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Acquisitions and Purchase Accounting
6 Months Ended
Jun. 28, 2014
Business Combinations [Abstract]  
Schedule of Business Acquisitions, by Acquisition
Acquisitions and Purchase Accounting
The company operates in a highly fragmented industry and has completed numerous acquisitions over the past several years as a component of its growth strategy. The company has acquired industry leading brands and technologies to position itself as a leader in the commercial foodservice equipment, food processing equipment and residential kitchen equipment industries.
The company has accounted for all business combinations using the acquisition method to record a new cost basis for the identifiable assets acquired and liabilities assumed. The difference between the purchase price and the fair value of the identifiable assets acquired and liabilities assumed has been recorded as goodwill in the financial statements. The results of operations are reflected in the consolidated financial statements of the company from the date of acquisition.
Stewart
On September 5, 2012, the company completed its acquisition of certain assets of Stewart Systems Global, LLC ("Stewart"), a manufacturer of automated proofing and oven baking systems for the food processing industry, for a purchase price of approximately $27.8 million. An additional payment is also payable upon the achievement of certain financial targets. During the second quarter of 2013, the company finalized the working capital provision provided by the purchase agreement resulting in a refund from the seller of $1.3 million. Subsequent to the acquisition of Stewart, the company purchased intangible assets from a third party company previously associated with Stewart. These assets consist of the trade name, Spooner Vicars and have been allocated to Stewart.
The final allocation of cash paid for the Stewart acquisition is summarized as follows (in thousands): 
 
(as initially reported) Sep 5, 2012
 
Measurement Period Adjustments
 
(as adjusted)
 Sep 5, 2012
Cash
$

 
$
244

 
$
244

Current assets
11,839

 
(1,922
)
 
9,917

Property, plant and equipment
653

 
583

 
1,236

Goodwill
17,886

 
(2,140
)
 
15,746

Other intangibles
6,850

 
4,030

 
10,880

Current liabilities
(5,228
)
 
(1,511
)
 
(6,739
)
Other non-current liabilities
(4,000
)
 
(587
)
 
(4,587
)
 
 
 
 
 
 
Consideration paid at closing
$
28,000

 
$
(1,303
)
 
$
26,697

 
 
 
 
 
 
Contingent consideration
4,000

 
587

 
4,587

 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
32,000

 
$
(716
)
 
$
31,284


The goodwill and $4.6 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350 "Intangibles - Goodwill and Other." Other intangibles also includes $5.9 million allocated to customer relationships and $0.4 million allocated to backlog, which are being amortized over periods of 5 years and 6 months, respectively. Goodwill and other intangibles of Stewart are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.
The Stewart purchase agreement includes an earnout provision providing for a contingent payment due the sellers to the extent certain financial targets are exceeded. This earnout is payable within the first quarter of 2015 if Stewart exceeds certain sales and earnings targets for fiscal 2014. The contractual obligation associated with the contingent earnout provision recognized on the acquisition date is $4.6 million.
Nieco
On October 31, 2012, the company completed its acquisition of all of the capital stock of Nieco Corporation, ("Nieco"), a leading manufacturer of automated broilers for the commercial foodservice industry, for a purchase price of approximately $23.9 million, net of cash acquired. An additional payment is also payable upon the achievement of certain financial targets. During the second quarter of 2013, the company finalized the working capital provision provided by the purchase agreement resulting in no adjustment to the original purchase price.
The final allocation of cash paid for the Nieco acquisition is summarized as follows (in thousands): 
 
(as initially reported) Oct 31, 2012

Measurement Period Adjustments

(as adjusted)
Oct 31, 2012
Cash
$
140


$


$
140

Current assets
4,011




4,011

Property, plant and equipment
268




268

Goodwill
18,855


(3,473
)

15,382

Other intangibles
5,620


4,060


9,680

Current liabilities
(1,836
)



(1,836
)
Other non-current liabilities
(3,058
)

(587
)

(3,645
)
 
 
 
 
 
 
Consideration paid at closing
$
24,000


$


$
24,000

 
 




Contingent consideration
3,058


587


3,645

 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
27,058


$
587


$
27,645


The goodwill and $3.1 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $6.5 million allocated to customer relationships and $0.1 million allocated to backlog, which are being amortized over periods of 4 years and 3 months, respectively. Goodwill and other intangibles of Nieco are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.
The Nieco purchase agreement includes an earnout provision providing for a contingent payment due the sellers to the extent certain financial targets are exceeded. This earnout is payable within the first quarter of 2015 if Nieco exceeds certain sales and earnings targets for fiscal 2013 and 2014. The contractual obligation associated with the contingent earnout provision recognized on the acquisition date is $3.6 million.
Viking
On December 31, 2012 (subsequent to the 2012 fiscal year end), the company completed its acquisition of all of the capital stock of Viking Range Corporation, ("Viking"), a leading manufacturer of kitchen equipment for the residential market, for a purchase price of approximately $361.7 million, net of cash acquired. During the third quarter of 2013, the company finalized the working capital provision provided by the purchase agreement resulting in a return from the seller of $11.2 million.
The final allocation of cash paid for the Viking acquisition is summarized as follows (in thousands): 
 
