Company Quick10K Filing
Actuant
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 62 $1,485
10-Q 2020-01-06 Quarter: 2019-11-30
10-K 2019-10-29 Annual: 2019-08-31
10-Q 2019-07-01 Quarter: 2019-05-31
10-Q 2019-04-05 Quarter: 2019-02-28
10-Q 2019-01-04 Quarter: 2018-11-30
10-K 2018-10-29 Annual: 2018-08-31
10-Q 2018-07-09 Quarter: 2018-05-31
10-Q 2018-04-09 Quarter: 2018-02-28
10-Q 2018-01-08 Quarter: 2017-11-30
10-K 2017-10-26 Annual: 2017-08-31
10-Q 2017-07-07 Quarter: 2017-05-31
10-Q 2017-04-07 Quarter: 2017-02-28
10-Q 2017-01-09 Quarter: 2016-11-30
10-K 2016-10-28 Annual: 2016-08-31
10-Q 2016-07-08 Quarter: 2016-05-31
10-Q 2016-04-08 Quarter: 2016-02-29
10-Q 2016-01-08 Quarter: 2015-11-30
10-K 2015-10-28 Annual: 2015-08-31
10-Q 2015-07-09 Quarter: 2015-05-31
10-Q 2015-04-08 Quarter: 2015-02-28
10-Q 2015-01-09 Quarter: 2014-11-30
10-K 2014-10-27 Annual: 2014-08-31
10-Q 2014-07-09 Quarter: 2014-05-31
10-Q 2014-04-08 Quarter: 2014-02-28
10-Q 2014-01-08 Quarter: 2013-11-30
10-K 2013-10-25 Annual: 2013-08-31
10-Q 2013-07-09 Quarter: 2013-05-31
10-Q 2013-04-08 Quarter: 2013-02-28
10-Q 2013-01-08 Quarter: 2012-11-30
10-K 2012-10-26 Annual: 2012-08-31
10-Q 2012-07-09 Quarter: 2012-05-31
10-Q 2012-04-06 Quarter: 2012-02-29
10-Q 2012-01-09 Quarter: 2011-11-30
10-K 2011-10-28 Annual: 2011-08-31
10-Q 2011-07-08 Quarter: 2011-05-31
10-Q 2011-04-08 Quarter: 2011-02-28
10-Q 2011-01-07 Quarter: 2010-11-30
10-K 2010-10-28 Annual: 2010-08-31
10-Q 2010-07-09 Quarter: 2010-05-31
10-Q 2010-04-08 Quarter: 2010-02-28
10-Q 2010-01-08 Quarter: 2009-11-30
8-K 2020-01-28 Amend Bylaw, Shareholder Vote, Regulation FD, Other Events, Exhibits
8-K 2019-12-19 Earnings, Exhibits
8-K 2019-11-05 Officers
8-K 2019-10-31 M&A, Other Events, Exhibits
8-K 2019-10-30 Amend Bylaw, Exhibits
8-K 2019-10-29 Officers, Exhibits
8-K 2019-09-26 Earnings, Exhibits
8-K 2019-09-25 Other Events
8-K 2019-07-30 Officers, Other Events, Exhibits
8-K 2019-07-30 Other Events
8-K 2019-07-18 Regulation FD
8-K 2019-07-17 Officers, Exhibits
8-K 2019-07-08 Enter Agreement, Impairments, Regulation FD, Exhibits
8-K 2019-06-26 Earnings, Exhibits
8-K 2019-04-12 Officers
8-K 2019-03-29 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2019-03-21 Earnings, Exhibits
8-K 2019-01-22 Exit Costs
8-K 2019-01-22 Shareholder Vote
8-K 2018-12-20 Earnings, Exhibits
8-K 2018-10-04 Earnings
8-K 2018-09-26 Earnings, Exhibits
8-K 2018-07-27 Exhibits
8-K 2018-07-27 Enter Agreement, Exhibits
8-K 2018-07-10 Officers
8-K 2018-06-20 Earnings, Exhibits
8-K 2018-03-21 Earnings
8-K 2018-03-20 Enter Agreement, Officers, Exhibits
8-K 2018-01-23 Officers, Shareholder Vote, Exhibits
ATU 2019-11-30
Part I-Financial Information
Item 1-Financial Statements
Note 1. Basis of Presentation
Note 2. Revenue Recognition
Note 3. Restructuring Charges
Note 5. Other Divestiture Activities
Note 6. Goodwill, Intangible Assets and Long-Lived Assets
Note 7. Product Warranty Costs
Note 8. Debt
Note 9. Fair Value Measurement
Note 10. Derivatives
Note 11. Earnings per Share and Shareholders' Equity
Note 12. Income Taxes
Note 13. Segment Information
Note 14. Commitments and Contingencies
Note 15. Leases
Note 16. Guarantor Subsidiaries
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Item 4 - Controls and Procedures
Part Ii-Other Information
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Item 6 - Exhibits
EX-31.1 epac-11302019exhibit311.htm
EX-31.2 epac-11302019exhibit312.htm
EX-32.1 epac-11302019exhibit321.htm
EX-32.2 epac-11302019exhibit322.htm

Actuant Earnings 2019-11-30

ATU 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
ACA 1,790 2,172 438 1,598 300 90 175 1,813 19% 10.4 4%
BMI 1,679 405 88 423 165 36 47 1,655 39% 35.0 9%
FLOW 1,633 2,574 1,515 1,945 613 89 218 2,137 32% 9.8 3%
AQUA 1,536 1,671 1,308 1,398 402 -14 158 2,436 29% 15.5 -1%
ATU 1,485 1,393 786 1,161 423 -20 20 1,761 36% 87.5 -1%
BE 1,323 1,223 1,234 838 98 -325 -184 1,653 12% -9.0 -27%
HOLI 1,235 1,309 362 0 0 0 0 898 0%
VICR 1,222 231 36 281 133 27 38 1,151 47% 30.5 12%
ATKR 1,193 1,413 1,210 1,892 465 126 228 1,977 25% 8.7 9%
IMAX 1,181 876 265 376 202 38 60 1,098 54% 18.4 4%

