Guarantor Subsidiaries

6 Months Ended

Feb. 28, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

As discussed in Note 8, “Debt” on April 16, 2012, Actuant Corporation (the “Parent”) issued $300.0 million of 5.625% Senior Notes, of which $287.6 million remains outstanding as of February 28, 2019. Our material, domestic wholly owned subsidiaries (the “Guarantors”) fully and unconditionally guarantee the 5.625% Senior Notes on a joint and several basis. There are no significant restrictions on the ability of the Guarantors to make distributions to the Parent.

Certain assets, liabilities and expenses have not been allocated to the Guarantors and the subsidiaries that do not guarantee the 5.625% Senior Notes (the "non-Guarantors") and therefore are included in the Parent column in the accompanying condensed consolidating financial statements. These items are of a corporate or consolidated nature and include, but are not limited to, tax provisions and related assets and liabilities, certain employee benefit obligations, prepaid and accrued insurance and corporate indebtedness. Intercompany activity primarily includes loan activity, purchases and sales of goods or services, investments and dividends. Intercompany balances also reflect certain non-cash transactions including transfers of assets and liabilities between the Parent, Guarantor and non-Guarantor, allocation of non-cash expenses from the Parent to the Guarantors and non-Guarantors, non-cash intercompany dividends and the impact of foreign currency rate changes.

The following tables present the results of operations, financial position and cash flows of the Parent, the Guarantors and the non-Guarantors and the eliminations necessary to arrive at the information for the Company on a consolidated basis.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)



	Three Months Ended February 28, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	41,091		$	80,230		$	150,586		$	—		$	271,907
Cost of products sold	9,979			59,701			104,741			—			174,421
Gross profit	31,112			20,529			45,845			—			97,486
Selling, administrative and engineering expenses	22,614			16,079			32,052			—			70,745
Amortization of intangible assets	318			1,867			1,256			—			3,441
Restructuring charges	—			—			60			—			60
Impairment & divestiture (income) charges	(904		)	3,187			4,603			—			6,886
Operating profit (loss)	9,084			(604		)	7,874			—			16,354
Financing costs (income), net	7,275			—			(122		)	—			7,153
Intercompany (income) expense, net	(6,117		)	8,866			(2,749		)	—			—
Intercompany dividends	(246,248		)	—			—			246,248			—
Other (income) expense, net	(166		)	1			821			—			656
Earnings (loss) before income tax expense (benefit)	254,340			(9,471		)	9,924			(246,248		)	8,545
Income tax expense (benefit)	420			(1,348		)	6,720			—			5,792
Net earnings (loss) before equity in (loss) earnings of subsidiaries	253,920			(8,123		)	3,204			(246,248		)	2,753
Equity in (loss) earnings of subsidiaries	(251,167		)	4,086			1,372			245,709			—
Net earnings (loss)	$	2,753		$	(4,037	)	$	4,576		$	(539	)	$	2,753
Comprehensive income (loss)	$	45,190		$	(3,966	)	$	46,755		$	(42,789	)	$	45,190

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)



	Three Months Ended February 28, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	36,219		$	83,072		$	155,874		$	—		$	275,165
Cost of products sold	5,848			63,979			115,642			—			185,469
Gross profit	30,371			19,093			40,232			—			89,696
Selling, administrative and engineering expenses	17,975			17,232			33,080			—			68,287
Amortization of intangible assets	318			2,861			1,989			—			5,168
Restructuring charges	194			909			2,347			—			3,450
Impairment & divestiture charges (income)	4,217			—			(1,230		)	—			2,987
Operating profit (loss)	7,667			(1,909		)	4,046			—			9,804
Financing costs (income), net	7,777			22			(195		)	—			7,604
Intercompany (income) expense, net	(5,042		)	5,419			(377		)	—			—
Other expense, net	305			49			228			—			582
Earnings (loss) before income tax expense (benefit)	4,627			(7,399		)	4,390			—			1,618
Income tax expense (benefit)	10,612			(2,234		)	11,461			—			19,839
Net loss before equity in loss of subsidiaries	(5,985		)	(5,165		)	(7,071		)	—			(18,221		)
Equity in loss of subsidiaries	(12,236		)	(9,454		)	(1,459		)	23,149			—
Net loss	$	(18,221	)	$	(14,619	)	$	(8,530	)	$	23,149		$	(18,221	)
Comprehensive income (loss)	$	62,788		$	(14,619	)	$	74,820		$	(60,201	)	$	62,788

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)



