Indiana | 001-35229 | 45-2080495 | ||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||
1 International Drive Rye Brook, New York | 10573 | |||||
(Address of principal executive offices) | (Zip Code) |
c | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
c | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
c | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
c | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit 99.1 | Sensus Worldwide Limited audited consolidated financial statements for the fiscal year ended March 31, 2016 |
Exhibit 99.2 | Sensus Worldwide Limited unaudited consolidated financial statements for the six months ended September 30, 2016 and 2015 |
XYLEM INC. | ||||
Date: January 10, 2017 | By: | /s/ E. Mark Rajkowski | ||
E. Mark Rajkowski | ||||
Senior Vice President and Chief Financial Officer (Authorized Officer of Registrant) | ||||
Exhibit 99.1 | Sensus Worldwide Limited audited consolidated financial statements for the fiscal year ended March 31, 2016 |
Exhibit 99.2 | Sensus Worldwide Limited unaudited consolidated financial statements for the six months ended September 30, 2016 and 2015 |
Independent Auditor's Report | 1 |
Consolidated Financial Statements | |
CONSOLIDATED BALANCE SHEET | 2 |
CONSOLIDATED STATEMENT OF OPERATIONS | 3 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) | 4 |
CONSOLIDATED STATMENT OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT) | 5 |
CONSOLIDATED STATEMENT OF CASH FLOWS | 6 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | 7-22 |
March 31 | |||
2016 | |||
ASSETS | |||
CURRENT ASSETS: | |||
Cash and cash equivalents......................................................................................................................... | $ | 46.4 | |
Short-term investments............................................................................................................................... | 9.2 | ||
Accounts receivable: | |||
Trade, net of allowance for doubtful accounts of $3.0 and $3.3, respectively....................................... | 114.8 | ||
Inventories, net........................................................................................................................................... | 56.2 | ||
Prepayments and other current assets....................................................................................................... | 16.0 | ||
Deferred income taxes................................................................................................................................ | 31.9 | ||
Deferred costs............................................................................................................................................... | 5.0 | ||
Total current assets................................................................................................................... | 279.5 | ||
Property, plant and equipment, net............................................................................................................. | 106.3 | ||
Goodwill and intangible assets, net............................................................................................................. | 606.6 | ||
Other long-term assets................................................................................................................................ | 69.8 | ||
Total assets................................................................................................................................... | $ | 1,062.2 | |
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) | |||
CURRENT LIABILITIES: | |||
Accounts payable........................................................................................................................................ | $ | 79.7 | |
Accruals and other current liabilities.......................................................................................................... | 90.8 | ||
Deferred revenue........................................................................................................................................... | 28.6 | ||
Current portion of long-term debt................................................................................................................ | 5.0 | ||
Short-term borrowings.................................................................................................................................. | 6.2 | ||
Total current liabilities.................................................................................................................................. | 210.3 | ||
Long-term debt, less current portion............................................................................................................. | 597.1 | ||
Pensions......................................................................................................................................................... | 82.5 | ||
Deferred income taxes................................................................................................................................... | 22.4 | ||
Deferred revenue........................................................................................................................................... | 17.3 | ||
Other long-term liabilities.............................................................................................................................. | 42.5 | ||
Total liabilities........................................................................................................................... | 972.1 | ||
STOCKHOLDER’S EQUITY (DEFICIT): | |||
Common stock, par value $1.00 per share, 12,000 shares authorized, issued and outstanding............... | – | ||
Paid-in capital.............................................................................................................................................. | 251.6 | ||
Accumulated deficit..................................................................................................................................... | (140.0) | ||
Accumulated other comprehensive loss...................................................................................................... | (28.0) | ||
Total stockholder’s equity (deficit).............................................................................................. | 83.6 | ||
Noncontrolling interest............................................................................................................................... | 6.5 | ||
Total equity (deficit)..................................................................................................................... | 90.1 | ||
Total liabilities and equity............................................................................................................ | $ | 1,062.2 |
Year Ended March 31 | |||
2016 | |||
Net sales................................................................................................................................... | $ | 860.8 | |
Cost of sales, excluding depreciation....................................................................................... | 453.2 | ||
Selling, general and administrative expenses, excluding depreciation and amortization......................................................................................................................... | 204.1 | ||
Depreciation and amortization | 56.4 | ||
Restructuring expense.............................................................................................................. | 5.6 | ||
Management fees...................................................................................................................... | 4.6 | ||
Operating income (loss)........................................................................................................... | 136.9 | ||
Other expense (income): | |||
Interest expense, net.............................................................................................................. | 37.3 | ||