Document
false--08-31Q12020truefalseWI0000006955falsefalse0.20.2168000000168000000819206798224839921455568 0000006955 2019-09-01 2019-11-30 0000006955 2019-12-31 0000006955 2018-09-01 2018-11-30 0000006955 2019-08-31 0000006955 2019-11-30 0000006955 us-gaap:CommonClassAMember 2019-11-30 0000006955 us-gaap:CommonClassAMember 2019-08-31 0000006955 2018-11-30 0000006955 2018-08-31 0000006955 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-11-30 0000006955 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-08-31 0000006955 us-gaap:AccountingStandardsUpdate201602Member 2019-11-30 0000006955 us-gaap:AccountingStandardsUpdate201802Member 2019-11-30 0000006955 us-gaap:TransferredAtPointInTimeMember 2019-09-01 2019-11-30 0000006955 us-gaap:TransferredOverTimeMember 2018-09-01 2018-11-30 0000006955 us-gaap:TransferredAtPointInTimeMember 2018-09-01 2018-11-30 0000006955 us-gaap:TransferredOverTimeMember 2019-09-01 2019-11-30 0000006955 epac:ReportableSegmentsMember 2019-09-01 2019-11-30 0000006955 epac:GeneralCoporateMember 2019-11-30 0000006955 epac:GeneralCoporateMember 2019-08-31 0000006955 epac:ReportableSegmentsMember 2019-08-31 0000006955 epac:IndustrialToolsServicesMemberDomain 2019-09-01 2019-11-30 0000006955 epac:GeneralCoporateMember 2019-09-01 2019-11-30 0000006955 epac:IndustrialToolsServicesMemberDomain 2019-11-30 0000006955 epac:ReportableSegmentsMember 2019-11-30 0000006955 epac:IndustrialToolsServicesMemberDomain 2019-08-31 0000006955 epac:OtherOperatingSegmentMember 2019-11-30 0000006955 epac:OtherOperatingSegmentMember 2019-08-31 0000006955 epac:OtherOperatingSegmentMember 2019-09-01 2019-11-30 0000006955 epac:GeneralCoporateMember 2018-09-01 2018-11-30 0000006955 epac:IndustrialToolsServicesMemberDomain 2018-11-30 0000006955 epac:IndustrialToolsServicesMemberDomain 2018-09-01 2018-11-30 0000006955 epac:ReportableSegmentsMember 2018-09-01 2018-11-30 0000006955 epac:GeneralCoporateMember 2018-08-31 0000006955 epac:ReportableSegmentsMember 2018-11-30 0000006955 epac:GeneralCoporateMember 2018-11-30 0000006955 epac:ReportableSegmentsMember 2018-08-31 0000006955 epac:IndustrialToolsServicesMemberDomain 2018-08-31 0000006955 epac:EngineeredComponentsSystemsMemberDomain 2019-08-31 0000006955 epac:CortlandFibronDomain 2018-09-01 2018-11-30 0000006955 epac:EngineeredComponentsSystemsMemberDomain 2019-09-01 2019-11-30 0000006955 epac:EngineeredComponentsSystemsMemberDomain 2019-10-31 2019-10-31 0000006955 epac:PrecisionHayesInternationalMember 2018-09-01 2018-11-30 0000006955 epac:EngineeredComponentsSystemsMemberDomain 2018-09-01 2018-11-30 0000006955 epac:MilwaukeeCylinderexcludingUNILIFTMember 2019-11-30 0000006955 epac:MilwaukeeCylinderexcludingUNILIFTMember 2019-09-01 2019-11-30 0000006955 epac:MilwaukeeCylinderincludingUNILIFTMember 2018-09-01 2018-11-30 0000006955 epac:ConnectorsProductLineMember 2019-10-22 2019-10-22 0000006955 epac:MilwaukeeCylinderincludingUNILIFTMember 2019-09-01 2019-11-30 0000006955 epac:UNILIFTProductLineDomain 2018-12-19 2018-12-19 0000006955 epac:ConnectorsProductLineMember 2018-09-01 2018-11-30 0000006955 epac:ConnectorsProductLineMember 2019-09-01 2019-11-30 0000006955 us-gaap:TrademarksAndTradeNamesMember 2019-08-31 0000006955 us-gaap:CustomerRelationshipsMember 2019-08-31 0000006955 us-gaap:TradeNamesMember 2019-08-31 0000006955 us-gaap:TradeNamesMember 2019-11-30 0000006955 us-gaap:TrademarksAndTradeNamesMember 2019-11-30 0000006955 us-gaap:PatentsMember 2019-11-30 0000006955 us-gaap:CustomerRelationshipsMember 2019-11-30 0000006955 us-gaap:PatentsMember 2019-09-01 2019-11-30 0000006955 us-gaap:TrademarksAndTradeNamesMember 2019-09-01 2019-11-30 0000006955 us-gaap:PatentsMember 2019-08-31 0000006955 us-gaap:CustomerRelationshipsMember 2019-09-01 2019-11-30 0000006955 epac:CortlandU.S.businessDomain 2018-09-01 2018-11-30 0000006955 epac:FivePointSixTwoFiveSeniorNotesMember us-gaap:SeniorNotesMember 2019-08-31 0000006955 epac:SeniorCreditFacilityRevolverMember us-gaap:LineOfCreditMember 2019-08-31 0000006955 us-gaap:LineOfCreditMember 2019-08-31 0000006955 epac:SeniorCreditFacilityTermLoanMember us-gaap:LineOfCreditMember 2019-08-31 0000006955 epac:FivePointSixTwoFiveSeniorNotesMember us-gaap:SeniorNotesMember 2019-11-30 0000006955 epac:FivePointSixTwoFiveSeniorNotesMember us-gaap:SeniorNotesMember 2012-04-16 0000006955 srt:MinimumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-09-01 2019-11-30 0000006955 srt:MinimumMember us-gaap:BaseRateMember 2019-09-01 2019-11-30 0000006955 srt:MinimumMember 2019-09-01 2019-11-30 0000006955 srt:MaximumMember epac:FivePointSixTwoFiveSeniorNotesMember us-gaap:SeniorNotesMember 2012-04-15 2012-04-16 0000006955 srt:MaximumMember 2019-11-30 0000006955 us-gaap:RevolvingCreditFacilityMember 2019-11-30 0000006955 srt:MaximumMember 2019-09-01 2019-11-30 0000006955 epac:SeniorCreditFacilityTermLoanMember 2019-11-30 0000006955 epac:FivePointSixTwoFiveSeniorNotesMember us-gaap:SeniorNotesMember 2019-09-01 2019-11-30 0000006955 srt:MaximumMember us-gaap:BaseRateMember 2019-09-01 2019-11-30 0000006955 srt:MaximumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-09-01 2019-11-30 0000006955 epac:SeniorCreditFacilityRevolverMember us-gaap:LineOfCreditMember 2019-11-30 0000006955 srt:MinimumMember 2019-11-30 0000006955 srt:MinimumMember epac:FivePointSixTwoFiveSeniorNotesMember us-gaap:SeniorNotesMember 2012-04-15 2012-04-16 0000006955 us-gaap:FairValueHedgingMember 2019-11-30 0000006955 us-gaap:FairValueHedgingMember 2019-08-31 0000006955 us-gaap:AdditionalPaidInCapitalMember 2018-11-30 0000006955 us-gaap:RetainedEarningsMember 2018-09-01 2018-11-30 0000006955 us-gaap:CommonStockMember 2018-09-01 2018-11-30 0000006955 epac:StockheldintrustmemberMember 2018-09-01 2018-11-30 0000006955 epac:StockheldintrustmemberMember 2018-08-31 0000006955 us-gaap:TreasuryStockMember 2018-08-31 0000006955 us-gaap:CommonStockMember 2018-08-31 0000006955 us-gaap:DeferredCompensationShareBasedPaymentsMember 2018-08-31 0000006955 us-gaap:AdditionalPaidInCapitalMember 2018-09-01 2018-11-30 0000006955 us-gaap:CommonStockMember 2018-11-30 0000006955 us-gaap:RetainedEarningsMember 2018-11-30 0000006955 us-gaap:RetainedEarningsMember 2018-08-31 0000006955 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-01 2018-11-30 0000006955 us-gaap:TreasuryStockMember 2018-11-30 0000006955 epac:StockheldintrustmemberMember 2018-11-30 0000006955 us-gaap:DeferredCompensationShareBasedPaymentsMember 2018-11-30 0000006955 us-gaap:AdditionalPaidInCapitalMember 2018-08-31 0000006955 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-11-30 0000006955 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-08-31 0000006955 us-gaap:DeferredCompensationShareBasedPaymentsMember 2018-09-01 2018-11-30 0000006955 us-gaap:TreasuryStockMember 2019-11-30 0000006955 us-gaap:RetainedEarningsMember 2019-09-01 2019-11-30 0000006955 us-gaap:AdditionalPaidInCapitalMember 2019-09-01 2019-11-30 0000006955 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-01 2019-11-30 0000006955 us-gaap:RetainedEarningsMember 2019-11-30 0000006955 us-gaap:RetainedEarningsMember 2019-08-31 0000006955 epac:StockheldintrustmemberMember 2019-08-31 0000006955 us-gaap:CommonStockMember 2019-11-30 0000006955 us-gaap:AdditionalPaidInCapitalMember 2019-08-31 0000006955 us-gaap:TreasuryStockMember 2019-09-01 2019-11-30 0000006955 us-gaap:DeferredCompensationShareBasedPaymentsMember 2019-09-01 2019-11-30 0000006955 us-gaap:CommonStockMember 2019-09-01 2019-11-30 0000006955 us-gaap:DeferredCompensationShareBasedPaymentsMember 2019-11-30 0000006955 us-gaap:TreasuryStockMember 2019-08-31 0000006955 us-gaap:DeferredCompensationShareBasedPaymentsMember 2019-08-31 0000006955 epac:StockheldintrustmemberMember 2019-11-30 0000006955 us-gaap:CommonStockMember 2019-08-31 0000006955 us-gaap:AdditionalPaidInCapitalMember 2019-11-30 0000006955 epac:StockheldintrustmemberMember 2019-09-01 2019-11-30 0000006955 epac:OtherOperatingSegmentMember 2018-09-01 2018-11-30 0000006955 epac:ProductsMember 2019-09-01 2019-11-30 0000006955 epac:ServiceRentalMember 2019-09-01 2019-11-30 0000006955 epac:ServiceRentalMember 2018-09-01 2018-11-30 0000006955 epac:ProductsMember 2018-09-01 2018-11-30 0000006955 2017-09-01 2018-08-31 0000006955 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-09-01 2019-11-30 0000006955 srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2019-09-01 2019-11-30 0000006955 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-09-01 2019-11-30 0000006955 srt:ConsolidationEliminationsMember 2019-09-01 2019-11-30 0000006955 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-09-01 2018-11-30 0000006955 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-09-01 2018-11-30 0000006955 srt:ConsolidationEliminationsMember 2018-09-01 2018-11-30 0000006955 srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2018-09-01 2018-11-30 0000006955 srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2019-08-31 0000006955 srt:ConsolidationEliminationsMember 2019-08-31 0000006955 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-08-31 0000006955 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-08-31 0000006955 srt:ConsolidationEliminationsMember 2019-11-30 0000006955 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-11-30 0000006955 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-11-30 0000006955 srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2019-11-30 0000006955 srt:ConsolidationEliminationsMember 2018-11-30 0000006955 srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2018-08-31 0000006955 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-11-30 0000006955 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-11-30 0000006955 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-08-31 0000006955 srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2018-11-30 0000006955 srt:ConsolidationEliminationsMember 2018-08-31 0000006955 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-08-31 xbrli:pure iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
——————————— 
FORM 10-Q
 ————————————
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-11288 
 ————————————
ACTUANT CORPORATION
(Exact name of registrant as specified in its charter)
 ————————————
Wisconsin
 
