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Business Acquisitions
 12 Months Ended
Aug. 31, 2015
Business Acquisitions [Abstract]  
Business Acquisitions

16. Business Acquisitions

Fiscal year 2015

On July 1, 2015, the Company completed the acquisition of J.Y.E. Castella Llorca, S.L. and each of its subsidiaries (collectively referred to as “Plasticos”) by acquiring 100% of the issued and outstanding common shares of J.Y.E. Castella Llorca, S.L. The aggregate purchase price totaled approximately $111.0 million in cash, based on the exchange rate on the date of acquisition.

The acquisition of Plasticos has been accounted for as a business combination using the acquisition method of accounting. Assets acquired of $168.6 million, including $40.5 million in goodwill and $32.1 million in intangible assets, and liabilities assumed of $49.8 million were recorded at their estimated fair values based on the exchange rate on the date of acquisition. The Company recorded a step acquisition gain of $6.2 million on the previously held Plasticos equity interest of $1.6 million, which is included in other expense within the Consolidated Statement of Operations. The Company is currently evaluating the fair values of the assets and liabilities related to the Plasticos business combination. The preliminary estimates and measurements are, therefore, subject to change during the measurement period for property, plant and equipment, intangible assets and tax adjustments. The excess of the purchase price over the fair value of the acquired assets and assumed liabilities of $40.5 million was recorded to goodwill. None of the goodwill is currently expected to be deductible for income tax purposes. The Company expensed transaction costs in connection with the acquisition of Plasticos of approximately $1.8 million during the fiscal year ended August 31, 2015. The results of operations were included in the Company’s consolidated financial results beginning on July 1, 2015. Pro forma information has not been provided as the acquisition of Plasticos is not deemed to be significant.

In connection with the acquisition of Plasticos, the Company acquired $32.1 million of intangible assets, including $24.4 million assigned to customer relationships with an assigned useful life of up to 10 years, $6.5 million assigned to intellectual property with an assigned useful life of up to 5 years and $1.2 million assigned to a definite-lived trade name with an assigned useful life of up to 1 year.

During the fiscal year ended August 31, 2015, the Company completed five additional acquisitions which were not deemed to be significant individually or in the aggregate. The acquired businesses expanded the Company’s capabilities in consumer lifestyles and wearable technologies and networking and telecommunications. The aggregate purchase price of these acquisitions totaled approximately $117.0 million in cash.

The acquisitions have been accounted for as business combinations using the acquisition method of accounting. Assets acquired of $167.8 million, including $42.4 million in goodwill and $31.7 million in intangible assets, and liabilities assumed of $50.8 million were recorded at their estimated fair values as of the acquisition dates. The Company is currently evaluating the fair values of the assets and liabilities related to the business combinations completed during the fiscal year ended August 31, 2015. The preliminary estimates and measurements are, therefore, subject to change during the measurement period for intangible assets and tax adjustments. The excess of the purchase prices over the fair values of the acquired assets and assumed liabilities of $42.4 million was recorded to goodwill. None of the goodwill is currently expected to be deductible for income tax purposes. The Company expensed transaction costs in connection with the acquisitions of approximately $6.1 million during the fiscal year ended August 31, 2015. The results of operations were included in the Company’s consolidated financial results beginning on the date of the acquisitions. Pro forma information has not been provided as the acquisitions are not deemed to be significant individually or in the aggregate.

Fiscal year 2013

On July 1, 2013, the Company completed its acquisition of Nypro by acquiring 100% of the issued and outstanding common shares of Nypro for net aggregate consideration of $696.0 million, which was funded from available cash. Nypro is a provider of manufactured precision plastic products for customers in the healthcare, packaging and consumer electronics industries. Nypro has advanced capabilities in product design, tooling, injection molding, surface decoration and complete product manufacturing.

The acquisition of Nypro has been accounted for as a business combination using the acquisition method of accounting. The allocation of the purchase price is considered final based on events and circumstances that existed on the acquisition date. The effects of the measurement period adjustments to the Consolidated Statements of Operations were not material.

The following table (in thousands) summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.

As reported at
August 31, 2013AdjustmentsAugust 31, 2014
Cash $77,384$ (12)(a)$77,372
Other current assets 343,446 (648)(a)342,798
Property, plant and equipment 282,599 (5,986)(b)276,613
Intangible assets 196,800 7,900 (b)204,700
Goodwill 335,871 34,696 (c)370,567
Other assets 28,304 (1,745)(a)26,559
Current liabilities (322,397) (361)(a)(322,758)
Long-term deferred tax liability (153,030) (15,810)(a)(168,840)
Other liabilities (72,906) 3,628 (a)(69,278)
Noncontrolling interests (36,548) (5,162)(b)(41,710)
Net assets acquired $679,523$16,500$696,023

  • Adjustment related to the fair value of identifiable assets and liabilities
  • Adjustment based on final valuation results
  • Adjustment based on finalization of provisional amounts previously recorded in (a) and (b)

The excess of the purchase price over the fair value of the acquired assets and assumed liabilities of $370.6 million was recorded to goodwill and was assigned fully to the DMS reportable segment. The goodwill is not expected to be deductible for tax purposes.

The $204.7 million of acquired intangible assets include $81.0 million assigned to customer relationships with an assigned useful life of up to 15 years, $51.2 million assigned to intellectual property with an assigned useful life of up to eight years and $72.5 million assigned to an indefinite-lived trade name.

Customer relationships were valued using the multi-period excess earnings method under the income approach. The intellectual property and indefinite-lived trade name were valued using a relief from royalty method under the income approach. The valuations considered expected and historical trends and discount rates were utilized to reflect the risk associated with the intangible assets relative to the overall business operations of the Company.

During the fiscal year ended August 31, 2013, the Company expensed transaction costs of $13.5 million related to the Nypro acquisition within the Consolidated Statements of Operations.

The results for the fiscal year ended August 31, 2013 included results from Nypro between July 1, 2013 and August 31, 2013. During this period, Nypro contributed $183.2 million in net revenue and $8.8 million of net loss to the Company’s Consolidated Statements of Operations. The following unaudited pro forma financial information for the fiscal years ended August 31, 2013 and 2012 represent the combined results of the Company’s operations as if the Nypro acquisition had occurred on September 1, 2011 (in thousands, except earnings per share):

Pro forma
Fiscal Year Ended August 31,
20132012
Net revenue$18,150,599$17,263,831
Net income$237,119$408,315
Earnings per share, basic$1.17$1.98
Earnings per share, diluted$1.14$1.93

Pro forma earnings for the fiscal years ended August 31, 2013 and 2012 were adjusted by $(78.3) million and $86.3 million, respectively, for recurring changes in amortization, interest expense and income taxes related to the acquisition, certain non-recurring acquisition costs and income taxes associated with a repatriation of foreign earnings to the U.S. The pro forma earnings do not include any adjustments for cost savings and other synergy benefits.

On August 28, 2014, the Company sold its controlling financial interests in two Nypro subsidiaries for $5.2 million. For the fiscal year ended August 31, 2014, the Company recorded a loss on disposal of subsidiaries of $8.0 million within the Consolidated Statement of Operations.