (Loss). The Company recognized a cumulative loss of $95.4 million on the sale of the industrial motors and generators businesses, which was primarily related to foreign currency translation losses that were reclassified out of accumulated other comprehensive income into earnings at the closing of the transaction.
The following table summarizes the fair value of the sale proceeds received in connection with the divestiture:
April 30, 2024
Purchase price$400.0 
Cash transferred to buyer64.5 
Estimated working capital and other adjustments(20.5)
Total purchase price444.0 
Direct costs to sell(7.3)
Fair value of sale consideration, net(1)
$436.7 
(1) The fair value of sale consideration, net includes an immaterial post-close adjustment to the purchase price for which cash was received in January 2025.
The following table summarizes the carrying value of the disposal group and resulting loss on sale:
April 30, 2024
Net assets sold$420.2 
Noncontrolling Interest(9.2)
Accumulated Other Comprehensive Income121.3 
Payables to seller(0.2)
Carrying value of disposal group$532.1 
Loss on Sale of Businesses$(95.4)
The assets and liabilities related to these businesses were included in Assets Held for Sale, Noncurrent Assets Held for Sale, Liabilities Held for Sale and Noncurrent Liabilities Held for Sale as of December 31, 2023, as shown in the table below:

December 31, 2023
Assets Held for Sale
Cash and Cash Equivalents$61.3 
Trade Receivables, Less Allowances88.3 
Inventories199.7 
Prepaid Expenses and Other Current Assets12.2 
  Total Current Assets Held for Sale$361.5 
Net Property, Plant and Equipment96.0 
Operating Lease Assets18.0 
Goodwill54.7 
Intangible Assets, Net of Amortization2.1 
Deferred Income Tax Benefits11.0 
Loss on Assets Held for Sale(87.7)
  Total Noncurrent Assets Held for Sale$94.1 
Liabilities Held for Sale
Accounts Payable$67.2 
Accrued Compensation and Employee Benefits11.3 
Other Accrued Expenses21.7 
Current Operating Lease Liabilities3.5 
  Total Current Liabilities Held for Sale$103.7 
Pension and Other Post Retirement Benefits0.9 
Noncurrent Operating Lease Liabilities16.2 
Other Noncurrent Liabilities3.3 
  Total Noncurrent Liabilities Held for Sale$20.4 
In addition to the assets and liabilities of the industrial motors and generators businesses, there are other assets recorded in Assets Held for Sale on the Company's Consolidated Balance Sheet as of December 31, 2023, which are not material.
Altra Transaction
On October 26, 2022, the Company entered into an Agreement and Plan of Merger (the “Altra Merger Agreement”) by and among the Company, Altra Industrial Motion Corp., a Delaware corporation (“Altra”), and Aspen Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”). Altra is a leading global manufacturer of highly-engineered products and sub-systems in the factory automation and industrial power transmission markets. Regal Rexnord entered into the Altra Merger Agreement because it believes it can recognize substantial revenue and cost synergies through the combination. In particular, Altra transforms Regal Rexnord's automation portfolio into a global provider with significant sales into markets with secular growth characteristics. Altra also adds significant capabilities to Regal Rexnord's industrial power transmission portfolio, in particular in clutches and brakes, allowing it to provide a broader offering, and more robust industrial powertrain solutions to its customers.

On March 27, 2023, in accordance with the terms and conditions of the Altra Merger Agreement, Merger Sub merged with and into Altra (the "Altra Merger"), with Altra surviving the Altra Merger as a wholly owned subsidiary of the Company (the “Altra Transaction”).

Pursuant to the Altra Merger Agreement, following the Altra Merger, each of Altra’s issued and outstanding shares of common stock were converted into $62.00 in cash, without interest (the “Altra Merger Consideration”). In addition, all Altra equity awards outstanding immediately prior to the Altra Merger were converted into an award of cash or an award of restricted stock
equal to the equivalent value of the original equity award with similar terms and conditions based on the Altra Merger Consideration.

The Company's management determined that the Company is the accounting acquirer in the Altra Transaction based on the facts and circumstances noted within this section and other relevant factors. As such, the Company applied the acquisition method of accounting to the identifiable assets and liabilities of Altra, which have been measured at estimated fair value as of the date of the business combination.