39-0168610
(State of incorporation)
 
(I.R.S. Employer Id. No.)
N86 W12500 WESTBROOK CROSSING
MENOMONEE FALLS, WISCONSIN 53051
Mailing address: P. O. Box 3241, Milwaukee, Wisconsin 53201
(Address of principal executive offices)
(262) 293-1500
(Registrant’s telephone number, including area code)
  ————————————
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Ticker Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.20 par value per share
EPAC
NYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
        
Large Accelerated Filer
 
 
Accelerated Filer
 
Non-accelerated Filer
 
 
Smaller reporting company
 
Emerging growth company
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨    No  
The number of shares outstanding of the registrant’s Class A Common Stock as of December 31, 2019 was 60,052,391.
 
 
 
 
 


Table of Contents

TABLE OF CONTENTS
 
FORWARD LOOKING STATEMENTS AND CAUTIONARY FACTORS
This quarterly report on Form 10-Q contains certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include statements regarding expected financial results and other planned events, including, but not limited to, anticipated liquidity, anticipated restructuring costs and related savings, anticipated future charges and capital expenditures. Words such as “may,” “should,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “plan,” “project” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We disclaim any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.
The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements:
deterioration of, or instability in, the domestic and international economy;
challenging conditions in our various end markets;
competition in the markets we serve;
failure to develop new products and market acceptance of existing and new products;
a material disruption at a significant manufacturing facility;
operating margin risk due to competitive pricing, operating inefficiencies, production levels and increases in the costs of commodities and raw materials;
uncertainty over global tariffs, or the financial impact of tariffs;
our international operations present special risks, including currency exchange rate fluctuations and export and import restrictions;
regulatory and legal developments, including changes to United States taxation rules;
our ability to successfully identify, consummate and integrate acquisitions and realize anticipated benefits/results from acquired companies as part of our portfolio management process;
the effects of divestitures and/or discontinued operations, including retained liabilities from, or indemnification obligations with respect to, businesses that we sell;

1

Table of Contents

the potential for a non-cash asset impairment charge, if the operating performance for our businesses were to fall significantly below current levels or impairment of goodwill and other intangible assets as they represent a substantial amount of our total assets;
our ability to execute restructuring actions and the realization of anticipated cost savings;
a significant failure in information technology (IT) infrastructure, such as unauthorized access to financial and other sensitive data or cybersecurity threats;
heavy reliance on suppliers for components used in the manufacture and sale of our products;
litigation, including product liability and warranty claims;
our ability to attract, develop, and retain qualified employees;
inadequate intellectual property protection or if our products are deemed to infringe on the intellectual property of others;
our ability to comply with the covenants in our debt agreements and fluctuations in interest rates; and
numerous other matters including those of a political, economic, business, competitive and regulatory nature contained from time to time in U.S. Securities and Exchange Commission ("SEC") filings, including, but not limited to, those factors listed in the "Risk Factors" section within Item 1A of Part I of the Form 10-K filed with the SEC on October 28, 2019.
When used herein, the terms “Actuant,” “we,” “us,” “our” and the “Company” refer to Actuant Corporation and its subsidiaries. Actuant Corporation, doing business as Enerpac Tool Group, provides free-of-charge access to its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, through its website, www.enerpactoolgroup.com, as soon as reasonably practical after such reports are electronically filed with the SEC.