Other expense, net................................................................................................................. | 0.6 | ||
Income (loss) before income taxes...................................................................................... | 99.0 | ||
Income tax (benefit) expense................................................................................................. | (33.6) | ||
Consolidated net income (loss).............................................................................................. | 132.6 | ||
Less: net income attributable to the noncontrolling interest.................................................... | 0.8 | ||
Net income (loss) attributable to controlling interest......................................................... | $ | 131.8 |
Year Ended March 31 | |||
2016 | |||
Net income (loss).................................................................................................................. | $ | 132.6 | |
Other comprehensive income (loss), before tax................................................................ | |||
Foreign currency translation adjustments.................................................................... | (8.2) | ||
Defined benefit pension plan........................................................................................ | |||
Prior service cost adjustment arising during period.................................................. | – | ||
Net actuarial gain (loss) adjustment arising during period........................................ | 7.6 | ||
Defined benefit pension plan, net............................................................................... | 7.6 | ||
Other comprehensive income (loss), before tax............................................................... | (0.6) | ||
Income tax expense related to components of other comprehensive income....................... | – | ||
Other comprehensive loss, net of tax.................................................................................... | (0.6) | ||
Comprehensive income (loss)............................................................................................. | 132.0 | ||
Less: comprehensive loss attributable to noncontrolling interest............................... | (0.1) | ||
Comprehensive income (loss) attributable to controlling interest.................................. | $ | 132.1 |
Common Stock | Paid-in Capital | Accumulate Deficit | Accumulated Other Comprehensive Loss | Total Stockholder’s Equity (Deficit) | Noncontrolling Interest | Total Equity (Deficit) | |||||||||||||||
Balance at March 31, 2015...................................... | $ | — | $ | 251.6 | $ | (271.8 | ) | $ | (28.3 | ) | $ | (48.5 | ) | $ | 7.0 | $ | (41.5 | ) | |||
Dividend payable to Joint Venture................ | – | – | – | – | – | (0.4) | (0.4) | ||||||||||||||
Other comprehensive income (loss):............ | |||||||||||||||||||||
Net income....................................... | – | – | 131.8 | – | 131.8 | 0.8 | 132.6 | ||||||||||||||
Foreign currency translation adjustment.................................. | – | – | – | (7.3) | (7.3) | (0.9) | (8.2) | ||||||||||||||
Defined benefit pension plan adjustment, net of tax of $0.0 million................................ | – | – | – | 7.6 | 7.6 | – | 7.6 | ||||||||||||||
Balance at March 31, 2016...................................... | $ | — | $ | 251.6 | $ | (140.0 | ) | $ | (28.0 | ) | $ | 83.6 | $ | 6.5 | $ | 90.1 |
Year Ended March 31 | |||
2016 | |||
Operating activities: | |||
Consolidated net income (loss)................................................................................................................... | $ | 132.6 | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization.................................................................................................................... | 56.4 | ||
Amortization of deferred financing costs and original issue discounts........................................................ | 3.2 | ||
Deferred income taxes ............................................................................................................................... | (40.0) | ||
Loss on divestiture of business .................................................................................................................. | - | ||
Loss on equity investment write down......................................................................................................... | - | ||
Non-cash loss (gain) on foreign currency transactions .............................................................................. | 0.4 | ||
Other non-cash (gain) loss ......................................................................................................................... | (0.3) | ||
Changes in assets and liabilities used in operations, net of effects of acquisitions and divestitures: | |||
Trade accounts receivable.......................................................................................................................... | (15.2) | ||
Inventories ................................................................................................................................................. | 3.3 | ||
Prepayments and other current assets ...................................................................................................... | (1.9) | ||
Accounts payable, accruals and other current liabilities ............................................................................. | (25.2) | ||
Deferred revenue less deferred costs......................................................................................................... | (23.8) | ||
Other non-current assets & liabilities........................................................................................................... | (10.9) | ||
Net cash provided by operating activities ............................................................................................. | 78.6 | ||
Investing activities: | |||
Expenditures for property, plant and equipment, net ................................................................................. | (34.3) | ||
Purchases of intangible assets.................................................................................................................... | (1.5) | ||
Software development costs ...................................................................................................................... | (35.1) | ||
Business acquisitions, net of cash acquired ............................................................................................... | (9.8) | ||
Proceeds from sale of business ................................................................................................................. | - | ||
Proceeds from sale of assets ..................................................................................................................... | 0.2 | ||
(Purchase) / sale of short-term investments .............................................................................................. | (8.1) | ||
Net cash used in investing activities ...................................................................................................... | (88.6) | ||
Financing activities: | |||
Receipts / (payments) on short-term borrowings, net................................................................................. | 0.7 | ||
Payments on debt....................................................................................................................................... | (5.3) | ||
Payments of contingent consideration ....................................................................................................... | - | ||
Dividend paid to Joint Venture ................................................................................................................... | (0.4) | ||
Net cash used in financing activities ..................................................................................................... | (5.0) | ||