The total purchase price to acquire Altra was $5.1 billion, which consisted of the following:

Cash paid for outstanding Altra Common Stock(1)
$4,051.0 
Stock based compensation(2)
23.1 
Payment of Altra debt(3)
1,061.0 
Pre-existing relationships(4)
(0.5)
Purchase price$5,134.6 

(1) Cash paid for the common stock component of the purchase price was based on 65.3 million shares of outstanding Altra Common Stock as of March 27, 2023 at $62.00 per share, in accordance with the Altra Merger Agreement.
(2) Represents fair value of replacement equity-based awards and Company common stock issued in settlement of other Altra share based awards. The portion of the fair value attributable to pre-acquisition service was recorded as part of the consideration transferred in the Altra Transaction of which $17.3 million was paid in cash during the second quarter of 2023.
(3) Cash paid by the Company to settle (a) the term loan facility, (b) the revolving credit facility and (c) 95.28% of the 6.125% senior notes due 2026 of Stevens Holding Company, Inc., a wholly owned subsidiary of Altra (the "Altra Notes"). $18.1 million of the Altra Notes remained outstanding following the closing of the Altra Transaction. See Note 6 - Debt and Bank Credit Facilities for more information.
(4) Represents effective settlement of outstanding payables and receivables between the Company and Altra. No gain or loss was recognized on this settlement.

Purchase Price Allocation
Altra’s assets and liabilities were measured at estimated fair values at March 27, 2023, primarily using Level 3 inputs. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions, royalty rates and customer attrition rates and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the acquisition date.

The Company estimated the fair value of net assets acquired based on information available during the measurement period and, as of March 31, 2024, the valuation process to determine the fair values of the net assets acquired during the measurement period was complete. The fair value of the assets acquired and liabilities assumed were as follows:
As Reported as of December 31, 2023Measurement period adjustmentsAs of March 31, 2024
Cash and Cash Equivalents$259.1 $— $259.1 
Trade Receivables258.1 (1.5)256.6 
Inventories387.5 (0.5)387.0 
Prepaid Expenses and Other Current Assets32.4 — 32.4 
Property, Plant and Equipment403.0 (0.5)402.5 
Intangible Assets(2)
2,142.0 — 2,142.0 
Deferred Income Tax Benefits0.7 0.1 0.8 
Operating Lease Assets46.8 — 46.8 
Other Noncurrent Assets12.7 — 12.7 
Accounts Payable(183.3)— (183.3)
Accrued Compensation and Benefits(66.0)— (66.0)
Other Accrued Expenses(1)
(144.6)(0.7)(145.3)
Current Operating Lease Liabilities(12.3)— (12.3)
Current Maturities of Long-Term Debt(0.4)— (0.4)
Long-Term Debt(25.3)— (25.3)
Deferred Income Taxes(533.3)8.2 (525.1)
Pension and Other Post Retirement Benefits(19.8)— (19.8)
Noncurrent Operating Lease Liabilities(29.0)— (29.0)
Other Noncurrent Liabilities(8.3)— (8.3)
Total Identifiable Net Assets2,520.0 5.1 2,525.1 
Goodwill2,614.6 (5.1)2,609.5 
Purchase price$5,134.6 $— $5,134.6 

(1) Includes $60.1 million related to Altra Transaction costs paid by the Company at the closing of the Altra Transaction.
(2) Includes $1,710.0 million related to Customer Relationships, $330.0 million related to Trademarks and $102.0 million related to Technology.

Summary of Significant Fair Value Methods
The methods used to determine the fair value of significant identifiable assets and liabilities included in the allocation of purchase price are discussed below.

Inventories
Acquired inventory was comprised of finished goods, work in process and raw materials. The fair value of finished goods was calculated as the estimated selling price, adjusted for costs of the selling effort and a reasonable profit allowance relating to the selling effort. The fair value of work in process inventory was primarily calculated as the estimated selling price, adjusted for estimated costs to complete the manufacturing, estimated costs of the selling effort, as well as a reasonable profit margin on the remaining manufacturing and selling effort. The fair value of raw materials and supplies was determined based on replacement cost which approximates historical carrying value.

Property, Plant and Equipment
The preliminary fair value of Property, Plant, and Equipment was determined using either the cost approach, which relies on an estimate of replacement costs of the new assets and estimated accrued depreciation, or the market approach.

Identifiable Intangible Assets
The fair value and weighted average useful life of the identifiable intangible assets are as follows:
Fair ValueWeighted Average Useful Life (Years)
Customer Relationships(1)
$1,710.0 14.0
Trademarks(2)
330.0 10.0
Technology(3)
102.0 13.0
Total Identifiable Intangible Assets$2,142.0 

(1) The fair value of Customer Relationships was valued using a multi-period excess earnings method, a form of the income approach, which incorporates the estimated future cash flows to be generated from Altra's existing customer base.
(2) The Altra Trademarks were valued using the relief from royalty method, which considers both the market approach and the income approach.
(3) The Altra Technology was valued using the relief from royalty method, which considers both the market approach and the income approach.