2

Table of Contents

PART I—FINANCIAL INFORMATION
Item 1—Financial Statements
ACTUANT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended November 30,
 
2019
 
2018
Net sales
$
146,674

 
$
158,551

Cost of products sold
77,986

 
88,239

Gross profit
68,688

 
70,312

 
 
 
 
Selling, administrative and engineering expenses
51,831

 
53,121

Amortization of intangible assets
1,872

 
2,297

Restructuring charges (benefit)
1,972

 
(29
)
Impairment & divestiture (benefit) charges
(1,356
)
 
23,477

Operating profit (loss)
14,369

 
(8,554
)
Financing costs, net
6,729

 
7,298

Other expense, net
318

 
505

Earnings (loss) before income tax expense
7,322

 
(16,357
)
Income tax expense
950

 
66

Net earnings (loss) from continuing operations
6,372

 
(16,423
)
Loss from discontinued operations, net of income taxes
(4,251
)
 
(1,029
)
Net earnings (loss)
$
2,121

 
$
(17,452
)
 
 
 
 
Earnings (loss) per share from continuing operations
 
 
 
Basic
$
0.11

 
$
(0.27
)
Diluted
$
0.11

 
$
(0.27
)
 
 
 
 
Loss per share from discontinued operations
 
 
 
Basic
$
(0.07
)
 
$
(0.02
)
Diluted
$
(0.07
)
 
$
(0.02
)
 
 
 
 
Earnings (loss) per share
 
 
 
Basic
$
0.04

 
$
(0.29
)
Diluted
$
0.03

 
$
(0.29
)
 
 
 
 
Weighted average common shares outstanding
 
 
 
Basic
60,081

 
61,031

Diluted
60,601

 
61,031

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

ACTUANT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
 
Three Months Ended November 30,
 
2019
 
2018
Net earnings (loss)
$
2,121

 
$
(17,452
)
Other comprehensive income (loss), net of tax
 
 
 
Foreign currency translation adjustments
8,492

 
(8,176
)
Recognition of foreign currency translation losses from divested businesses
51,994

 

Pension and other postretirement benefit plans
441

 
232

Total other comprehensive income (loss), net of tax
60,927

 
(7,944
)
Comprehensive income (loss)
$
63,048

 
$
(25,396
)
The accompanying notes are an integral part of these condensed consolidated financial statements.


4

Table of Contents

ACTUANT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 
 
November 30, 2019
 
August 31, 2019
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
206,780

 
$
211,151

Accounts receivable, net
 
122,027

 
125,883

Inventories, net
 
79,508

 
77,187

Assets held for sale
 
1,697

 

Assets from discontinued operations
 

 
285,578

Other current assets
 
42,720

 
30,526

Total current assets
 
452,732

 
730,325

Property, plant and equipment, net
 
56,094

 
56,729

Goodwill
 
263,969

 
260,415

Other intangible assets, net
 
51,235

 
52,375

Other long-term assets
 
84,482

 
24,430

Total assets
 
$
908,512

 
$
1,124,274

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
Current liabilities
 
 
 
 
Trade accounts payable
 
$
68,790

 
$
76,914

Accrued compensation and benefits
 
25,281

 
26,421

Current maturities of debt
 

 
7,500

Income taxes payable
 
6,853

 
4,838

Liabilities held for sale
 
1,697

 

Liabilities from discontinued operations
 

 
143,763

Other current liabilities
 
54,649

 
40,965

Total current liabilities
 
157,270

 
300,401

Long-term debt, net
 
286,236

 
452,945

Deferred income taxes
 
1,567

 
1,564

Pension and postretirement benefit liabilities
 
19,806

 
20,213

Other long-term liabilities
 
90,380

 
47,972

Total liabilities
 
555,259

 
823,095

Commitments and contingencies (Note 14)
 
 
 
 
Shareholders’ equity
 
 
 
 
Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 82,248,399 and 81,920,679 shares, respectively
 
16,450

 
16,384

Additional paid-in capital
 
187,772

 
181,213

Treasury stock, at cost, 22,295,357 and 21,455,568 shares, respectively
 
(658,017
)
 
(640,212
)
Retained earnings
 
921,460

 
915,466

Accumulated other comprehensive loss
 
(114,412
)
 
(171,672
)
Stock held in trust
 
(3,157
)
 
(3,070
)
Deferred compensation liability
 
3,157

 
3,070

Total shareholders' equity
 
353,253

 
301,179

Total liabilities and shareholders’ equity
 
$
908,512

 
$
1,124,274


The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents

ACTUANT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended November 30,
 
2019
 
2018
Operating Activities
 
 
 
Net earnings (loss)
$
2,121

 
$
(17,452
)
Less: Net loss from discontinued operations
(4,251
)
 
(1,029
)
Net earnings (loss) from continuing operations
6,372

 
(16,423
)
Adjustments to reconcile net earnings to net cash provided by operating activities - continuing operations:
 
 
 
Impairment & divestiture (benefit) charges, net of tax effect
(1,095
)
 
23,477

Depreciation and amortization
4,779

 
5,056

Stock-based compensation expense
2,820

 
2,673

Benefit for deferred income taxes
(522
)
 
(1,739
)
Amortization of debt issuance costs
896

 
301

Other non-cash adjustments
83

 
124

Changes in components of working capital and other, excluding acquisitions and divestitures:
 
 
 
Accounts receivable
3,151

 
(437
)
Inventories
(5,767
)
 
(6,535
)
Trade accounts payable
(6,086
)
 
305

Prepaid expenses and other assets
(6,167
)
 
(5,899
)
Income tax accounts
(5,260
)
 
619

Accrued compensation and benefits
(1,617
)
 
(11,196
)
Other accrued liabilities
4,318

 
(1,000
)
Cash used in operating activities - continuing operations
(4,095
)
 
(10,674
)
Cash used in operating activities - discontinued operations
(18,832
)
 
(18,436
)
Cash used in operating activities
(22,927
)
 
(29,110
)
 
 
 
 
Investing Activities
 
 
 
Capital expenditures
(3,187
)
 
(4,569
)
Proceeds from sale of property, plant and equipment
162

 
11

Proceeds from sale of business, net of transaction costs
8,726

 

Cash provided by (used in) investing activities - continuing operations
5,701

 
(4,558
)
Cash provided by (used in) investing activities - discontinued operations
207,641

 
(3,097
)
Cash provided by (used in) investing activities
213,342

 
(7,655
)
 
 
 
 
Financing Activities
 
 
 
Principal repayment on term loan
(175,000
)
 
(7,500
)
Borrowings on revolving credit facility
100,000

 

Principal repayments on revolving credit facility
(100,000
)
 

Purchase of treasury shares
(17,805
)
 

Taxes paid related to the net share settlement of equity awards
(2,638
)
 
(201
)
Stock option exercises & other
2,640

 
552

Payment of cash dividend
(2,419
)
 
(2,439
)
Cash used in financing activities - continuing operations
(195,222
)
 
(9,588
)
Cash provided by (used in) financing activities - discontinued operations

 

Cash used in financing activities
(195,222
)
 
(9,588
)
 
 
 
 
Effect of exchange rate changes on cash
436

 
(694
)
Net decrease in cash and cash equivalents
(4,371
)
 
