| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) | ||
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) | |
| Wisconsin | 39-0168610 | |
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13000 WEST SILVER SPRING DRIVE
BUTLER,
53051
(414) 352-4160
| (Title of each class) | (Name of each exchange on which registered) | ||||
| Class A Common Stock, par value $0.20 per share | New York Stock Exchange | |||||
| Large accelerated filer | x | Accelerated filer | o | |
| Non-accelerated filer | o | Smaller-reporting company | o | |
| (do not check if a smaller reporting company) | ||||
The Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Energy segment provides joint integrity products and services, customized offshore vessel mooring solutions, as well as and agricultural markets. Financial information related to the Company's reportable segments is included in Note 13, "Business Segment, Geographic and Customer Information" in the notes to the consolidated financial statements. generation to achieve our financial Al Masaood Trading. markets. Jeyco) to OEMs, maintenance and service organizations and energy producers in emerging and developed countries. energy asset owners. CNHTC and automotive electro-hydraulic convertible top latching and actuation systems. The automotive convertible top actuation systems are utilized on both retractable soft and hard top vehicles manufactured by OEMs such as Daimler, Our diesel engine air flow solutions, such as exhaust gas recirculation We also sell business. fluctuations. Quarter 1 Quarter 2 Quarter 3 Quarter 4 At August 31, employees. We believe that we are in substantial compliance with applicable environmental Name Position Robert C. Arzbaecher William Gustav H.P. Boel Mark E. Goldstein Brian K. Kobylinski Andrew G. Lampereur mutual funds. leader of the Gardner Bender business and was appointed Executive Vice President—Tools and Supplies in 2003. Mr. Goldstein is also a director at Pall Corporation. and cash flows. liquidity. difficulties in integrating and managing personnel, financial reporting and other systems used by the acquired the failure of acquired businesses to perform in accordance with our expectations; failure to achieve anticipated synergies between our business units and the business units of acquired businesses; the loss of customers of acquired the loss of financial condition, results of operations, cash flows and liquidity. costs. Industrial Energy Electrical Engineered Solutions Corporate and other In addition to the facilities above, we retain responsibility for Mine Safety Disclosures Fiscal Year Period 2010 2009 28, 2012 2013 Actuant Corporation S&P 500 Dow Jones US Diversified Industrials Statement of Earnings Data(1)(2): Net sales Gross profit Selling, administrative and engineering expenses Restructuring charges Impairment charges Amortization of intangible assets Operating profit Earnings from continuing operations Diluted earnings per share from continuing operations Cash dividends per share declared Balance Sheet Data(at end of period)(2): Total assets Total debt Selantic Biach Industries Hydrospex Team Hydrotec The Cortland Companies Cortland Cable Company Sanlo, Inc. Superior Plant Services, LLC Templeton, Kenly & Co, Inc. BH Electronics, Inc. T.T. Fijnmechanica B.V. Injectaseal Deutschland GmbH Veha Haaksbergen B.V. Maxima Technologies Actown-Electrocoil, Inc. Precision Sure-Lock D.L. Ricci B.E.P. Marine Ltd. and agricultural markets. Statements of Earnings Data: Net sales Cost of products sold Gross profit Selling, administrative, and engineering expenses Restructuring charges Impairment charges Amortization of intangible assets Operating profit Financing costs, net Other expense (income), net Earnings from continuing operations before income tax expense Income tax expense Earnings from continuing operations Loss from discontinued operations, net of income taxes Net earnings Other Financial Data: Depreciation Capital expenditures resulting subdued demand for our products and services. Consolidated operating profit for fiscal G+I activities Industrial Energy Electrical Engineered Solutions 2012 The following table sets forth summary results of operations for the Energy segment for the three most recent fiscal years (in millions): Industrial Energy Electrical Engineered Solutions General Corporate Fiscal a favorable adjustment to an acquisition earn-out provision. following the refinancing of our Senior Notes in the third quarter of fiscal 2012. limitations) and an $11 million adjustment to properly state deferred tax balances related to equity compensation programs (see to Note 1, “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements for further discussion). Fiscal 2012 income tax expense included