Acquisitions and Investments

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

ACQUISITIONS AND INVESTMENTS

ACQUISITIONS AND INVESTMENTS

On March 9, 2015, the Company acquired Herder Implementos e Maquinas Agricolas Ltda. ("Herder") on a debt free basis for a total consideration of approximately $4.0 million subject to certain post-closing adjustments. This acquisition is being accounted for in accordance with ASC Topic 805 Business Combinations (“ASC Topic 805”). Accordingly, the total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. These allocations reflect provisional estimates that were available at the time and are subject to change during the measurement period as valuations are finalized. The primary reason for the Herder acquisition was to establish a presence in South America which is a major global agricultural market; therefore, Herder will be reported as part of the Company's Agricultural Division. The revenue and earnings of Herder from the date of acquisition to December 31, 2015 were not material to the Company’s consolidated results of operations. In addition, assuming the acquisition had occurred as of January 1, 2014, the results of operations of Herder would not have had a material pro forma effect on the Company’s revenues, earnings or earnings per share for the periods ended December 31, 2015.

Other Acquisitions

On May 13, 2014 the "Closing Date", the Company acquired all of the operating units of Specialized Industries LP, a portfolio company of ELB Capital Management, LLC.  The purchase included the businesses of Super Products LLC, Wausau-Everest LP and Howard P. Fairfield LLC as well as several related entities ("Specialized"), including all brand names and related product names and trademarks pursuant to the terms of the Membership Interests and Partnership Interests Purchase Agreement dated February 24, 2014. The purchase price consideration was $193 million, on a debt-free basis which included certain post-closing adjustments that were made within 90 days from the acquisition date per the agreement.

In connection with the Specialized acquisition on May 13, 2014, the Company amended its revolving credit facility and increased its line of credit from $100 million to $250 million. The Company financed the acquisition through $190 million of new borrowings under the amended credit facility.

The Specialized acquisition was accounted for in accordance with ASC Topic 805.  Accordingly, the total purchase price has been allocated to assets acquired and liabilities assumed in connection with the Acquisition, based on their fair values as of May 12, 2014. 

During Q2 2015, the Company completed its valuation of the acquired assets and liabilities.  In connection with preparing information needed for the associated tax returns, the Company identified an error in the pre-acquisition financial statements of Specialized Industries.  In particular, a previously unrecognized deferred tax liability approximating $3.3 million related to intangible assets was identified.  This resulted in an adjustment to the preliminary purchase price allocation disclosed in Note 2 of the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2014.  The Company adjusted the purchase price allocation associated with the Specialized acquisition to record the $3.3 million deferred tax liability with an associated increase in goodwill. Pursuant to ASC 805-10-25-17, this adjustment has been reflected as of the acquisition date, and accordingly, the recorded amounts for deferred income tax liabilities and goodwill in the December 31, 2014 financial statements included herein have been adjusted to reflect the revised amounts.  The final amounts assigned to the assets acquired and liabilities assumed in the Specialized acquisition were recognized at their acquisition-date fair values and are as follows (in thousands):

Cash	$	2,025
Accounts receivable	16,290
Inventory	47,500
Prepaid expenses	3,223
Rental equipment	28,446
Property, plant & equipment	13,214
Intangible assets	53,900
Other assets	675
Deferred income tax	(6,023		)
Other liabilities assumed	(10,962		)
Net assets assumed	$	148,288
Goodwill	44,611
Acquisition Price	$	192,899

Intangible assets determined to be definite-lived assets and are broken down as follows:

(in thousands)	Estimated Useful Lives	Value at Acquisition
Definite:
Trade names and trademarks	25	$	22,200
Customer and dealer relationships	14	29,700
Patents and drawings	12	2,000
Total		$	53,900

The valuation did not identify indefinite-lived assets during the analysis.

This allocation resulted in goodwill of $44.6 million, all of which has been assigned to the Company's Industrial reporting segment. $31.5 million of goodwill is tax deductible. The recognized goodwill is primarily attributable to expected synergies in both the vacuum truck and snow removal product lines.

Under ASC Topic 805-10, acquisition related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred. The Company incurred $1.8 million of acquisition related costs, which have been recorded in Selling, general and administrative expenses on the consolidated statement of income.

In the period between the Acquisition Date and December 31, 2014, the Specialized business units generated approximately $107.4 million of net sales and $5.1 million of net income. The Company has included the operating results of Specialized in its consolidated financial statements since the Acquisition Date.