	Six Months Ended February 28, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	81,381		$	176,052		$	307,005		$	—		$	564,438
Cost of products sold	19,860			130,297			211,787			—			361,944
Gross profit	61,521			45,755			95,218			—			202,494
Selling, administrative and engineering expenses	43,579			34,393			65,964			—			143,936
Amortization of intangible assets	637			4,559			2,524			—			7,720
Restructuring (income) charges	—			(93		)	556			—			463
Impairment & divestiture (income) charges	(904		)	13,407			30,836			—			43,339
Operating profit (loss)	18,209			(6,511		)	(4,662		)	—			7,036
Financing costs (income), net	14,826			—			(378		)	—			14,448
Intercompany (income) expense, net	(10,170		)	15,357			(5,187		)	—			—
Intercompany dividends	(246,248		)	—			—			246,248			—
Other (income) expense, net	(381		)	8			1,941			—			1,568
Earnings (loss) before income tax (benefit) expense	260,182			(21,876		)	(1,038		)	(246,248		)	(8,980		)
Income tax (benefit) expense	(2,287		)	(1,450		)	9,456			—			5,719
Net earnings (loss) before equity in (loss) earnings of subsidiaries	262,469			(20,426		)	(10,494		)	(246,248		)	(14,699		)
Equity in (loss) earnings of subsidiaries	(277,168		)	(9,046		)	2,627			283,587			—
Net loss	$	(14,699	)	$	(29,472	)	$	(7,867	)	$	37,339		$	(14,699	)
Comprehensive income (loss)	$	19,794		$	(29,400	)	$	26,636		$	2,764		$	19,794

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)



	Six Months Ended February 28, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	71,929		$	170,906		$	321,285		$	—		$	564,120
Cost of products sold	12,811			128,553			232,149			—			373,513
Gross profit	59,118			42,353			89,136			—			190,607
Selling, administrative and engineering expenses	37,690			35,680			69,395			—			142,765
Amortization of intangible assets	636			5,722			3,941			—			10,299
Restructuring charges	5,550			1,078			3,451						10,079
Impairment & divestiture charges (income)	4,217			—			(1,230		)	—			2,987
Operating profit (loss)	11,025			(127		)	13,579			—			24,477
Financing costs (income), net	15,400			43			(325		)	—			15,118
Intercompany (income) expense, net	(9,919		)	10,903			(984		)	—			—
Other expense, net	255			94			562			—			911
Earnings (loss) before income tax expense (benefit)	5,289			(11,167		)	14,326			—			8,448
Income tax expense (benefit)	10,327			(1,797		)	12,913			—			21,443
Net (loss) earnings before equity in loss of subsidiaries	(5,038		)	(9,370		)	1,413			—			(12,995		)
Equity in loss of subsidiaries	(7,957		)	(661		)	(1,505		)	10,123			—
Net loss	$	(12,995	)	$	(10,031	)	$	(92	)	$	10,123		$	(12,995	)
Comprehensive income (loss)	$	71,039		$	(10,031	)	$	86,386		$	(76,355	)	$	71,039

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)



	February 28, 2019
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	9,426	$	—	$	160,962	$	—		$	170,388
Accounts receivable, net	22,057		44,345		143,772		—			210,174
Inventories, net	28,088		52,849		80,709		—			161,646
Assets held for sale	—		53,714		2,399		—			56,113
Other current assets	14,829		2,000		38,034		—			54,863
Total current assets	74,400		152,908		425,876		—			653,184
Property, plant & equipment, net	7,800		16,859		58,473		—			83,132
Goodwill	38,847		184,120		257,241		—			480,208
Other intangibles, net	6,247		96,065		47,723		—			150,035
Investment in subsidiaries	1,630,688		1,234,687		798,879		(3,664,254		)	—
Intercompany receivable	—		406,039		210,522		(616,561		)	—
Other long-term assets	12,992		320		23,186		—			36,498
Total assets	$	1,770,974	$	2,090,998	$	1,821,900	$	(4,280,815	)	$	1,403,057
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	16,600		17,390		88,496		—			122,486
Accrued compensation and benefits	12,028		4,330		21,044		—			37,402
Current maturities of debt	30,000		—		—		—			30,000
Income taxes payable	—		—		8,548		—			8,548
Liabilities held for sale	—		7,634		13,186		—			20,820
Other current liabilities	16,321		6,650		35,900		—			58,871
Total current liabilities	74,949		36,004		167,174		—			278,127
Long-term debt	455,573		—		—		—			455,573
Deferred income taxes	15,526		—		3,447		—			18,973
Pension and post-retirement benefit liabilities	7,405		—		6,966		—			14,371
Other long-term liabilities	45,820		271		4,292		—			50,383
Intercompany payable	586,071		30,490		—		(616,561		)	—
Shareholders’ equity	585,630		2,024,233		1,640,021		(3,664,254		)	585,630
Total liabilities and shareholders’ equity	$	1,770,974	$	2,090,998	$	1,821,900	$	(4,280,815	)	$	1,403,057

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)