(as initially reported) Dec 31, 2012
 
Measurement Period Adjustments
 
(as adjusted) Dec 31, 2012
Cash
$
6,900

 
$
(121
)
 
$
6,779

Current assets
40,794

 
(2,385
)
 
38,409

Property, plant and equipment
76,693

 
(20,446
)
 
56,247

Goodwill
144,833

 
(32,752
)
 
112,081

Other intangibles
152,500

 
44,500

 
197,000

Other assets
12,604

 
865

 
13,469

Current liabilities
(52,202
)
 
(886
)
 
(53,088
)
Other non-current liabilities
(2,386
)
 
(1
)
 
(2,387
)
 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
379,736

 
$
(11,226
)
 
$
368,510


The goodwill and $151.0 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $44.0 million allocated to customer relationships and $2.0 million allocated to backlog which are being amortized over periods of 6 years and 3 months, respectively. Goodwill and other intangibles of Viking are allocated to the Residential Kitchen Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes. Certain acquired assets included in other assets were classified as held for sale at the date of acquisition and were sold during the second quarter of 2013.






Viking Distributors 2013
Subsequent to the acquisition of Viking, the company, through Viking, purchased certain assets of four of Viking's former distributors ("Distributors 2013"). The aggregate purchase price of these transactions as of June 29, 2013 was approximately $23.6 million. This included $8.7 million in forgiveness of liabilities owed to Viking resulting from pre-existing relationships with Viking.
The final allocation of cash paid for the Viking Distributors 2013 is summarized as follows(in thousands): 
 
(as initially reported) Jun 29, 2013

Measurement Period Adjustments

(as adjusted) Jun 29, 2013
Current assets
$
21,390

 
$
(3,599
)
 
$
17,791

Property, plant and equipment
1,318

 

 
1,318

Goodwill
1,709

 
3,599

 
5,308

Current liabilities
(804
)
 

 
(804
)
 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
23,613

 
$

 
$
23,613

 
 
 
 
 
 
Forgiveness of liabilities owed to Viking
(8,697
)
 

 
(8,697
)
 
 
 
 
 
 
Consideration paid at closing
$
14,916

 
$

 
$
14,916



The goodwill is subject to the non-amortization provisions of ASC 350. Goodwill of these Distributors 2013 purchases is allocated to the Residential Kitchen Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.

Celfrost

On October 15, 2013, the company completed its acquisition of substantially all of the assets of Celfrost Innovations Pvt. Ltd. ("Celfrost"), a preferred commercial foodservice equipment supplier in India with a broad line of cold side products such as professional refrigerators, coldrooms, ice machines and freezers marketed under the Celfrost brand for a purchase price of approximately $11.2 million. Additional deferred payments totaling $1.1 million are also due to the seller in equal installments on the first, second and third anniversary of the acquisition.
The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
 
(as initially reported) Oct 15, 2013
 
Preliminary Measurement Period Adjustments
 
(as adjusted) Oct 15, 2013
Current assets
$
5,638

 
$
(50
)
 
$
5,588

Property, plant and equipment
182

 

 
182

Goodwill
5,943

 
50

 
5,993

Other intangibles
4,333

 

 
4,333

Other assets
4

 

 
4

Current liabilities
(3,979
)
 

 
(3,979
)
Other non-current liabilities
(875
)
 

 
(875
)
 
 
 
 
 
 
Consideration paid at closing
$
11,246

 
$

 
$
11,246

 
 
 
 
 
 
Deferred payments
1,067

 

 
1,067

 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
12,313

 
$

 
$
12,313


The goodwill and $2.3 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $1.9 million allocated to customer relationships and $0.1 million allocated to backlog which are being amortized over periods of 7 years and 3 months, respectively. Goodwill and other intangibles of Celfrost are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.
The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.
Wunder-Bar

On December 17, 2013, the company completed its acquisition of all of the capital stock of Automatic Bar Controls, Inc. ("Wunder-Bar"), a leading manufacturer of beverage dispensing systems for the commercial foodservice industry, for a purchase price of approximately $74.1 million, net of cash acquired.
The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):

(as initially reported) Dec 17, 2013
 
Preliminary Measurement Period Adjustments
 
(as adjusted) Dec 17, 2013
Cash
$
857

 
$

 
$
857

Deferred tax asset
50

 
79

 
129

Current assets
13,127

 
1,075

 
14,202

Property, plant and equipment
1,735

 
(312
)
 
1,423

Goodwill
45,056

 
(2,824
)
 
42,232

Other intangibles
30,000

 

 
30,000

Other assets

 
(556
)
 
(556
)
Current liabilities
(5,013
)
 
2,942

 
(2,071
)
Long-term tax liabilities
(10,811
)
 
(404
)
 
(11,215
)
Other non-current liabilities
(1
)
 

 
(1
)
 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
75,000

 
$

 
$
75,000



The net long term deferred tax liability is comprised primarily of $11.1 million of book basis in excess of tax basis related to identifiable intangible assets.
 