a $6 million discrete income tax benefit resulting from debt refinancing while fiscal 2011 income tax expense included a $4 million benefit from a favorable adjustment to a valuation allowance. Net sales Net gain on disposal Loss from operations of discontinued businesses (1) Income tax expense (benefit) Loss from discontinued operations, net of income tax for the last three fiscal years: Net cash provided by operating activities Net cash used in investing activities Net cash provided by (used in) financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents expenditures. Accounts receivable, net Accounts receivable securitization Total accounts receivable Inventory, net Accounts payable Net primary working capital See Note 5, “Debt” in the notes to the consolidated financial statements for further discussion on the Senior Credit Facility. in the range of $35 to 40 million, but could vary from that depending on business and growth opportunities. 2013 Long-term debt Interest on long-term debt Operating leases Acquisition purchase price payable the values of assets in use, and often requires the application of judgment regarding estimates and assumptions. While the ultimate responsibility resides with management, for material acquisitions we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities, including intangible assets and tangible long-lived assets. Acquired intangible assets, excluding goodwill, are valued using a discounted cash flow methodology based benefit plan assets was change fiscal 2014 domestic benefit plan expense. liabilities being translated into U.S. dollars, our reporting currency. August 31, 2013 would result in a corresponding change in financing costs of approximately $1 million on an annual basis. INDEX TO FINANCIAL STATEMENT SCHEDULE 2013. Wisconsin 25, 2013 Net sales Cost of products sold Gross profit Selling, administrative and engineering expenses Restructuring charges Impairment charges Amortization of intangible assets Operating profit Financing costs, net Other expense (income), net Earnings from continuing operations before income tax Income tax expense Earnings from continuing operations Loss from discontinued operations, net of income taxes Net earnings Earnings from continuing operations per share: Basic Diluted Earnings per share: Basic Diluted Weighted average common shares outstanding: Basic Diluted STATEMENTS OF COMPREHENSIVE INCOME A S S E T S Current Assets Cash and cash equivalents Accounts receivable, net Inventories, net Deferred income taxes Prepaid expenses and other current assets Current assets of discontinued operations Total Current Assets Property, Plant and Equipment Land, buildings, and improvements Machinery and equipment Gross property, plant and equipment Less: Accumulated depreciation Property, Plant and Equipment, net Goodwill Other Intangibles, net Other Long-term assets Total Assets L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y Current Liabilities Short-term borrowings Trade accounts payable Accrued compensation and benefits Income taxes payable Other current liabilities Current liabilities of discontinued operations Total Current Liabilities Long-term Debt Deferred Income Taxes Pension and Postretirement Benefit Liabilities Other Long-term Liabilities Shareholders’ Equity Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued and outstanding 68,056,387 and 67,718,207 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Stock held in trust Deferred compensation liability Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity thousands) BALANCE SHEETS Operating activities Net earnings Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization Amortization of debt discount and debt issuance costs Stock-based compensation expense Provision (benefit) for deferred income taxes Impairment charges Net gain on disposal of businesses Other non-cash adjustments Changes in components of working capital and other: Accounts receivable Expiration of accounts receivable securitization program Inventories Prepaid expenses and other assets Trade accounts payable Income taxes payable Accrued compensation and benefits Other accrued liabilities Cash provided by operating activities Investing activities Proceeds from sale of property, plant and equipment Proceeds from sale of businesses Capital expenditures Business acquisitions, net of cash acquired Cash used in investing activities Financing activities Net borrowings (repayments) on revolver and short-term borrowings Principal repayments on term loans and other debt Proceeds from issuance of term loans Open market repurchases of 2% Convertible Notes Debt issuance costs Proceeds from equity offering, net of transaction costs Stock option exercises, related tax benefits and