(47,047
)
Cash and cash equivalents - beginning of period
211,151

 
250,490

Cash and cash equivalents - end of period
$
206,780

 
$
203,443

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
General
The accompanying unaudited condensed consolidated financial statements of Actuant Corporation, doing business as Enerpac Tool Group (“Actuant,” “Company,” "we," or "us"), have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet data as of August 31, 2019 was derived from the Company’s audited financial statements, but does not include all disclosures required by GAAP. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Company’s fiscal 2019 Annual Report on Form 10-K.
In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the three months ended November 30, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2020.
New Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (and subsequently ASU 2018-01 and ASU 2019-01), to increase transparency and comparability among organizations by recognizing all lease transactions on the balance sheet as a lease liability and a right-of-use (“ROU”) asset. The amendments also expanded disclosure requirements for key information about leasing arrangements. On September 1, 2019, the Company adopted the standard using a modified retrospective approach and through implementing selected third-party lease software utilized as a central repository for all leases. The Company elected the package of practical expedients allowing us to not reassess whether any expired or existing contracts contain leases, the lease classification for any expired or existing leases, and initial direct costs for leases that commenced prior to September 1, 2019. In addition, we elected not to recognize ROU assets or lease liabilities for leases containing terms of 12 months or less and not separate lease components from non-lease components for all asset classes. The Company updated its standard lease accounting policy to address the new standard, revised the Company’s business processes and controls to align to the updated policy and new standard and completed the implementation of and data input into the Company’s lease accounting software solution. The most significant impact of the standard on the Company was the recognition of a $60.8 million ROU asset and operating lease liability on the Condensed Consolidated Balance Sheets at adoption. The standard did not have a significant impact on our Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows. In addition, as a result of sale leaseback transactions in previous years for which gains were deferred and under the new standard would have been recognized, the Company recorded an increase to retained earnings of $0.2 million in the first quarter of fiscal 2020, which represents the recognition of these previously deferred gains. See Note 15, “Leases” for further discussion of the Company’s operating leases.
In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows companies to reclassify stranded income tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings in their consolidated financial statements. The Company adopted the guidance in the three months ended November 30, 2019 which resulted in an increase to retained earnings with an offsetting increase in accumulated other comprehensive loss of $3.7 million.
Accumulated Other Comprehensive Loss
The following is a summary of the Company's accumulated other comprehensive loss (in thousands):
 
 
November 30, 2019
 
August 31, 2019
Foreign currency translation adjustments
 
$
90,629

 
$
151,115

Pension and other postretirement benefit plans, net of tax
 
23,783

 
20,557

Accumulated other comprehensive loss
 
$
114,412

 
$
171,672



7

Table of Contents

Property Plant and Equipment
The following is a summary of the Company's components of property, plant and equipment (in thousands):
 
 
November 30, 2019
 
August 31, 2019
Land, buildings and improvements
 
$
29,586

 
$
29,661

Machinery and equipment
 
136,713

 
140,083

Gross property, plant and equipment
 
166,299

 
169,744

Less: Accumulated depreciation
 
(110,205
)
 
(113,015
)
Property, plant and equipment, net
 
$
56,094

 
$
56,729




Note 2. Revenue Recognition
Nature of Goods and Services
The Company generates its revenue under two principal activities, which are discussed below:
Product Sales: Sales of tools, heavy-lifting solutions, and rope and cable solutions are recorded when control is transferred to the customer (i.e., performance obligation has been satisfied). For the majority of the Company’s product sales, revenue is recognized at a point in time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company to the customer. Due to the highly customized nature and limited alternative use of certain products, for which the Company has an enforceable right of reimbursement for performance completed to date, revenue is recognized over time. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over time revenue associated with these custom products. For a majority of the Company’s custom products, machine hours and labor hours (efforts-expended measurement) are used as a measure of progress.
Service & Rental Sales: Service contracts consist of providing highly trained technicians to perform bolting, technical services, machining and joint integrity work for our customers. These revenues are recognized over time as our customers simultaneously receive and consume the benefits provided by the Company. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over time revenue associated with service contracts. For a majority of the Company’s service contracts, labor hours (efforts-expended measurement) is used as the measure of progress when it is determined to be a better depiction of the transfer of control to the customer due to the timing and pattern of labor hours incurred. Revenue from rental contracts (less than a year and non-customized products) is generally recognized ratably over the contract term, depicting the customer’s consumption of the benefit related to the rental equipment.
Disaggregated Revenue and Performance Obligations
The Company disaggregates revenue from contracts with customers by reportable segment and product line and by the timing of when goods and services are transferred. See Note 13, "Segment Information" for information regarding our revenue disaggregation by reportable segment and product line.
The following table presents information regarding revenues disaggregated by the timing of when goods and services are transferred (in thousands):
 
 
Three Months Ended November 30,
 
 
2019
 
2018
Revenues recognized at point in time
 
$
104,812

 
$
108,255

Revenues recognized over time
 
41,862

 
50,296

Total
 
$
146,674

 
$
158,551



8

Table of Contents

Contract Balances
The Company's contract assets and liabilities are as follows (in thousands):
 
 
November 30, 2019
 
August 31, 2019
Receivables, which are included in accounts receivable, net
 
$
122,027

 
$
125,883

Contract assets, which are included in other current assets
 
4,948

 
3,747

Contract liabilities, which are included in other current liabilities
 
1,775

 
3,707


Receivables: The Company performs its obligations under a contract with a customer by transferring goods or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established.
Contract Assets: Contract assets relate to the Company’s rights to consideration for work completed but not billed as of the reporting date on contracts with customers. The contract assets are transferred to receivables when the rights become unconditional. The Company has contract assets on contracts that are generally long-term and have revenues that are recognized over time.
Contract Liabilities: As of November 30, 2019, the Company had certain contracts where there were unsatisfied performance obligations and the Company had received cash consideration from customers before the performance obligations were satisfied. The majority of these contracts relate to long-term customer contracts (project durations of greater than three months) and are recognized over time. The Company estimates that the $1.8 million will be recognized in net sales from satisfying those performance obligations within the next twelve months.
Significant Judgments
Timing of Performance Obligations Satisfied at a Point in Time: The Company evaluates when the customer obtains control of the product based on shipping terms, as control will transfer, depending upon such terms, at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because i) the Company has a present right to payment at that time; ii) the legal title has been transferred to the customer; iii) the Company has transferred physical possession of the product to the customer; and iv) the customer has significant risks and rewards of ownership of the product.
Variable Consideration: The Company estimates whether it will be subject to variable consideration under the terms of the contract and includes its estimate of variable consideration in the transaction price based on the expected value method when it is deemed probable of being realized based on historical experience and trends. Types of variable consideration may include rebates, incentives and discounts, among others, which are recorded as a reduction to net sales at the time when control of a performance obligation is transferred to the customer.
Practical Expedients & Exemptions: The Company elected to expense the incremental cost to obtaining a contract when the amortization period for such contracts would be one year or less. The Company does not disclose the value of unperformed obligations for i) contracts with an original expected length of one year or less and ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

9

Table of Contents

Note 3. Restructuring Charges
The Company has undertaken or committed to various restructuring initiatives including workforce reductions; leadership changes; plant consolidations to reduce manufacturing overhead; satellite office closures; the continued movement of production and product sourcing to low-cost alternatives; and the centralization and standardization of certain administrative functions. Liabilities for severance will generally be paid within twelve months, while future lease payments related to facilities vacated as a result of restructuring will be paid over the underlying remaining lease terms. During fiscal 2019, the Company announced a new restructuring plan focused on i) the integration of the Enerpac and Hydratight businesses (Industrial Tools & Service ("IT&S") segment), ii) the strategic exit of certain commodity type services in our North America Services operations (IT&S segment) and iii) driving efficiencies within the overall corporate structure. Total restructuring charges associated with this restructuring plan were $1.5 million in the three months ended November 30, 2019.
The following rollforwards summarize restructuring reserve activity for the IT&S reportable segment and corporate (in thousands):
 