Effect of exchange rate changes on cash................................................................................................... | (1.9) | ||
(Decrease) increase in cash and cash equivalents..................................................................................... | (16.9) | ||
Cash and cash equivalents at beginning of year......................................................................................... | 63.3 | ||
Cash and cash equivalents at end of year ................................................................................................. | $ | 46.4 | |
Supplemental disclosures of cash flows: | |||
Cash paid during the period for: | |||
Interest, net ................................................................................................................................................ | $ | 34.8 | |
Income taxes, net of refunds....................................................................................................................... | $ | 4.4 |
3. | ACQUISITIONS / DIVESTITURES |
4. | INVENTORIES |
2016 | |||
Raw materials, parts and supplies............................................. | $ | 32.7 | |
Work in Process........................................................................ | 5.6 | ||
Finished Goods ........................................................................ | 17.9 | ||
Inventories, net ........................................................................ | $ | 56.2 |
5. | PROPERTY, PLANT AND EQUIPMENT, NET |
Depreciable Lives | 2016 | |||
Land, buildings and improvements ......................................... | 13-50 years | $ | 47.5 | |
Machinery and equipment ....................................................... | 3-13 years | 241.6 | ||
Construction in progress .......................................................... | N/A | 20.8 | ||
Total property, plant and equipment ........................................ | 309.9 | |||
Less accumulated depreciation............................................. | (203.6) | |||
Property, plant and equipment, net .......................................... | $ | 106.3 |
6. | GOODWILL AND INTANGIBLE ASSETS, NET |
Total | |||
Balance as of March 31, 2015 | |||
Goodwill .................................................................................................. | 483.2 | ||
Accumulated impairment losses .............................................................. | (14.4) | ||
$ | 468.8 | ||
Sentec acquisition-related adjustment resulting from deferred tax liability | 1.6 | ||
Balance as of March 31, 2016 | |||
Goodwill....................................................................................................... | 484.8 | ||
Accumulated impairment losses .............................................................. | (14.4) | ||
$ | 470.4 |
6. | GOODWILL AND INTANGIBLE ASSETS, NET (continued) |
2016 | |||
Weighted Average Amortization Periods | Cost | Accumulated Amortization |
Distributor and marketing relationships... | 22.7 years | 180.5 | (97.8) |
Developed technology ............................ | 11.9 years | 28.3 | (22.6) |
Non-competition agreements .................. | n/a | 0.5 | (0.5) |
Patents...................................................... | 7.9 years | 25.8 | (14.4) |
FCC licenses ............................................ | 12.2 years | 21.7 | (10.1) |
Tradenames (definite lived) ..................... | 2.9 years | 3.4 | (3.4) |
260.2 | (148.8) | ||
Total goodwill and intangible assets ....... | 755.4 | (148.8) |
Years Ending March 31 | |||
2017 ...................................................................... | $ | 14.4 | |
2018 ...................................................................... | 14.4 | ||
2019 ...................................................................... | 11.5 | ||
2020 ...................................................................... | 10.1 | ||
2021 ...................................................................... | 10.0 |
7. | RESTRUCTURING COSTS |
2016 | |||
Balance at beginning of year ................................................................... | $ | 3.1 | |
Accrual of new committed/announced programs .................................... | 5.6 | ||
Cash payments ....................................................................................... | (7.2) | ||
Foreign currency translation adjustment................................................. | 0.1 | ||
Balance at end of year.............................................................................. | $ | 1.6 | |
Current portion ......................................................................................... | $ | 0.9 | |
Non-current portion ............................................................................... | 0.7 | ||
Total.......................................................................................................... | $ | 1.6 |
8. | DEBT |
2016 | |||
Capital Leases....................................................................................... | $ | 0.3 | |
Short-term borrowings......................................................................... | 6.2 | ||
First lien credit agreement (A) .............................................................. | |||
Revolving Credit Facility .................................................................. | - | ||
Term loan (net of $0.4 original issue discount) ....................................................................................... | 452.1 | ||
Second lien credit agreement (net of $0.3 original issue discount ) (B)................................................................................... | 149.7 | ||
Total Debt ............................................................................................. | 608.3 | ||
Less: Current portion ........................................................................... | (11.2) | ||
Long-term debt ..................................................................................... | $ | 597.1 |
(A) | The First Lien Credit Agreement consists of a $100 million Revolving Credit Facility and a $475 million term loan. The Revolving Credit Facility matures on May 9, 2016 and bears interest at LIBOR plus 3.125%. The term loan matures on May 9, 2017 with quarterly payments of principal of $1.2 million due through maturity and the remaining balance due upon maturity. The term loan bears interest at LIBOR plus 3.25% subject to a minimum LIBOR of 1.25%. As of March 31, 2016, there were letters of credit pledged against the revolver totaling $4.3 million. |
(B) | The Second Lien Credit Agreement consists of a $150 million term loan, with the full amount of principal payable on May 9, 2018. The second lien term loan bears interest at LIBOR plus 7.25% subject to a minimum LIBOR of 1.25%. |
2017 ...................................................................... | 11.2 | ||
2018 ...................................................................... | 447.8 | ||
2019 ...................................................................... | 150.0 | ||
Total Debt Maturities ............................................... | 609.0 | ||
Less Original issue discounts ................................... | (0.7) | ||
Total Debt | $ | 608.3 |
9. | WARRANTY OBLIGATIONS |
2016 | |||
Balance at beginning of year .......................................................... | $ | 19.1 | |
Warranty provision ......................................................................... | 10.2 | ||
Settlements made ........................................................................ | (6.7) | ||
Foreign currency translation adjustment......................................... | 0.1 | ||
Balance at end of year..................................................................... | $ | 22.7 |
10. | LEASES |
2017........................................................................... | 4.8 | ||
2018........................................................................... | 4.3 | ||