other Cash dividend Cash provided by (used in) financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents—beginning of year Cash and cash equivalents—end of year thousands, except share and per share amounts) CASH FLOWS Balance at August 31, 2007 Net earnings Currency translation adjustments Fair value of derivatives, net of taxes Pension and postretirement plan funded status, net of taxes Total comprehensive income Effect of FIN 48 adoption Company stock contribution to employee benefit plans Restricted stock awards Cash dividend ($0.04 per share) Stock based compensation expense Stock option exercises Excess benefit on stock option exercises Stock issued to, acquired for and distributed from rabbi trust Balance at August 31, 2008 Net earnings Currency translation adjustments Fair value of derivatives, net of taxes Pension and postretirement plan funded status, net of taxes Total comprehensive loss Company stock contribution to employee benefit plans Restricted stock awards Issuance of common stock Cash dividend ($0.04 per share) Stock based compensation expense Stock option exercises Excess benefit on stock option exercises Stock issued to, acquired for and distributed from rabbi trust Balance at August 31, 2009 Net earnings Currency translation adjustments Fair value of derivatives, net of taxes Pension and postretirement plan funded status, net of taxes Total comprehensive loss Company stock contribution to employee benefit plans Restricted stock awards Cash dividend ($0.04 per share) Stock based compensation expense Stock option exercises Excess benefit on stock option exercises Stock issued to, acquired for and distributed from rabbi trust Balance at August 31, 2010 Beginning balance Warranty reserves of acquired businesses Provision for warranties Warranty payments and costs incurred Warranty reserves of divested/discontinued businesses Impact of changes in foreign currency rates Ending balance estimate and accrue the ultimate costs of such programs. The Company maintains an accrual at the end of each period for the earned, but unpaid costs related to the programs. The Company generally does not require collateral or other security for receivables and provides for an allowance for doubtful accounts based on historical experience and a review of its existing receivables. Accounts Receivable are Financing Costs: Financing costs represent interest expense, financing fees and amortization of debt issuance costs, assumed liabilities. other marine services to offshore operators, drillers and energy asset owners. The purchase price tradenames. Accounts receivable, net Inventories Other current assets Property, plant & equipment Goodwill Other intangible assets Trade accounts payable Other current liabilities Deferred/contingent purchase price payable Deferred income taxes Other noncurrent liabilities Cash paid, net of cash acquired two maximatecc tuck-in acquisitions that further expand the geographic presence, product offerings and technologies of the Engineered Solutions segment. On gauges serving the Brazilian agriculture and industrial markets. agreements. Net sales As reported Pro forma Earnings from continuing operations As reported Pro forma Basic earnings per share from continuing operations As reported Pro forma Diluted earnings per share from continuing operations As reported Pro forma Accounts receivable, net Inventories, net Other assets Property, plant & equipment, net Assets of discontinued operations Trade accounts payable Accrued compensation and benefits Other current liabilities Pension benefit accruals Other long-term liabilities Liabilities of discontinued operations Net sales Net gain on disposal Loss from operations of discontinued businesses (1) Income tax expense (benefit) (2) Loss from discontinued operations, net of income tax business. Severance and facility consolidation Product line rationalization Other restructuring costs Beginning balance Restructuring charges Cash payments Product line rationalization Other non-cash uses of reserve Impact of changes in foreign currency rates Ending balance During the third quarter of fiscal $22.2 million at August 31, 2013 and 2012. The changes in the carrying amount of goodwill for the years ended August 31, Balance as of August 31, 2008 Businesses acquired Purchase accounting adjustments Impairment charges Business divested Impact of changes in foreign currency rates Balance as August 31, 2009 Businesses acquired Purchase accounting adjustments Impairment charges Impact of changes in foreign currency rates Balance as August 31, 2010 Customer relationships Patents Trademarks Non-compete agreements Other discontinued operations (refer to Note 3, "Discontinued Operations"). Amortization expense recorded on intangible