Annual report pursuant to section 13 and 15(d)

Acquisitions

v2.4.0.6
Acquisitions
12 Months Ended
Jan. 28, 2012
Acquisitions [Abstract]  
ACQUISITIONS
2.

ACQUISITIONS

On August 6, 2010, we acquired Dimensions and certain assets of Alexandra, two leading providers of corporate clothing uniforms and workwear in the United Kingdom, to complement our corporate apparel operations. The results of operations for Dimensions and Alexandra have been included in the consolidated financial statements since that date. The acquired businesses are organized under a UK-based holding company, of which the Company controls 86% and certain previous shareholders of Dimensions control 14%. The Company has the right to acquire the remaining outstanding shares of the UK-based holding company after fiscal 2013 on terms set forth in the Investment, Shareholders’ and Stock Purchase Agreement.

The acquisition-date cash consideration transferred for the Dimensions and Alexandra acquisitions was $79.8 million and $18.0 million, respectively, totaling $97.8 million (£61 million), and was funded through the Company’s cash on hand.

The following table summarizes the fair values of the identifiable assets acquired and liabilities assumed in the Dimensions and Alexandra acquisitions as of the date of acquisition (in thousands). As of January 28, 2012, measurement-period adjustments were not material.

 

                         
    As of August 6, 2010  
    Dimensions     Alexandra     Total  

Current non-cash assets

  $ 25,515     $     $ 25,515  

Inventory

    48,340       16,980       65,320  

Property and equipment

    5,374       283       5,657  

Intangible assets

    35,474       1,501       36,975  
   

 

 

   

 

 

   

 

 

 

Total identifiable assets acquired

    114,703       18,764       133,467  
   

 

 

   

 

 

   

 

 

 

Current liabilities

    40,590       279       40,869  

Other liabilities

    8,273             8,273  
   

 

 

   

 

 

   

 

 

 

Total liabilities assumed

    48,863       279       49,142  
   

 

 

   

 

 

   

 

 

 

Net identifiable assets acquired

    65,840       18,485       84,325  

Goodwill

    26,989             26,989  
   

 

 

   

 

 

   

 

 

 

Subtotal

    92,829       18,485       111,314  

Less: Fair value of noncontrolling interest

    (13,004           (13,004

Less: Gain on bargain purchase

          (524     (524
   

 

 

   

 

 

   

 

 

 

Net assets acquired

  $ 79,825     $ 17,961     $ 97,786  
   

 

 

   

 

 

   

 

 

 

Goodwill is calculated as the excess of the purchase price over the net assets acquired. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Dimensions. All of the goodwill has been assigned to our corporate apparel reporting segment and is non-deductible for tax purposes.

Acquired intangible assets for both acquisitions consist primarily of customer relationship intangibles and trademarks, which are being amortized over their estimated useful lives of primarily 12 years. Acquired intangible assets also include $1.3 million related to certain trademarks of Alexandra which are not subject to amortization but will be evaluated at least annually for impairment.

In connection with the Alexandra acquisition, we recognized a gain on a bargain purchase of approximately $0.5 million which is included in “selling, general and administrative expenses” (“SG&A”) in the 2010 consolidated statements of earnings. The transaction resulted in a bargain purchase because the previous UK business of Alexandra plc was in administration (similar to bankruptcy) and was being sold through a bidding process.

 

The $13.0 million noncontrolling interest fair value as of the August 6, 2010 acquisition date was determined based upon the $79.8 million fair value of consideration transferred to acquire our 86% interest in the UK businesses.

During fiscal 2011, we completed the integration of the Dimensions and Alexandra operations by consolidating the distribution facilities into one primary location and centralizing the sourcing, technology and accounting functions. Total integration costs incurred for the acquisitions of Dimensions and Alexandra and included in SG&A in the consolidated statement of earnings were $3.8 million for fiscal 2011. Total acquisition transaction and integration costs incurred for the acquisitions of Dimensions and Alexandra and included in SG&A in the consolidated statement of earnings were $6.4 million for fiscal 2010.

For the fiscal year ended January 28, 2012, the acquired businesses contributed net sales of $218.1 million, gross margin of $63.9 million and net earnings, including the pretax $3.8 million in integration costs, of $2.2 million to the Company’s consolidated net earnings attributable to common shareholders. From the date of acquisition to the period ended January 29, 2011, the acquired businesses contributed net sales of $104.8 million, gross margin of $29.5 million and a net loss, including the pretax $6.4 million in acquisition transaction and integration costs, of $2.6 million to the Company’s consolidated net earnings attributable to common shareholders.

The following table presents unaudited pro forma financial information as if the closing of our acquisition of Dimensions had occurred on February 1, 2009, after giving effect to certain purchase accounting adjustments (in thousands, except per share data). The acquisition of Alexandra was not material to the Company’s financial position or results of operations, therefore pro forma operating results for Alexandra have not been included below.

 

                 
    Fiscal Year  
    2010     2009  

Total net sales

  $ 2,165,273     $ 2,037,387  
   

 

 

   

 

 

 

Net earnings attributable to common shareholders

  $ 71,934     $ 52,737  
   

 

 

   

 

 

 

Net earnings per common share attributable to common shareholders:

               

Basic

  $ 1.35     $ 1.00  
   

 

 

   

 

 

 

Diluted

  $ 1.35     $ 1.00  
   

 

 

   

 

 

 

This pro forma information is not necessarily indicative of the results of operations that actually would have resulted had the Dimensions acquisition occurred on the dates indicated above or that may result in the future and does not reflect potential synergies, integration costs or other such costs and savings.

Subsequent to completion of the acquisitions, Alexandra operations were extended to The Netherlands and France through newly formed subsidiaries. These subsidiaries did not have a material impact on our financial position, results of operations or cash flows in fiscal 2011 or fiscal 2010.