Acquisitions

On December 30, 2014 the Company acquired 100% of the outstanding common shares of Stahlhammer Bommern GmbH (“STB”) located in Hamm, Germany, a privately-owned company with annual sales of approximately $16,000,000. STB manufactures a large range of lifting tools and forged parts that are able to withstand particularly heavy, static and dynamic loads, including single and ramshorn lifting hooks. In connection with the acquisition of STB, the Company withheld $5,431,000 to be paid to the seller upon satisfaction of certain conditions. $822,000 of the amounts withheld related to a working capital adjustment which was paid during fiscal 2016. The remaining $4,609,000 was paid to the seller during fiscal 2017.

On September 2, 2015, the Company completed its acquisition of Magnetek, a designer and manufacturer of digital power and motion control solutions for material handling, elevators, and mining applications. The transaction combines Magnetek's technology with the Company's broad line of lifting and positioning mechanical products to create a more comprehensive solution for customers. In connection with the acquisition, the Company completed a tender offer to acquire all of the outstanding shares of common stock of Magnetek at a purchase price of $50.00 per share in cash for a total acquisition value of $182,467,000, net of cash acquired. The results of Magnetek included in the Company’s consolidated financial statements from the date of acquisition are net sales and income from operations of $100,658,000 and $10,309,000, respectively for March 31, 2017 and $65,662,000 and $6,395,000, respectively for the year ended March 31, 2016. Magnetek's income from operations for the year ended March 31, 2016 includes acquisition related severance costs of $2,300,000. These costs have been included in general and administrative expenses. Acquisition expenses incurred by the Company total $5,746,000 and were all incurred in fiscal 2016 and have been recorded in general and administrative expenses.

In preparation for the Magnetek acquisition, on July 26, 2015 the Company, JPMorgan Chase Bank, N.A. (“JP Morgan Chase Bank”) and J.P. Morgan Securities LLC entered into a commitment letter in which JPMorgan Chase Bank committed to extend $75,000,000 of incremental revolving commitments to the Company’s existing credit agreement dated as of January 23, 2015. The incremental revolving commitment was on terms and conditions consistent with the Company’s pre-existing revolving credit facility under the Credit Agreement. The Company drew upon its revolving credit facilities to fund the purchase price and fees associated with the acquisition of Magnetek. These borrowings were subsequently refinanced with the acquisition of STAHL (refer to below).

The purchase price has been allocated to the assets acquired and liabilities assumed as of the date of acquisition. The excess consideration of $49,204,000 has been recorded as goodwill. The identifiable intangible assets acquired include customer relationships of $41,000,000, engineered drawings of $28,488,000, trademark and trade names of $26,600,000, patents and technology of $9,750,000, and in-process research and development of $160,000. The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 18 years at the time of acquisition. Goodwill recorded in connection with the acquisition is not deductible for income tax purposes.

The assignment of purchase consideration to the assets acquired and liabilities assumed is as follows:



Cash	$	8,205
Working capital	19,660
Property, plant, and equipment	5,660
Intangible assets	105,998
Other long term assets	3,921
Other long term liabilities	(44,052		)
Deferred taxes, net	42,076
Goodwill	49,204
Total	$	190,672

On July 15, 2016, the Company purchased 100% of the assets of Ergomatic Products LLC ("Ergomatic"), a designer and manufacturer of ergonomic lift assists, articulating arms, torque tubes, and pneumatic control systems for material handling and tool suspension applications. The purchase price of the transaction was $1,175,000, of which $588,000 was paid to the seller on the day of closing with the remainder due to the seller over a two year period.

In connection with the acquisition of Ergomatic, the Company withheld $588,000 to be paid to the seller upon satisfaction of certain conditions. Of this amount, $294,000 is expected to be paid to the seller within one year of the period ending March 31, 2017 and the remaining $294,000 is expected to be paid within two years. The Company has recorded short term restricted cash on its consolidated balance sheets of $294,000 within prepaid expenses and other and long term restricted cash of $294,000 in other assets at March 31, 2017. Further, the Company has recorded a short term liability to the seller of $294,000 within accrued liabilities and a long term liability to the seller of $294,000 within other non current liabilities at March 31, 2017.