The intangible assets related to definite-lived customer relationships, trademarks and technology are amortized over their estimated useful lives.

Leases, including right-of-use ("ROU") assets and lease liabilities
Lease liabilities were measured as of the effective date of the acquisition at the present value of future minimum lease payments over the remaining lease term and the incremental borrowing rate of the Company as if the acquired leases were new leases as of the acquisition date. ROU assets recorded within “Operating Lease Assets” are equal to the amount of the lease liability at the acquisition date adjusted for any off-market terms of the lease. The remaining lease term was based on the remaining term at the acquisition date plus any renewal or extension options that the Company is reasonably certain will be exercised.

Deferred Income Tax Assets and Liabilities
The acquisition was structured as a merger, and therefore the Company assumed the historical tax basis of Altra’s assets and liabilities. The deferred income tax assets and liabilities include the expected future federal, state, and foreign tax consequences associated with temporary differences between the fair values of the assets acquired and liabilities assumed and the respective tax bases. Tax rates utilized in calculating deferred income taxes generally represent the enacted statutory tax rates at the effective date of the acquisition in the jurisdictions in which legal title of the underlying asset or liability resides. See Note 10 - Income Taxes for further information related to income taxes.

Other Assets Acquired and Liabilities Assumed (excluding Goodwill)
The Company utilized the carrying values, net of allowances, to value accounts receivable and accounts payable as well as other current assets and liabilities, as it was determined that carrying values represented the fair value of those items at the acquisition date. Accounts receivable reflect the best estimate at the acquisition date of the contractual cash flows expected to be collected.

Goodwill
The excess of the consideration for the acquisition over the fair value of net assets acquired was recorded as goodwill. The goodwill is attributable to expected synergies and expanded market opportunities from combining the Company’s operations with those of Altra. The goodwill created in the acquisition is not expected to be deductible for tax purposes.

Transaction and Integration Costs
The Company incurred transaction and integration-related costs in connection with the Altra Transaction of approximately $23.5 million during the year ended December 31, 2024, which includes legal, professional service and integration costs associated with the Altra Transaction. During the year ended December 31, 2023 the Company incurred $86.9 million of costs related to the Altra Transaction, which includes legal and professional services and certain employee compensation costs, including severance and retention. These costs were recognized as Operating Expenses in the Company's Condensed Consolidated Statements of Income (Loss).

The Company also incurred $15.7 million of share-based compensation expense during the first quarter of 2023 related to the accelerated vesting of awards for certain former Altra employees. See Note 9 – Shareholders' Equity for additional information.

In connection with the Altra Transaction, the Company incurred additional costs due to the entry into certain financing arrangements. Such financing arrangements are described in Note 6 – Debt and Bank Credit Facilities.

Unaudited Pro Forma Information
The following unaudited supplemental pro forma financial information presents the Company's financial results for the years ended December 31, 2023 and December 31, 2022, respectively, as if the Altra Transaction had occurred on January 2, 2022, the first day of the Company's year ended December 31, 2022. The pro forma financial information includes, where applicable, adjustments for: (i) additional amortization expense that would have been recognized related to the acquired intangible assets, (ii) additional interest expense on transaction related borrowings less interest income earned on the investment of proceeds from borrowings prior to the close of the Altra Transaction, (iii) additional depreciation expense that would have been recognized related to the acquired property, plant, and equipment, (iv) transaction costs and other one-time non-recurring costs, including share-based compensation expense related to the accelerated vesting of awards for certain former Altra employees, which reduced expenses by $102.6 million and increased expenses by $102.6 million for the years ended December 31, 2023 and December 31, 2022, respectively, (v) additional cost of sales related to the inventory valuation and lease ROU assets valuation adjustments which reduced expenses by $54.5 million and increased expenses by $54.5 million for the years ended December 31, 2023 and December 31, 2022, respectively and (vi) the estimated income tax effect on the pro forma adjustments.

The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the Altra Transaction been completed as of the date indicated or the results that may be obtained in the future.

For the Year Ended December 31, 2023For the Year Ended December 31, 2022
Net Sales$6,701.8 $7,163.4 
Net Income Attributable to Regal Rexnord Corporation$50.1 $131.1 
Earnings Per Share Attributable to Regal Rexnord Corporation:
   Basic$0.76 $1.97 
   Assuming Dilution$0.75 $1.95