 
Three Months Ended November 30, 2018
 
 
Industrial Tools & Services
 
Corporate
 
Total
Balance as of August 31, 2018
 
$
1,687

 
$
46

 
$
1,733

Restructuring charges
 
(29
)
(1) 

 
(29
)
Cash payments
 
(922
)
 
(46
)
 
(968
)
Other non-cash uses of reserve
 
(13
)
 

 
(13
)
Impact of changes in foreign currency rates
 
(21
)
 

 
(21
)
Balance as of November 30, 2018
 
$
702

 
$

 
$
702

 
 
Three Months Ended November 30, 2019
 
 
Industrial Tools & Services
 
Corporate
 
Total
Balance as of August 31, 2019
 
$
2,912

 
$

 
$
2,912

Restructuring charges
 
1,230

 
235

 
1,465

Cash payments
 
(1,851
)
 
(1
)
 
(1,852
)
Other non-cash uses of reserve
 
(39
)
 
(226
)
 
(265
)
Impact of changes in foreign currency rates
 
2

 

 
2

Balance as of November 30, 2019
 
$
2,254

 
$
8

 
$
2,262

(1) Benefit relates to reversal of restructuring accrual due to the underspend of estimated restructuring costs.
The three months ended November 30, 2019 included $0.5 million of restructuring expenses related to Cortland U.S. (Other Segment). Restructuring reserves for Cortland U.S. were $1.3 million and $0.9 million as of November 30, 2019 and August 31, 2019, respectively.

10

Table of Contents

Note 4. Discontinued Operations
On October 31, 2019, as part of our overall strategy to become a pure-play industrial tools and services company, the Company completed the previously announced sale of the businesses comprising its former Engineered Components & Systems ("EC&S") segment to wholly owned subsidiaries of BRWS Parent LLC, a Delaware limited liability company and affiliate of One Rock Capital Partners II, LP for a purchase price of approximately $214.5 million (which includes approximately $3.0 million to be paid in four equal quarterly installments after closing). In connection with the completion of the sale in the three months ended November 30, 2019, the Company recorded a net loss of $4.2 million comprised of a loss of $22.4 million representing the excess of the net assets (exclusive of deferred tax assets and liabilities associated with subsidiaries of the Company whose stock was sold as part of the transaction) as compared to the purchase price less costs to sell and the recognition in earnings of the cumulative effect of foreign currency exchange gains and losses during the quarter largely offset by an income tax benefit of $18.2 million associated with the write off of the net deferred tax liability on subsidiaries of the EC&S segment for which the stock was divested. The final loss on sale is subject to agreement with the buyer on working capital amounts at the time of the divestiture. The Company also recognized an additional $3.3 million of impairment & divestiture costs in the quarter associated with the accelerated vesting of restricted stock awards associated with employees terminated as part of the transaction and $2.7 million of additional divestiture charges which were necessary to complete the transaction.
During the first quarter of fiscal 2019, the Company determined that the Precision Hayes business (EC&S segment) was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business. The Company recorded $9.5 million of impairment & divestiture charges during the three months ended November 30, 2018 representing the excess of the net book value of the net assets held for sale less the anticipated proceeds, less costs to sell. Also, during the first fiscal quarter of fiscal 2019, the Company recognized $1.8 million of impairment & divestiture charges associated with the Cortland Fibron business representing the excess of the net book value of the net assets held for sale less the anticipated proceeds, net of transaction costs. Both divestitures were completed in the second quarter of fiscal 2019.
As the aforementioned divestitures were a part of our strategic shift to become a pure-play industrial tools and services company, the results of their operations (including the stated impairment & divestiture charges) are recorded as a component of "Loss from discontinued operations" in the Condensed Consolidated Statements of Operations for all periods presented. In addition, the assets and liabilities of the EC&S segment are recorded as "Assets from discontinued operations" and "Liabilities from discontinued operations", respectively, within the Consolidated Balance Sheets as of August 31, 2019.
The following is a summary of the assets and liabilities of discontinued operations (in thousands):
 
 
August 31, 2019
Accounts receivable, net
 
$
52,802

Inventories, net
 
76,825

Other current assets
 
8,058

Property, plant & equipment, net
 
32,172

Goodwill
 
16,862

Other intangible assets, net
 
93,314

Other long-term assets
 
5,545

Assets of discontinued operations
 
$
285,578

 
 
 
Trade accounts payable
 
$
43,628

Accrued compensation and benefits
 
12,101

Reserve for cumulative translation adjustment
 
54,469

Other current liabilities
 
12,101

Deferred income taxes
 
20,029

Pension and postretirement benefit liabilities
 
1,344

Other long-term liabilities
 
91

Liabilities of discontinued operations
 
$
143,763



11

Table of Contents

The following represents the detail of "Loss from discontinued operations, net of income taxes" within the Condensed Consolidated Statements of Operations (in thousands):
 
 
Three Months Ended November 30,
 
 
2019*
 
2018
Net sales
 
$
67,010

 
$
133,980

Cost of products sold
 
49,749

 
99,284

Gross profit
 
17,261

 
34,696

 
 
 
 
 
Selling, administrative and engineering expenses
 
10,832

 
20,071

Amortization of intangible assets
 

 
1,981

Restructuring (benefit) charges
 
(11
)
 
432

Impairment & divestiture charges
 
28,416

 
12,976

Operating loss
 
(21,976
)
 
(764
)
 
 
 
 
 
Financing costs (benefits), net
 
14

 
(3
)
Other (income) expense, net
 
(104
)
 
406

Loss before income tax benefit
 
(21,886
)
 
(1,167
)
 
 
 
 
 
Income tax benefit
 
(17,635
)
 
(138
)
Net loss from discontinued operations
 
$
(4,251
)
 