The purchase price has been preliminarily allocated to the assets and liabilities assumed as of the date of acquisition. Adjustments may be made if new information is obtained during the measurement period. The identifiable intangible assets acquired primarily includes engineered drawings of $677,000 with an estimated useful life of 20 years. The preliminary assignment of the purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):



Working capital	$	212
Property, plant, and equipment	246
Intangible assets	717
Total purchase consideration	$	1,175

On January 31, 2017, the Company completed its acquisition of STAHL for $218,256,000, net of cash acquired. STAHL is a leading manufacturer of explosion-protected hoists and crane components as well as provides custom engineered lifting solutions and hoisting technology with annual sales of approximately $165,000,000. STAHL serves independent crane builders and Engineering Procurement and Construction (EPC) firms, providing products to a variety of end markets including automotive, general manufacturing, oil & gas, steel & concrete, power generation, as well as process industries such as chemical and pharmaceuticals.

The results of STAHL included in the Company’s consolidated financial statements from the date of acquisition are net sales and loss from operations of $24,682,000 and ($6,022,000), respectively for the year ended March 31, 2017. STAHL's loss from operations for the year ended March 31, 2017 includes acquisition related inventory amortization of $8,852,000. These costs have been included in cost of goods sold. Acquisition expenses incurred by the Company total $8,454,000 through March 31, 2017 and have been recorded in general and administrative expenses.

To finance the STAHL acquisition, the Company, completed securing a $545,000,000 debt facility (New Facilities) with JPMorgan Chase Bank, N.A. (JP Morgan Chase Bank). The New Facilities consist of a New Revolving Facility in the amount of $100,000,000 and a $445,000,000 1st Lien Term Loan. Proceeds from the New Facility were used to fund the STAHL acquisition, pay fees and expenses associated with the acquisition, and refinance the Company’s existing Term Loan and Credit Facility. As of March 31, 2017 the Company had not drawn on the New Revolving Facility and had repaid $12,500,000 on the 1st Lien Term Loan. Please refer to Note 11 for additional information related to the Company's debt facilities.

In addition to the debt borrowing described above, the Company entered into an agreement to sell in aggregate 2,273,000 shares of Common Shares to the following purchasers: Adage Capital Management, LP; Heights Capital Management, Inc.; and UBS O'Connor LLC. The sale of the shares closed on January 30, 2017 at a price per Common Share of $22.00, generating gross proceeds of approximately $50,000,000. The purchase agreement for the shares requires the Company to file an initial registration statement registering the common shares issued to the purchasers for resale. The filing of the registration statement was completed and declared effective on April 28, 2017.

The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed as of the date of acquisition. The excess consideration of $150,322,000 has preliminarily been recorded as goodwill. The identifiable intangible assets acquired include customer relationships of $120,220,000, trademark and trade names of $18,191,000, patents and technology of $2,660,000, and other intangibles totaling $1,968,000. The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 16 years at the time of acquisition. Goodwill recorded in connection with the acquisition is not deductible for income tax purposes. The allocation of the purchase price to the assets acquired and liabilities assumed of STAHL is not complete as of March 31, 2017 as the Company is continuing to gather information regarding STAHL's contingent liabilities and intangible assets.

The preliminary assignment of purchase consideration to the assets acquired and liabilities assumed is as follows:



Cash	$	30,473
Working capital	18,593
Property, plant, and equipment	14,234
Intangible assets	143,039
Other assets	380
Other liabilities	(74,762		)
Deferred taxes, net	(33,550		)
Goodwill	150,322
Total	$	248,729

For each of the Company's acquisitions disclosed, goodwill represents future economic benefits arising from other assets acquired that do not meet the criteria for separate recognition apart from goodwill, including assembled workforce, growth opportunities, and increased presence in the markets served by the acquired companies.

Included within accrued liabilities at March 31, 2017 is $14,103,000 due to the former owner of STAHL related to a profit distribution agreement in place prior to the acquisition. This is expected to be paid to the former owner during fiscal 2018.

See Note 4 for assumptions used in determining the fair values of of the intangible assets acquired.

The following unaudited pro forma financial information presents the combined results of operations as if the acquisitions had occurred as of April 1, 2015. The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts may not be indicative of the results that actually would have been achieved had the acquisitions occurred as of April 1, 2015 and are not necessarily indicative of future results of the combined companies (in thousands, except per share data):



	March 31,
	2017		2016
Net sales	$	777,847	$	826,653
Net income	$	20,699	$	29,617
Net income per share - Basic	$	0.92	$	1.33
Net income per share - Diluted	$	0.91	$	1.31