2019........................................................................... | 3.0 | ||
2020........................................................................... | 2.5 | ||
2021........................................................................... | 1.5 | ||
Thereafter.................................................................. | 1.6 | ||
Total .......................................................................... | $ | 17.7 |
2017............................................................................................. | $ | 0.2 | |
2018............................................................................................. | 0.1 | ||
Present value of minimum lease payments (A) .......................... | 0.3 |
(A) | The Company has recorded $0.2 million and $0.1 million in current portion of long-term debt and long- term debt, less, current portion, respectively, in the consolidated balance sheet at March 31, 2016 |
German Pension Plan | U.S. Pension Plan | |||||
2016 | 2016 | |||||
Benefit obligation at end of year ............................. | $ | 80.5 | $ | 13.2 | ||
Fair value of plan assets at end of year ................... | N/A | 8.6 | ||||
Underfunded status at end of year........................... | 80.5 | 4.6 |
Employer contributions ........................................... | N/A | 0.5 | ||||
Benefits paid on benefit obligation ......................... | (2.4) | (0.3) | ||||
Liability on balance sheet consists of: | ||||||
Current pension liability ..................................... | $ | 2.6 | $ | 0.0 | ||
Long-term pension liability ............................. | 77.9 | 4.6 | ||||
Liability on balance sheet.............................................. | $ | 80.5 | $ | 4.6 | ||
Amounts recognized in accumulated other comprehensive loss: | ||||||
Actuarial loss ................................................... | $ | 28.4 | $ | 3.2 | ||
Unrecognized prior service cost ..................... | 1.5 | 0.2 | ||||
Total in accumulated other comprehensive loss | $ | 29.9 | $ | 3.4 |
German Pension Plan | U.S. Pension Plan | |||
2016 | 2016 | |||
Discount rate ........................................ | 1.94 | % | 3.85 | % |
Rate of compensation increase ............. | 2.25 | % | N/A |
Germany | U.S | |
2017 ............................................................................................ | 2.6 | 0.4 |
2018 ............................................................................................ | 2.6 | 0.5 |
2019 ............................................................................................ | 2.8 | 0.6 |
2020 ............................................................................................ | 2.8 | 0.6 |
2021 ............................................................................................ | 2.9 | 0.7 |
Five years, collectively, thereafter .................................................. | 15.6 | 4.3 |
German Pension Plan | U.S. Pension Plan | |
2016 | 2016 | |
Discount rate........................................ | 1.94% | 3.75% |
Rate of compensation increase ........... | 2.25% | N/A |
Expected rate of return on plan assets | N/A | 6.75% |
Target Allocation | Allocation at March 31, 2016 | |||
Separate Accounts: | ||||
Fixed income ........................................... | 45 | % | 42 | % |
Large U.S. equity ..................................... | 9 | 10 | ||
Balanced / Asset Allocation ..................... | 5 | 5 | ||
Mutual Funds: | ||||
International equity .................................. | 18 | 17 | ||
Small/Mid U.S. equity ............................. | 8 | 9 | ||
Fixed Income ............................................ | 5 | 6 | ||
Balanced / Asset Allocation ..................... | 5 | 6 | ||
Large U.S. equity....................................... | 5 | 5 | ||
Total ........................................................... | 100 | % | 100 | % |
• | Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. |
• | Level 2 inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices (in non-active markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are not directly observable, but that are corroborated by observable market data. |
• | Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs shall be used to the extent that observable inputs are not available, allowing for situations in which there is little, if any, market activity for an asset or liability. |
Level 1 * (Quoted prices in active markets) | Level 2 ** (Significant other inputs including daily pricing) | Total | |
Investment option (in millions) | 2016 | 2016 | 2016 |
Mutual Funds: | |||||||||
International equity ................................... | 1.5 | – | 1.5 | ||||||
Small/Mid U.S. equity .............................. | 0.8 | – | 0.8 | ||||||
Large U.S. equity ...................................... | 0.5 | – | 0.5 | ||||||
Fixed Income ............................................ | 0.5 | – | 0.5 | ||||||
Balanced/Asset Allocation ........................ | 0.4 | – | 0.4 | ||||||
Total ............................................................... | $ | 3.7 | $ | 4.9 | $ | 8.6 |
** | Level 2 investments represent separate accounts that may invest in a mutual fund(s) or directly into securities, primarily stocks or bonds, or a combination of stocks and bonds. For those that invest in a mutual fund(s), a publicly quoted price is used to determine the net asset value of the pooled separate accounts, which is not publicly quoted. For those that invest directly in securities, the majority of the securities have observable Level 2 pricing inputs, including quoted prices for similar assets in active or non-active markets. Most of the security prices were obtained from a pricing service, Interactive Data Corporation. |
2016 | |||
Current: | |||
United States federal ................................................. | $ | 0.1 | |
Non-U.S. ................................................................ | 5.3 | ||
United States state and local...................................... | 1.0 | ||
Total current ............................................................... | 6.4 | ||
Deferred: | |||
United States federal ................................................. | (34.2) | ||
Non-U.S..................................................................... | (0.2) | ||
United States state and local...................................... | (5.6) | ||
Total deferred ............................................................. | (40.0) | ||
Income tax expense .................................................... | $ | (33.6 | ) |
13. | RELATED-PARTY TRANSACTIONS |
14. | COMMITMENTS AND CONTINGENCIES (continued) |
15. | OTHER COMPREHENSIVE (LOSS) INCOME |
Pension Benefit Plans, Net of Tax | Foreign Currency Translation | Total | |||||||
Balance March 31, 2015 ........................... | $ | (43.8 | ) | $ | 15.5 | $ | (28.3 | ) | |
Foreign currency translation adjustment | – | (7.3) | (7.3) | ||||||
Net actuarial gain adjustment ................. | 7.6 | – | 7.6 | ||||||
Prior service credit adjustment ............... | – | – | – | ||||||
Balance March 31, 2016 ............................ | $ | (36.2 | ) | $ | 8.2 | $ | (28.0 | ) |
16. | SUBSEQUENT EVENTS |
September 30, | March 31, | |||||
2016 | 2016 | |||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents......................................................................................................... | $ | 54.3 | $ | 46.4 | ||
Short-term investments ............................................................................................................. | 10.5 | 9.2 | ||||
Accounts receivable: | ||||||
Trade, net of allowance for doubtful accounts of $2.8 and $3.0, respectively............... | 106.1 | 114.8 | ||||
Inventories, net.......................................................................................................................... | 63.2 | 56.2 | ||||