	August 31, 2018
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	67,649	$	—	$	182,841	$	—		$	250,490
Accounts receivable, net	19,969		54,822		112,958		—			187,749
Inventories, net	22,570		59,391		74,395		—			156,356
Assets held for sale	—		—		23,573		—			23,573
Other current assets	7,358		4,759		30,615		—			42,732
Total current assets	117,546		118,972		424,382		—			660,900
Property, plant & equipment, net	7,937		26,408		55,875		—			90,220
Goodwill	38,847		203,543		270,022		—			512,412
Other intangible assets, net	6,884		121,793		52,360		—			181,037
Investment in subsidiaries	1,836,954		1,211,781		789,917		(3,838,652		)	—
Intercompany receivables	—		622,646		200,173		(822,819		)	—
Other long-term assets	12,955		366		23,448		—			36,769
Total assets	$	2,021,123	$	2,305,509	$	1,816,177	$	(4,661,471	)	$	1,481,338

LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$	15,890	$	29,022	$	85,926	$	—		$	130,838
Accrued compensation and benefits	22,171		9,804		22,533		—			54,508
Current maturities of debt	30,000		—		—		—			30,000
Income taxes payable	—		—		4,091		—			4,091
Liabilities held for sale	—		—		44,225		—			44,225
Other current liabilities	17,379		11,078		38,842		—			67,299
Total current liabilities	85,440		49,904		195,617		—			330,961
Long-term debt	502,695		—		—		—			502,695
Deferred income taxes	17,467		—		4,466		—			21,933
Pension and post-retirement benefit liabilities	7,765		—		7,104		—			14,869
Other long-term liabilities	45,483		359		6,326		—			52,168
Intercompany payable	803,561		19,258		—		(822,819		)	—
Shareholders’ equity	558,712		2,235,988		1,602,664		(3,838,652		)	558,712
Total liabilities and shareholders’ equity	$	2,021,123	$	2,305,509	$	1,816,177	$	(4,661,471	)	$	1,481,338

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)



	Six Months Ended February 28, 2019
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Activities
Net cash (used in) provided by operating activities	$	(79,539	)	$	305,640		$	(31,167	)	$	(246,248	)	$	(51,314	)
Investing Activities
Capital expenditures	(950		)	(6,478		)	(8,239		)	—			(15,667		)
Proceeds from sale of property, plant and equipment	8			(31		)	75			—			52
Intercompany investment	52,883			—			—			(52,883		)	—
Proceeds from sale of business, net of transaction costs	23,611			—			12,548			—			36,159
Cash used in investing activities	75,552			(6,509		)	4,384			(52,883		)	20,544
Financing Activities
Principal repayments on term loan	(47,500		)	—			—			—			(47,500		)
Stock option exercises, related tax benefits and other	1,031			—			—			—			1,031
Taxes paid related to the net share settlement of equity awards	(1,489		)	—			—			—			(1,489		)
Cash Dividends	(2,439		)	(246,248		)	—			246,248			(2,439		)
Intercompany loan activity	(3,839		)	—			3,839			—			—
Intercompany capital contribution	—			(52,883		)	—			52,883			—
Cash (used in) provided by financing activities	(54,236		)	(299,131		)	3,839			299,131			(50,397		)
Effect of exchange rate changes on cash	—			—			1,065			—			1,065
Net decrease in cash and cash equivalents	(58,223		)	—			(21,879		)	—			(80,102		)
Cash and cash equivalents—beginning of period	67,649			—			182,841			—			250,490
Cash and cash equivalents—end of period	$	9,426		$	—		$	160,962		$	—		$	170,388

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)



	Six Months Ended February 28, 2018
	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
Operating Activities
Net cash (used in) provided by operating activities	$	(14,509	)	$	6,923		$	(14,520	)	$	—	$	(22,106	)
Investing Activities
Capital expenditures	(1,982		)	(5,274		)	(5,291		)	—		(12,547		)
Proceeds from sale of property, plant and equipment	—			83			30			—		113
Rental asset buyout for Viking divestiture	—			—			(27,718		)	—		(27,718		)
Proceeds from sale of business, net of transaction costs	198			—			8,582			—		8,780
Cash paid for business acquisitions, net of cash acquired	—			(1,732		)	(14,785		)	—		(16,517		)
Cash used in investing activities	(1,784		)	(6,923		)	(39,182		)	—		(47,889		)
Financing Activities
Principal repayments on term loan	(15,000		)	—			—			—		(15,000		)
Stock option exercises, related tax benefits and other	10,305			—			—			—		10,305
Taxes paid related to the net share settlement of equity awards	(1,107		)	—			—			—		(1,107		)
Cash dividends	(2,390		)	—			—			—		(2,390		)
Intercompany loan activity	(5,954		)	—			5,954			—		—
Cash used in financing activities	(14,146		)	—			5,954			—		(8,192		)
Effect of exchange rate changes on cash	—			—			2,211			—		2,211
Net decrease in cash and cash equivalents	(30,439		)	—			(45,537		)	—		(75,976		)
Cash and cash equivalents—beginning of period	34,715			—			194,856			—		229,571
Cash and cash equivalents—end of period	$	4,276		$	—		$	149,319		$	—	$	153,595