The goodwill and $12.5 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $17.5 million allocated to customer relationships which is to be amortized over a period of 9 years. Goodwill and other intangibles of Wunder-Bar are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.
The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

Market Forge
On January 7, 2014, the company completed its acquisition of certain assets of Market Forge Industries, Inc. (“Market Forge”), a leading manufacturer of steam cooking equipment for the commercial foodservice industry, for a purchase price of approximately $7.0 million. During the first quarter of 2014, the company finalized the working capital provision provided for by the purchase agreement resulting in an additional payment to the seller of $0.2 million. Additional deferred payments amounting to $2.6 million were paid to the seller during the second quarter of 2014. A remaining amount of $0.4 million is expected to be paid during the third quarter of 2014. An additional payment is also due upon the achievement of certain financial targets.
The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
 
(as initially reported) Jan 7, 2014
 
Preliminary Measurement Period Adjustments
 
(as adjusted) Jan 7, 2014
Current assets
$
2,051

 
$

 
$
2,051

Property, plant and equipment
120

 

 
120

Goodwill
5,252

 
367

 
5,619

Other intangibles
4,191

 

 
4,191

Current liabilities
(4,374
)
 
(367
)
 
(4,741
)
 
 
 
 
 
 
Consideration paid at closing
$
7,240

 
$

 
$
7,240

 
 
 
 
 
 
Deferred payments
3,000

 

 
3,000

Contingent consideration
$
1,374

 
$
39

 
$
1,413

 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
11,614

 
$
39

 
$
11,653


The goodwill and $2.9 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $1.1 million allocated to customer relationships, $0.2 million allocated to developed technology and less than $0.1 million allocated to backlog, which are to be amortized over periods of 4 years, 5 years and 3 months, respectively. Goodwill and other intangibles of Market Forge are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.
The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

Viking Distributors 2014
The company, through Viking, purchased certain assets of two of Viking's former distributors ("Distributors 2014"). The aggregate purchase price of these transactions as of January 31, 2014 was approximately $44.5 million. This included $6.0 million in forgiveness of liabilities owed to Viking resulting from pre-existing relationships with Viking.
The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
 
(as initially reported) Jan 31, 2014
 
Preliminary Measurement Period Adjustments
 
(as adjusted) Jan 31, 2014
Current assets
$
35,909

 
$
(6,078
)
 
$
29,831

Property, plant and equipment
2,000

 
(62
)
 
1,938

Goodwill
7,552

 
6,145

 
13,697

Current liabilities
(1,005
)
 
(5
)
 
(1,010
)
 
 
 
 
 
 
Net assets acquired and liabilities assumed
$
44,456

 
$

 
$
44,456

 
 
 
 
 
 
Forgiveness of liabilities owed to Viking
(5,971
)
 

 
(5,971
)


 
 
 
 
Consideration paid at closing
$
38,485

 
$

 
$
38,485


The goodwill is subject to the non-amortization provisions of ASC 350. Goodwill of these Distributors 2014 purchases is allocated to the Residential Kitchen Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.
The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition dates.
Process Equipment Solutions
On March 31, 2014 (subsequent to the first quarter of 2014), the company completed its acquisition of substantially all of the assets of Processing Equipment Solutions, Inc. ("PES"), a leading manufacturer of water jet cutting equipment for the food processing industry, for a purchase price of approximately $15.0 million. An additional payment is also due upon the achievement of certain financial targets.
The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
 
(as initially reported) Mar 31, 2014
Current assets
$
2,211

Property, plant and equipment
3,493

Goodwill
10,792

Other intangibles
1,600

Other assets
21

Current liabilities
(3,117
)
 
 
Consideration paid at closing
$
15,000

 
 
Contingent consideration
$
2,301

 
 
Net assets acquired and liabilities assumed
$
17,301

The goodwill is subject to the non-amortization provisions of ASC 350. Other intangibles includes $0.9 million allocated to customer relationships, $0.6 million allocated to developed technology and $0.1 million allocated to backlog, which are being amortized over periods of 3 years, 7 years and 3 months, respectively. Goodwill and other intangibles of PES are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.
The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition dates.