Prepayments and other current assets........................................................................................ | 15.1 | 16.0 | ||||
Deferred income taxes ............................................................................................................. | 27.8 | 31.9 | ||||
Deferred costs ........................................................................................................................... | 0.4 | 5.0 | ||||
Total current assets .............................................................................................. | 277.4 | 279.5 | ||||
Property, plant and equipment, net............................................................................................ | 106.9 | 106.3 | ||||
Goodwill and intangible assets, net .......................................................................................... | 599.2 | 606.6 | ||||
Deferred costs ........................................................................................................................... | 3.8 | – | ||||
Other long-term assets .............................................................................................................. | 71.8 | 66.8 | ||||
Total assets........................................................................................................... | $ | 1,059.1 | $ | 1,059.2 | ||
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) | ||||||
CURRENT LIABILITIES: | ||||||
Accounts payable ..................................................................................................................... | $ | 72.3 | $ | 79.7 | ||
Accruals and other current liabilities........................................................................................ | 75.6 | 99.8 | ||||
Deferred revenue....................................................................................................................... | 18.9 | 28.6 | ||||
Current portion of long-term debt ............................................................................................ | 6.4 | 5.0 | ||||
Short-term borrowings ............................................................................................................. | 6.0 | 6.2 | ||||
Total current liabilities ........................................................................................ | 179.2 | 210.3 | ||||
Long-term debt, less current portion ......................................................................................... | 590.5 | 594.1 | ||||
Pensions .................................................................................................................................... | 83.7 | 82.5 | ||||
Deferred income taxes .............................................................................................................. | 31.6 | 22.4 | ||||
Deferred revenue........................................................................................................................ | 21.0 | 17.3 | ||||
Other long-term liabilities ........................................................................................................ | 38.3 | 42.5 | ||||
Total liabilities ..................................................................................................... | 944.3 | 969.1 | ||||
COMMITMENTS AND CONTINGENCIES (Note 13) | ||||||
STOCKHOLDER’S EQUITY: | ||||||
Common stock, par value $1.00 per share, 12,000 shares authorized, issued and outstanding | – | – | ||||
Paid-in capital ........................................................................................................................... | 251.6 | 251.6 | ||||
Accumulated deficit ................................................................................................................. | (115.2) | (149.0) | ||||
Accumulated other comprehensive loss ................................................................................... | (28.4) | (28.0) | ||||
Total stockholder’s equity ................................................................................... | 108.0 | 83.6 | ||||
Noncontrolling interest ............................................................................................................ | 6.8 | 6.5 | ||||
Total equity ......................................................................................................... | 114.8 | 90.1 | ||||
Total liabilities and equity................................................................................... | $ | 1,059.1 | $ | 1,059.2 |
Six Months Ended September 30, | ||||||
2016 | 2015 | |||||
Net sales........................................................................................................... | $ | 463.1 | $ | 430.8 | ||
Cost of sales, excluding depreciation .............................................................. | 256.2 | 236.7 | ||||
Selling, general and administrative expenses, excluding depreciation and amortization ....................................................................................... | 103.0 | 102.5 | ||||
Depreciation and amortization ......................................................................... | 29.8 | 27.1 | ||||
Restructuring expense .................................................................................... | 2.1 | 3.0 | ||||
Management fees.............................................................................................. | 1.7 | 2.1 | ||||
Operating income ............................................................................................. | 70.3 | 59.4 | ||||
Other expense (income): | ||||||
Interest expense, net ...................................................................................... | 22.9 | 19.1 | ||||
Loss on extinguishment of debt..................................................................... | 2.1 | 0.0 | ||||
Other expense, net ......................................................................................... | 3.0 | (0.8) | ||||
Income before income taxes........................................................................ | 42.3 | 41.1 | ||||
Income tax expense ....................................................................................... | 17.2 | 12.6 | ||||
Consolidated net income ................................................................................ | 25.1 | 28.5 | ||||
Less: net income attributable to the noncontrolling interest............................. | 0.3 | 0.4 | ||||
Net income attributable to controlling interest | $ | 24.8 | $ | 28.1 |
Six Months Ended September 30, | ||||||
2016 | 2015 | |||||
Net income ..................................................................................................... | $ | 25.1 | $ | 28.5 | ||
Other comprehensive loss, before tax | ||||||
Foreign currency translation adjustments ............................................... | (0.4) | (7.4) | ||||
Defined benefit pension plan | ||||||
Prior service cost adjustment arising during period ............................. | 0.0 | 0.0 | ||||
Net actuarial gain (loss) adjustment arising during period .................. | 0.0 | 0.0 | ||||
Defined benefit pension plan, net .......................................................... | 0.0 | 0.0 | ||||
Other comprehensive loss, before tax .......................................................... | (0.4) | (7.4) | ||||
Income tax expense related to components of other comprehensive income .. | 0.0 | 0.0 | ||||
Other comprehensive loss, net of tax ............................................................... | (0.4) | (7.4) | ||||
Comprehensive income ................................................................................. | 24.7 | 21.1 | ||||
Less: comprehensive income (loss) attributable to noncontrolling interest .................................................................................................... | 0.3 | (0.3) | ||||
Comprehensive income attributable to controlling interest ...................... | $ | 24.4 | $ | 21.4 |
Six Months Ended September 30, | ||||||
2016 | 2015 | |||||
Operating activities: | ||||||