$
(1,029
)
* "Loss from discontinued operations, net of income taxes" for the three months ended November 30, 2019, includes the results of the EC&S segment for the two month period ended October 31, 2019. As a result of the classification of the segment as assets and liabilities held for sale, the Company did not record amortization or depreciation expense in the results of operations in accordance with U.S. GAAP for the three months ended November 30, 2019. Furthermore, the Company excluded EC&S segment employees from the fiscal 2020 bonus compensation plan, hence there are no expenses associated with the plan for the three months ended November 30, 2019.
Note 5. Other Divestiture Activities    
On September 20, 2019, the Company completed the sale of the UNI-LIFT product line, a component of our Milwaukee Cylinder business (IT&S segment) for net cash proceeds of $6.0 million, which resulted in an impairment & divestiture benefit of $4.6 million in the first quarter of fiscal 2020. An additional $1.5 million of contingent proceeds could be received in the future if the buyer is able to extend a long-term supply agreement with a significant customer of the business which had a change in control provision in their current contract. These contingent proceeds are not reflected within the condensed consolidated financial statements.
After the sale of the UNI-LIFT product line, the Company determined that the remaining Milwaukee Cylinder business was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business. Therefore at November 30, 2019, the Milwaukee Cylinder business met the held for sale criteria and the Condensed Consolidated Balance Sheet reflects the assets and liabilities held for sale, respectively, of the Milwaukee Cylinder business. The $1.7 million of Assets held for sale are comprised of $1.3 million of Accounts receivable, net, $0.3 million of Inventories, net and $0.1 million of Other long-term assets. The $1.7 million of Liabilities held for sale are comprised of $1.1 million of Trade accounts payable, $0.1 million of Accrued compensation and benefits, $0.2 million of Other current liabilities and $0.3 million of Other long-term liabilities. We recorded impairment & divestiture charges of $4.6 million in the three months ended November 30, 2019 comprised of impairment charges of $2.5 million representing the excess of net assets held for sale compared to the anticipated proceeds less costs to sell, $1.9 million associated with our requirement to withdraw from the multi-employer pension plan associated with that business and $0.2 million of other divestiture related charges. The Company completed the divestiture of the Milwaukee Cylinder business on December 2, 2019 for a negligible amount. The historical results of the Milwaukee Cylinder business, inclusive of the UNI-LIFT product line, (which had net sales of $2.9 million and $3.8 million in the three months ended November 30, 2019 and 2018, respectively) are not material to the condensed consolidated financial results.
On October 22, 2019, the Company completed the sale of the Connectors product line (IT&S segment) for net cash proceeds of $2.7 million, which resulted in an impairment & divestiture benefit of $1.3 million. The historical results of the Connectors product line (which had net sales of $0.2 million and $1.5 million in the three months ended November 30, 2019 and 2018, respectively) are not material to the condensed consolidated financial results.

12

Table of Contents

Note 6. Goodwill, Intangible Assets and Long-Lived Assets
Changes in the gross carrying value of goodwill and intangible assets result from changes in foreign currency exchange rates, business acquisitions, divestitures and impairment charges. The changes in the carrying amount of goodwill for the three months ended November 30, 2019 are as follows (in thousands):
 
Industrial Tools & Services
 
Other
 
Total
Balance as of August 31, 2019
$
242,873

 
$
17,542

 
$
260,415

Impact of changes in foreign currency rates
3,552

 
2

 
3,554

Balance as of November 30, 2019
$
246,425

 
$
17,544

 
$
263,969


The gross carrying value and accumulated amortization of the Company’s intangible assets are as follows (in thousands):
 
 
 
November 30, 2019
 
August 31, 2019
 
Weighted Average
Amortization
Period (Years)
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Book
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Book
Value
Amortizable intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
14
 
$
127,242

 
$
99,191

 
$
28,051

 
$
126,229

 
$
96,817

 
$
29,412

Patents
12
 
13,439

 
12,605

 
834

 
13,227

 
12,276

 
951

Trademarks and tradenames*
12
 
3,219

 
1,940

 
1,279

 
4,513

 
2,921

 
1,592

Indefinite lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Tradenames
N/A
 
21,071

 

 
21,071

 
20,420

 

 
20,420

 
 
 
$
164,971

 
$
113,736

 
$
51,235

 
$
164,389

 
$
112,014

 
$
52,375


*The decrease in the Gross Carrying Value and Accumulated Amortization of Trademarks and tradenames is a result of the impairment of the Milwaukee Cylinder trademark as discussed in Note 5, "Other Divestiture Activities."
The Company estimates that amortization expense will be $5.7 million for the remaining nine months of fiscal 2020. Amortization expense for future years is estimated to be: $6.7 million in fiscal 2021, $5.9 million in fiscal 2022, $4.4 million in fiscal 2023, $2.8 million in fiscal 2024, $2.1 million in fiscal 2025 and $2.6 million cumulatively thereafter. The future amortization expense amounts represent estimates and may be impacted by future acquisitions, divestitures or changes in foreign currency exchange rates, among other causes.
Fiscal 2019 Impairment Charges
During the three months ended November 30, 2018, within the Other segment, the Company recognized a $10.2 million Goodwill impairment charge related to the Cortland U.S. business in conjunction with triggering events identified during the period.
Note 7. Product Warranty Costs
The Company generally offers its customers an assurance warranty on products sold, although warranty periods may vary by product type and application. The reserve for future warranty claims, which is recorded within the "Other current liabilities" line in the Condensed Consolidated Balance Sheets, is based on historical claim rates and current warranty cost experience. The following is a rollforward of the changes in product warranty reserves for the three months ended November 30, 2019 and 2018, respectively (in thousands):
 
Three Months Ended November 30,
 
2019
 
2018
Beginning balance
$
1,145

 
$
931

Provision for warranties
211

 
570

Warranty payments and costs incurred
(206
)
 
(457
)
Impact of changes in foreign currency rates
(25
)

(10
)
Ending balance
$
1,125

 
$
1,034



13

Table of Contents

Note 8. Debt
The following is a summary of the Company’s long-term indebtedness (in thousands):
 
November 30, 2019
 
August 31, 2019
Senior Credit Facility
 
 
 
Revolver
$

 
$

Term Loan

 
175,000

Total Senior Credit Facility

 
175,000

5.625% Senior Notes
287,559

 
287,559

Total Senior Indebtedness
287,559

 
462,559

Less: Current maturities of long-term debt

 
(7,500
)
Debt issuance costs
(1,323
)
 
(2,114
)
Total long-term debt, less current maturities
$
286,236

 
$
452,945


Senior Credit Facility
The Company's $600 million Senior Credit Facility is comprised of a $400 million revolving line of credit and provided for a $200 million term loan which was scheduled to mature in March 2024. It also provides the option for future expansion through a $300 million accordion on the revolving line of credit. Borrowings under the Senior Credit Facility bear interest based on LIBOR or a base rate, with interest rate spreads above LIBOR or the base rate being subject to adjustments based on the Company's net leverage ratio, ranging from 1.125% to 2.00% in the case of loans bearing interest at LIBOR and from 1.25% to 1.00% in the case of loans bearing interest at the base rate. In addition, a non-use fee is payable quarterly on the average unused amount of the revolving line of credit ranging from 0.15% to 0.3% per annum, based on the Company's net leverage ratio.
The Senior Credit Facility contains two financial covenants which are a maximum leverage ratio of 3.75:1 and a minimum interest coverage ratio of 3.5:1. For each covenant, certain transactions lead to adjustments to the underlying ratio, including a reduction of the minimum interest coverage ratio from 3.5 to 3.0 for any fiscal quarter ending within twelve months after the sale of the EC&S segment and an increase to the leverage ratio from 3.75 to 4.25 during the four fiscal quarters after a significant acquisition.
The Company was in compliance with all financial covenants at November 30, 2019. Borrowings under the Senior Credit Facility are secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors and certain equity interests owned by the foreign law pledgors.
During the three months ended November 30, 2019, the Company used the proceeds from the sale of the EC&S segment to pay off the outstanding principal balance on the term loan. In conjunction, we expensed the remaining $0.6 million of associated capitalized debt issuance costs. As of November 30, 2019, the unused credit line and amount available for borrowing under the revolving line of credit was $394.0 million.
Senior Notes
On April 16, 2012, the Company issued $300 million of 5.625% Senior Notes due 2022 (the “Senior Notes”), of which $287.6 million remain outstanding. The Senior Notes require no principal installments prior to their June 15, 2022 maturity, require semiannual interest payments in December and June of each year and contain certain financial and non-financial covenants. The Senior Notes include a call feature that allows the Company to repurchase them anytime on or after June 15, 2017 at stated redemption prices currently at 100.9% and reducing to 100.0% on June 15, 2020, plus accrued and unpaid interest.
Note 9. Fair Value Measurement
The Company assesses the inputs used to measure the fair value of financial assets and liabilities using a three-tier hierarchy. Level 1 inputs include unadjusted quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing an asset or liability.
The fair value of the Company’s cash and cash equivalents, accounts receivable, and accounts payable approximated book value at both November 30, 2019 and August 31, 2019 due to their short-term nature. The fair value of variable rate long-term debt approximated book value at August 31, 2019 as the interest rate approximated market rates (the Company had no variable rate debt outstanding as of November 30, 2019). Foreign currency exchange contracts are recorded at fair value. The fair value of the Company's foreign currency exchange contracts was a net liability of $0.2 million at November 30, 2019 and a net asset of less