Consolidated net income ........................................................................................................................ | $ | 25.1 | $ | 28.5 | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||
Depreciation and amortization.................................................................................................... | 29.8 | 27.1 | ||||
Amortization of deferred financing costs and original issue discounts ..................................... | 2.1 | 1.6 | ||||
Deferred income taxes .............................................................................................................. | 13.4 | 1.8 | ||||
Loss on extinguishment of debt.................................................................................................. | 2.1 | 0.0 | ||||
Non-cash loss (gain) on foreign currency transactions ............................................................. | 1.8 | (0.2) | ||||
Other non-cash gain ................................................................................................................... | (0.2) | (0.3) | ||||
Changes in assets and liabilities used in operations, net of effects of acquisitions and divestitures: | ||||||
Trade accounts receivable......................................................................................................... | 7.2 | (4.6) | ||||
Inventories ................................................................................................................................ | (7.4) | 3.4 | ||||
Prepayments and other current assets ....................................................................................... | 0.6 | (0.3) | ||||
Accounts payable, accruals and other current liabilities ........................................................... | (21.5) | (16.7) | ||||
Deferred revenue less deferred costs......................................................................................... | (4.4) | (20.1) | ||||
Other non-current assets & liabilities........................................................................................ | (11.2) | (1.8) | ||||
Net cash provided by operating activities .................................................................. | 37.4 | 18.4 | ||||
Investing activities: | ||||||
Expenditures for property, plant and equipment, net ................................................................ | (12.0) | (16.5) | ||||
Purchases of intangible assets................................................................................................... | (0.6) | (0.9) | ||||
Software development costs ..................................................................................................... | (16.5) | (16.1) | ||||
Proceeds from sale of assets ..................................................................................................... | 0.0 | 0.1 | ||||
(Purchase) / sale of short-term investments .............................................................................. | (1.4) | (8.1) | ||||
Net cash used in investing activities .......................................................................... | (30.5) | (41.5) | ||||
Financing activities: | ||||||
Receipts / (payments) on short-term borrowings, net................................................................ | 0.0 | (0.3) | ||||
Proceeds from debt issuance...................................................................................................... | 606.3 | 0.0 | ||||
Payments on debt........................................................................................................................ | (604.2) | (3.3) | ||||
Net cash used in financing activities ......................................................................... | 2.1 | (3.6) | ||||
Effect of exchange rate changes on cash................................................................................... | (1.1) | (1.4) | ||||
Increase (decrease) in cash and cash equivalents............................................................................. | 7.9 | (28.1) | ||||
Cash and cash equivalents at beginning of year............................................................................... | 46.4 | 63.3 | ||||
Cash and cash equivalents at end of year ......................................................................................... | $ | 54.3 | $ | 35.2 | ||
Supplemental disclosures of cash flows: | ||||||
Cash paid during the period for: | ||||||
Interest, net ............................................................................................................................... | $ | 23.4 | $ | 17.5 | ||
Income taxes, net of refunds................................................................................................... | $ | 3.5 | $ | 1.5 |
3. | ACQUISITIONS |
4. | INVENTORIES, NET |
September 30, | March 31, | |||||
2016 | 2016 | |||||
Raw materials, parts and supplies............................................. | $ | 35.0 | $ | 32.7 | ||
Work in Process........................................................................ | 6.3 | 5.6 | ||||
Finished Goods ........................................................................ | 21.9 | 17.9 | ||||
Inventories, net ........................................................................ | $ | 63.2 | $ | 56.2 |
5. | PROPERTY, PLANT AND EQUIPMENT, NET |
Depreciable | September 30, | March 31, | |||||
Lives | 2016 | 2016 | |||||
Land, buildings and improvements ......................................... | 13-50 years | $ | 47.2 | $ | 47.5 | ||
Machinery and equipment ....................................................... | 3-13 years | 245.3 | 241.6 | ||||
Construction in progress .......................................................... | N/A | 25.3 | 20.8 | ||||
Total property, plant and equipment ........................................ | 317.8 | 309.9 | |||||
Less accumulated depreciation............................................. | (210.9) | (203.6) | |||||
Property, plant and equipment, net .......................................... | $ | 106.9 | $ | 106.3 |
Balance as of March 31, 2016 | |||
Goodwill ............................................................................................ | 484.8 | ||
Accumulated impairment losses ............................................................ | (14.4) | ||
$ | 470.4 | ||
Balance as of September 30, 2016 | |||
Goodwill ............................................................................................ | 484.8 | ||
Accumulated impairment losses ............................................................ | (14.4) | ||
$ | 470.4 |
September 30. | March 31, | ||||||||||||
2016 | 2016 | ||||||||||||
Weighted Average Amortization Periods | Cost | Accumulated Amortization | Cost | Accumulated Amortization | |||||||||
Intangible assets not subject to amortization: | |||||||||||||
Goodwill ............................................... | $ | 470.4 | $ | — | $ | 470.4 | $ | — | |||||
Tradenames (indefinite lived) ................ | 24.8 | — | 24.8 | — | |||||||||
$ | 495.2 | $ | — | $ | 495.2 | $ | — | ||||||
Intangible assets subject to amortization: | |||||||||||||
Distributor and marketing relationships... | 22.7 years | $ | 180.3 | $ | (101.7 | ) | $ | 180.5 | $ | (97.8 | ) | ||
Developed technology ............................ | 11.9 years | 28.3 | (23.8 | ) | 28.3 | (22.6 | ) | ||||||
Non-competition agreements .................. | n/a | 0.5 | (0.5 | ) | 0.5 | (0.5 | ) | ||||||
Patents...................................................... | 7.9 years | 25.0 | (15.5 | ) | 25.8 | (14.4 | ) | ||||||
FCC licenses ............................................ | 12.2 years | 22.4 | (11.0 | ) | 21.7 | (10.1 | ) | ||||||
Tradenames (definite lived) ..................... | 2.9 years | 3.4 | (3.4 | ) | 3.4 | (3.4 | ) | ||||||
259.9 | (155.9 | ) | 260.2 | (148.8 | ) | ||||||||
Total goodwill and intangible assets ....... | $ | 755.1 | $ | (155.9 | ) | $ | 755.4 | $ | (148.8 | ) |
7. | RESTRUCTURING COSTS |
September 30, | September 30, | |||||
2016 | 2015 | |||||
Balance at March 31................................................................................ | $ | 1.6 | $ | 3.1 | ||
Accrual of new committed/announced programs .................................... | 2.1 | 2.9 | ||||
Cash payments ......................................................................................... | (2.9 | ) | (4.0 | ) | ||
Foreign currency translation adjustment.................................................. | — | 0.1 | ||||
Balance at September 30.......................................................................... | 0.8 | 2.1 | ||||
Current portion ......................................................................................... | 0.7 | 1.5 | ||||
Non-current portion ................................................................................ | 0.1 | 0.6 | ||||
Total.......................................................................................................... | $ | 0.8 | $ | 2.1 |
8. | DEBT |
September 30, | March 31, | |||||
2016 | 2016 | |||||
Capital Leases............................................................................................ | $ | 0.1 | $ | 0.3 | ||
Short-term borrowings............................................................................... | 6.0 | 6.2 | ||||
First lien credit agreement (A, C) ............................................................. | ||||||
Revolving Credit Facility ....................................................................... | — | — | ||||
Term loan (net of $17.7 and $0.4 original issue discount, September 2016 and March 2016, respectively) ............................................. | 605.8 | 452.1 | ||||
Second lien credit agreement (net of $0.3 original issue discount March 2016) (B)...................................................................... | 0.0 | 149.7 | ||||
Less Deferred Financing Cost................................................................ | (9.0) | |||||
Total Debt .................................................................................................. | 602.9 | 608.3 | ||||
Less: Current portion ................................................................................ | (12.4) | (11.2) | ||||
Long-term debt .......................................................................................... | $ | 590.5 | $ | 597.1 |
(A) | On April 5, 2016, the Company completed a refinancing of its debt by securing a new $700.0 million credit facility, comprised of a five-year $75.0 million senior secured first lien revolving credit facility, which matures in April 2021, and a seven-year $625.0 million senior secured first lien term loan, which matures in April 2023. The revolving credit facility bears interest at LIBOR plus 5.0% (no minimum LIBOR) and the term loan bears interest at LIBOR plus 5.5% subject to a minimum LIBOR of 1.0%. Proceeds from the new credit facility were used to repay the Company’s $452.5 million outstanding first lien term loan that would have matured in May 2017 and $150.0 million second lien term loan that would have matured in May 2018. As of September 30, 2016, there were letters of credit pledged against the revolver totaling $4.2 million. |
(B) | The Second Lien Credit Agreement consists of a $150 million term loan, with the full amount of principal payable on May 9, 2018. The second lien term loan bears interest at LIBOR plus 7.25% subject to a minimum LIBOR of 1.25%. |
(C) | The First Lien Credit Agreement consists of a $100 million Revolving Credit Facility and a $475 million term loan. The Revolving Credit Facility matured on May 9, 2016 and was bearing interest at LIBOR plus 3.125%. The term loan matures on May 9, 2017 with quarterly payments of principal of $1.2 million due through maturity and the remaining balance due upon maturity. The term loan bears interest at LIBOR plus 3.25% subject to a minimum LIBOR of 1.25%. As of March 31, 2016, there were letters of credit pledged against the revolver totaling $4.3 million. The balance of this loan was paid in full in April 2016. |
9. | WARRANTY OBLIGATIONS |
September 30, | September 30, | |||||
2016 | 2015 | |||||
Balance at March 31................................................................................ | $ | 22.7 | $ | 18.7 | ||
Warranty provision .................................................................................. | 4.5 | 2.9 | ||||
Settlements made .................................................................................... | (4.2 | ) | (3.0 | ) | ||
Foreign currency translation adjustment.................................................. | (0.2 | ) | 0.1 | |||
Balance at September 30.......................................................................... | $ | 22.8 | $ | 18.7 |
Six months ended September 30, | |||||||
2016 | 2015 | ||||||
Domestic defined benefit pension plans: | |||||||
Service cost ........................................................... | $ | 0.3 | $ | 0.3 | |||
Interest cost ........................................................... | 0.3 | 0.2 | |||||
Expected return on plan assets ............................. | (0.3 | ) | (0.3 | ) | |||
Amortization of net prior service costs ................ | 0.0 | 0.0 | |||||
Amortization of net actuarial costs ....................... | 0.2 | 0.2 | |||||
Net periodic benefit cost ......................................... | $ | 0.5 | $ | 0.4 | |||
International defined benefit pension plans: | |||||||
Service cost ........................................................... | $ | 0.5 | $ | 0.6 | |||
Interest cost ........................................................... | 0.8 | 0.7 | |||||
Expected return on plan assets ............................. | — | — | |||||
Amortization of net prior service costs ................ | 0.2 | 0.2 | |||||
Amortization of net actuarial loss ......................... | 1.2 | 1.5 | |||||
Net periodic benefit cost ......................................... | $ | 2.7 | $ | 3.0 | |||
Total net periodic benefit cost ................................... | $ | 3.2 | $ | 3.4 |
14. | OTHER COMPREHENSIVE (LOSS) INCOME |
Pension Benefit Plans, Net of Tax | Foreign Currency Translation | Total | |||||||
Balance April 1, 2016 .............................. | $ | (36.2 | ) | $ | 8.2 | $ | (28.0 | ) | |
Foreign currency translation adjustment | — | (0.4 | ) | (0.4 | ) | ||||
Net actuarial gain adjustment ................. | — | — | — | ||||||
Prior service credit adjustment ............... | — | — | — | ||||||
Balance September 30, 2016 .................... | $ | (36.2 | ) | $ | 7.8 | $ | (28.4 | ) |
15. | SUBSEQUENT EVENTS |
Xylem Inc. | |||||||||||||||
Unaudited ProForma Condensed Combined Income Statements | |||||||||||||||
For the Year Ended | |||||||||||||||
December 31, 2015 Xylem Inc. | March 31, 2016 Sensus | ProForma Adjustments | ProForma Combined | ||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Revenue | $ | 3,653 | $ | 861 | $ | (7 | ) | 6a | $ | 4,507 | |||||
Cost of revenue | 2,249 | 500 | (14 | ) | 6b | 2,735 | |||||||||
Gross profit | 1,404 | 361 | 7 | 1,772 | |||||||||||
Selling, general and administrative expenses | 854 | 160 | 33 | 6c | 1,047 | ||||||||||
Research and development expenses | 95 | 59 | — | 154 | |||||||||||
Restructuring charges | 6 | 6 | — | 12 | |||||||||||
Operating income | 449 | 136 | (26 | ) | 559 | ||||||||||
Interest expense | 55 | 37 | (3 | ) | 6d | 89 | |||||||||
Other non-operating income (expense), net | — | 1 | — | 1 | |||||||||||
Gain from sale of business | 9 | — | — | 9 | |||||||||||
Income before taxes | 403 | 98 | (23 | ) | 478 | ||||||||||
Income tax expense (benefit) | 63 | (34 | ) | (8 | ) | 6e | 21 | ||||||||
Net income | 340 | 132 | (15 | ) | 457 | ||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.88 | $ | 2.53 | |||||||||||
Diluted | $ | 1.87 | $ | 2.51 | |||||||||||
Weighted average number of shares: | |||||||||||||||
Basic | 180.9 | 180.9 | |||||||||||||
Diluted | 181.7 | 181.7 | |||||||||||||
Dividends declared per share | $ | 0.5632 | $ | 0.5632 |
Xylem Inc. | |||||||||||||||