14

Table of Contents

than $0.1 million at August 31, 2019. The fair value of the foreign currency exchange contracts was based on quoted inactive market prices and is therefore classified as Level 2 within the valuation hierarchy. The fair value of the Company’s outstanding Senior Notes was $290.8 million and $291.5 million at November 30, 2019 and August 31, 2019, respectively. The fair value of the Senior Notes was based on quoted inactive market prices and are therefore classified as Level 2 within the valuation hierarchy.
Note 10. Derivatives
All derivatives are recognized in the balance sheet at their estimated fair value. The Company does not enter into derivatives for speculative purposes. Changes in the value of derivatives (not designated as hedges) are recorded in earnings along with the gain or loss on the hedged asset or liability, while changes in the value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss, until earnings are affected by the variability of cash flows.
The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations. In order to manage this risk, the Company utilizes foreign currency exchange contracts to reduce the exchange rate risk associated with recognized non-functional currency balances. The effects of changes in exchange rates are reflected concurrently in earnings for both the fair value of the foreign currency exchange contracts and the related non-functional currency asset or liability. These derivative gains and losses offset foreign currency gains and losses from the related revaluation of non-functional currency assets and liabilities (amounts included in "Other expense" in the Condensed Consolidated Statements of Operations). The U.S. dollar equivalent notional value of these short duration foreign currency exchange contracts was $143.2 million and $13.3 million at November 30, 2019 and August 31, 2019, respectively. The fair value of outstanding foreign currency exchange contracts was a net liability of $0.2 million in November 30, 2019 and a net asset of less than $0.1 million at August 31, 2019. Net foreign currency losses (included in "Other expense" in the Condensed Consolidated Statements of Operations) related to these derivative instruments were as follows (in thousands):
 
Three Months Ended November 30,
 
2019
 
2018
Foreign currency loss, net
$
(270
)
 
$
(229
)

Note 11. Earnings per Share and Shareholders' Equity
The Company's Board of Directors authorized the repurchase of shares of the Company's common stock under publicly announced share repurchase programs. Since the inception of the initial share repurchase program in fiscal 2012, the Company has repurchased 22,295,357 shares of common stock for $658.0 million. As of November 30, 2019, the maximum number of shares that may yet be purchased under the programs is 5,704,643 shares. During the three months ended November 30, 2019 the Company repurchased 839,789 shares for $17.8 million.

15

Table of Contents

The reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share amounts):
 
Three Months Ended November 30,
 
2019
 
2018
Numerator:
 
 
 
Net earnings (loss) from continuing operations
$
6,372

 
$
(16,423
)
Net loss from discontinued operations
(4,251
)
 
(1,029
)
Net earnings (loss)
2,121

 
(17,452
)
 
 
 
 
Denominator:
 
 
 
Weighted average common shares outstanding - basic
60,081

 
61,031

Net effect of dilutive securities - stock based compensation plans
520

 

Weighted average common shares outstanding - diluted
$
60,601

 
$
61,031

 
 
 
 
Earnings (loss) per common share from continuing operations:
 
 
 
Basic
$
0.11

 
$
(0.27
)
Diluted
$
0.11

 
$
(0.27
)
 
 
 
 
Loss per common share from discontinued operations:
 
 
 
Basic
$
(0.07
)
 
$
(0.02
)
Diluted
$
(0.07
)
 
$
(0.02
)
 
 
 
 
Earnings (loss) per common share:
 
 
 
Basic
$
0.04

 
$
(0.29
)
Diluted
$
0.03

 
$
(0.29
)
 
 
 
 
Anti-dilutive securities from stock based compensation plans (excluded from earnings per share calculation)
1,068

 
2,973


16

Table of Contents


The following table illustrates the changes in the balances of each component of shareholders' equity for the three months ended November 30, 2019 (in thousands):
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Stock
Held in
Trust
 
Deferred
Compensation
Liability
 
Total
Shareholders’
Equity
 
Issued
Shares
 
Amount
 
Balance at August 31, 2019
81,919

 
$
16,384

 
$
181,213

 
$
(640,212
)
 
$
915,466

 
$
(171,672
)
 
$
(3,070
)
 
$
3,070

 
$
301,179

Net earnings

 

 

 

 
2,121

 

 

 

 
2,121

Other comprehensive income, net of tax

 

 

 

 

 
60,927

 

 

 
60,927

Stock contribution to employee benefit plans and other
6

 
1

 
130

 

 

 

 

 

 
131

Restricted stock awards
190

 
38

 
(38
)
 

 

 

 

 

 

Treasury stock repurchases

 

 

 
(17,805
)
 

 

 

 

 
(17,805
)
Stock based compensation expense

 

 
6,537

 

 

 

 

 

 
6,537

Stock option exercises
128

 
26

 
2,483

 

 

 

 

 

 
2,509

Tax effect related to net share settlement of equity awards

 

 
(2,638
)
 

 

 

 

 

 
(2,638
)
Stock issued to, acquired for and distributed from rabbi trust
5

 
1

 
85

 

 

 

 
(87
)
 
87

 
86

Adoption of accounting standards (Note 1)

 

 

 

 
3,873

 
(3,667
)
 

 

 
206

Balance at November 30, 2019
82,248

 
$
16,450

 
$
187,772

 
$
(658,017
)
 
$
921,460

 
$
(114,412
)
 
$
(3,157
)
 
$
3,157

 
$
353,253


The following table illustrates the changes in the balances of each component of shareholders' equity for the three months ended November 30, 2018 (in thousands):
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Stock
Held in
Trust
 
Deferred
Compensation
Liability
 
Total
Shareholders’
Equity
 
Issued
Shares
 
Amount
 
Balance at August 31, 2018
81,424

 
$
16,285

 
$
167,448

 
$
(617,731
)
 
$
1,166,955

 
$
(174,245
)
 
$
(2,450
)
 
$
2,450

 
$
558,712

Net loss

 

 

 

 
(17,452
)
 

 

 

 
(17,452
)
Other comprehensive income, net of tax

 

 

 

 

 
(7,944
)
 

 

 
(7,944
)
Stock contribution to employee benefit plans and other
5

 
1

 
117

 

 

 

 

 

 
118

Restricted stock awards
46

 
9

 
(9
)
 

 

 

 

 

 

Stock based compensation expense

 

 
3,594

 

 

 

 

 

 
3,594

Stock option exercises
20

 
4

 
430