Unaudited ProForma Condensed Combined Income Statements | |||||||||||||||
For the Nine Months Ended September 30, 2016 | |||||||||||||||
Xylem Inc. | Sensus | ProForma Adjustments | ProForma Combined | ||||||||||||
(in millions, except per share data) | |||||||||||||||
Revenue | $ | 2,676 | $ | 691 | $ | (2 | ) | 6a | $ | 3,365 | |||||
Cost of revenue | 1,621 | 397 | (12 | ) | 6b | 2,006 | |||||||||
Gross profit | 1,055 | 294 | 10 | 1,359 | |||||||||||
Selling, general and administrative expenses | 665 | 118 | 15 | 6c | 798 | ||||||||||
Research and development expenses | 75 | 48 | — | 123 | |||||||||||
Restructuring charges | 18 | 3 | — | 21 | |||||||||||
Operating income | 297 | 125 | (5 | ) | 417 | ||||||||||
Interest expense | 50 | 36 | (14 | ) | 6d | 72 | |||||||||
Other non-operating income (expense), net | 3 | — | — | 3 | |||||||||||
Income before taxes | 250 | 89 | 9 | 348 | |||||||||||
Income tax expense (benefit) | 40 | (37 | ) | 1 | 6e | 4 | |||||||||
Net income | $ | 210 | $ | 126 | $ | 8 | $ | 344 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.17 | $ | 1.92 | |||||||||||
Diluted | $ | 1.17 | $ | 1.92 | |||||||||||
Weighted average number of shares: | |||||||||||||||
Basic | 179.0 | 179.0 | |||||||||||||
Diluted | 179.8 | 179.8 | |||||||||||||
Dividends declared per share | $ | 0.4647 | $ | 0.4647 |
Xylem Inc. | |||||||||||||||
Unaudited ProForma Condensed Combined Balance Sheets | |||||||||||||||
As of September 30, 2016 | |||||||||||||||
Xylem Inc. | Sensus | ProForma Adjustments | ProForma Combined | ||||||||||||
(in millions) | |||||||||||||||
ASSETS | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 659 | $ | 54 | $ | (449 | ) | 4 | $ | 264 | |||||
Receivables | 792 | 106 | (1 | ) | 6f | 897 | |||||||||
Inventories | 488 | 63 | 20 | 6g | 571 | ||||||||||
Prepaid and other current assets | 153 | 26 | — | 179 | |||||||||||
Total current assets | 2,092 | 249 | (430 | ) | 1,911 | ||||||||||
Property, plant and equipment, net | 440 | 107 | 75 | 6h | 622 | ||||||||||
Goodwill | 1,621 | 470 | 581 | 6i | 2,672 | ||||||||||
Other intangible assets, net | 444 | 185 | 591 | 6j | 1,220 | ||||||||||
Other non-current assets | 181 | 48 | (32 | ) | 6k | 197 | |||||||||
Total assets | $ | 4,778 | $ | 1,059 | $ | 785 | $ | 6,622 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 341 | $ | 72 | $ | — | $ | 413 | |||||||
Accrued and other current liabilities | 438 | 94 | (3 | ) | 6l | 529 | |||||||||
Short-term borrowings and current maturities of long-term debt | 62 | 12 | 411 | 4 | 485 | ||||||||||
Total current liabilities | 841 | 178 | 408 | 1,427 | |||||||||||
Long-term debt, net | 1,148 | 591 | 297 | 4 | 2,036 | ||||||||||
Accrued postretirement benefits | 335 | 84 | 419 | ||||||||||||
Deferred income tax liabilities | 114 | 32 | 180 | 6m | 326 | ||||||||||
Other non-current liabilities | 113 | 59 | (2 | ) | 6n | 170 | |||||||||
Total liabilities | 2,551 | 944 | 883 | 4,378 | |||||||||||
Commitments and contingencies | |||||||||||||||
Stockholders’ equity: | |||||||||||||||
Common Stock: | |||||||||||||||
Authorized | 2 | — | — | 2 | |||||||||||
Capital in excess of par value | 1,871 | 252 | (252 | ) | 6o | 1,871 | |||||||||
Non-controlling interest | — | 7 | 10 | 6p | 17 | ||||||||||
Retained earnings | 1,011 | (115 | ) | 115 | 6o | 1,011 | |||||||||
Treasury stock | (402 | ) | — | (402 | ) | ||||||||||
Accumulated other comprehensive loss | (255 | ) | (29 | ) | 29 | 6o | (255 | ) | |||||||
Total stockholders’ equity | 2,227 | 115 | (98 | ) | 2,244 | ||||||||||
Total liabilities and stockholders’ equity | $ | 4,778 | $ | 1,059 | $ | 785 | $ | 6,622 |
INCOME STATEMENTS | ||||||||||||||||||||
Nine months ended | Revised Nine months ended | Twelve months ended | Revised Twelve months ended | |||||||||||||||||
September 30, 2016 | Reclass | September 30, 2016 | December 31, 2015 | Reclass | December 31, 2015 | |||||||||||||||
Cost of revenue | $ | 358 | $ | 39 | $ | 397 | $ | 453 | $ | 47 | $ | 500 | ||||||||
Research and development expenses | — | 48 | 48 | — | 59 | 59 | ||||||||||||||
Selling, general and administrative expenses | 157 | (39 | ) | 118 | 204 | (44 | ) | 160 | ||||||||||||
Depreciation and amortization | 45 | (45 | ) | — | 56 | (56 | ) | — | ||||||||||||
Management fees | 2 | (2 | ) | — | 5 | (5 | ) | — | ||||||||||||
Interest expense, net | 32 | 4 | 36 | 37 | — | 37 | ||||||||||||||
Other non-operating expense | 5 | (5 | ) | — | 1 | — | 1 | |||||||||||||
Net income attributable to controlling interest | — | — | — | 1 | (1 | ) | — |
BALANCE SHEET | ||||||||||
As of | Revised As of | |||||||||
September 30, 2016 | Reclass | September 30, 2016 | ||||||||
Short-term investments | $ | 11 | $ | (11 | ) | $ | — | |||
Prepaid and other current assets | 15 | 11 | 26 | |||||||
Deferred income taxes - current | 28 | (28 | ) | — | ||||||
Goodwill and intangible assets, net | 599 | (599 | ) | — | ||||||
Goodwill | — | 470 | 470 | |||||||
Other intangible assets, net | — | 185 | 185 | |||||||
Deferred costs - long-term | 4 | (4 | ) | — | ||||||
Other non-current assets | 72 | (24 | ) | 48 | ||||||
Accrued and other current liabilities | 75 | 19 | 94 | |||||||
Deferred revenue - current | 19 | (19 | ) | — | ||||||
Deferred revenue - long-term | 21 | (21 | ) | — | ||||||
Other non-current liabilities | 38 | 21 | 59 |
Cash | $ | 54 | |
Accounts Receivable | 105 | ||
Inventories | 83 | ||
Other current assets | 26 | ||
Property, plant and equipment | 182 | ||
Other non-current assets | 16 | ||
Intangible assets | 776 | ||
Accounts payable | (72 | ) | |
Accrued expenses and other current liabilities | (91 | ) | |
Accrued pension | (84 | ) | |
Long-term deferred tax liabilities | (212 | ) | |
Other non-current liabilities | (57 | ) | |
Non-controlling interest | (17 | ) | |
Goodwill | 1,051 | ||
Total Consideration Paid | $ | 1,760 |
a. | Revenue: Adjustments to revenue are comprised of the following: |
Nine months ended | Twelve months ended | ||||||
September 30, 2016 | December 31, 2015 | ||||||
Decrease in revenue to be recognized from deferred revenue per fair value adjustment | $ | (2 | ) | $ | (7 | ) |
b. | Cost of revenue: Adjustments to cost of revenue are comprised of the following: |
Nine months ended | Twelve months ended | ||||||
September 30, 2016 | December 31, 2015 | ||||||
Amortization and depreciation of acquired Sensus' intangible and tangible assets | $ | 18 | $ | 24 | |||
Elimination of Sensus' historical amortization and depreciation | (29 | ) | (35 | ) | |||
Amortization of warranty fair value adjustment | (1 | ) | (3 | ) | |||
$ | (12 | ) | $ | (14 | ) |
c. | Selling, general & administrative expenses: Adjustments to selling, general and administrative expenses (“SG&A”) are comprised of the following: |
Nine months ended | Twelve months ended | ||||||
September 30, 2016 | December 31, 2015 | ||||||
Amortization and depreciation of acquired Sensus' intangible assets and property, plant and equipment | $ | 43 | $ | 57 | |||
Elimination of Sensus' historical amortization and depreciation | (14 | ) | (18 | ) | |||
Elimination of Xylem's acquisition transaction and integration fees | (10 | ) | — | ||||
Elimination of Sensus' management fees | (4 | ) | (6 | ) | |||
$ | 15 | $ | 33 |
Nine months ended | Twelve months ended | ||||||
September 30, 2016 | December 31, 2015 | ||||||
Elimination of Xylem's bridge loan deferred financing cost | $ | (4 | ) | $ | — | ||
Elimination of Sensus' debt extinguishment costs | (4 | ) | — | ||||
Interest expense related to acquisition financing | 26 | 35 | |||||
Elimination of Sensus' historical interest expense | (32 | ) | (38 | ) | |||
$ | (14 | ) | $ | (3 | ) |
Fair Value | Useful Lives | ||||
Customer and distributor relationships | $ | 561 | 4 - 18 years | ||
Proprietary technology | 20 | 3 - 5 years | |||
Trademarks/tradenames | 99 | 10 - 25 years | |||
FCC licenses | 24 | Indefinite | |||
Internally developed network software | 50 | 7 years | |||
Other | 22 | 1 - 12 years | |||
$ | 776 |
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