assets for the years ended August 31, rates or other factors. Senior Credit Facility—Revolver 6.875% Senior notes Other debt Total Senior Indebtedness Convertible subordinated debentures (“2% Convertible Notes”) 2013 On year and contain certain financial and non-financial covenants. The Company utilized the net proceeds from this issuance to fund the repurchase of all its then-outstanding $250 million6.875% Senior Notes due 2017 at a cost of 104%, or $260.4 million. Level 1 Valuation: Cash equivalents Investments Level 2 Valuation: Fair value of derivative instruments ) and tradename ($13.6 million) were written down to estimated fair value, resulting in a non-cash impairment charge of $62.5 million. In order to arrive at the implied fair value of goodwill, the Company assigned the fair value to all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. The tradename was valued using the relief of royalty income approach. At August 31, 2013, the assets and liabilities of the Electrical segment are classified as discontinued operations and therefore are valued at fair value, less cost to sell. In determining the fair value of the Electrical segment the Company utilized generally accepted valuation techniques, which required the Company to make assumptions and apply judgment to estimate macro economic factors, industry and market trends and the future profitability of current business strategies. These represent Level 3 assets measured at fair value on a nonrecurring basis. consolidated statement of earnings). Reconciliation of benefit obligations: Benefit obligation at beginning of year Acquisitions Interest cost Actuarial loss Benefits paid Benefit obligation at end of year Reconciliation of plan assets: Fair value of plan assets at beginning of year Acquisitions Actual return on plan assets Company contributions Benefits paid from plan assets Fair value of plan assets at end of year Funded status of the plans (underfunded) Amounts recognized in the balance sheet: Current liabilities Non-current liabilities : Service cost Interest cost Expected return on assets Amortization of actuarial loss Net benefit cost (credit) Assumptions for benefit obligations: Discount rate Assumptions for net periodic benefit cost: Discount rate Expected return on plan assets basis. At Cash and cash equivalents Fixed Income securities: Government bonds Corporate bonds Short term funds Equity Securities: U.S. companies International companies Projected benefit payments from plan assets to participants in the Company’s U.S. pension plans are approximately following five years. Projected benefit obligation Plan assets at fair value Funded status of plans (underfunded) follows (in thousands): years ended August 31, Currently payable: Federal Foreign State Deferred: Federal Foreign State Federal statutory rate State income taxes, net of Federal effect Net effect of foreign tax rates and credits Restructuring and valuation allowance Other items Effective income tax rate Deferred income tax assets: Operating loss and tax credit carryforwards Compensation related reserves Postretirement benefit accruals Inventory items Restructuring expenses Deferred income Book reserves and other items Total deferred income tax assets Valuation allowance Net deferred income tax assets Deferred income tax liabilities: Depreciation and amortization 2% Convertible Notes interest Other items Deferred income tax liabilities Net deferred income tax liability Beginning balance Increase for tax positions taken in a prior period Decrease for tax positions taken in a prior period Decrease due to settlements Ending balance Substantially all of these unrecognized tax benefits, if recognized, would impact the effective income tax rate. As of August 31, The authorized common stock of the Company as of corporate purposes. As of Numerator: Net earnings Plus: 2% Convertible Notes financings costs, net of taxes Net earnings for diluted earnings per share Denominator: Weighted average common shares outstanding for basic earnings per share Net effect of dilutive securities—employee stock compensation plans Net effect of 2% Convertible Notes based on the if-converted method Weighted average common and equivalent shares outstanding for diluted earnings per share Basic Earnings Per Share: Diluted Earnings Per Share: forfeitures. A summary of stock option activity Weighted-average fair value of options granted (per share) Intrinsic value gain of options exercised Cash receipts from exercise of options Outstanding August 31, 2009 Granted Forfeited Vested Outstanding August 31, 2010 binomial pricing model for Dividend yield Expected volatility Risk-free rate of return Expected forfeiture rate Expected life Currency translation adjustments, net of tax Unrecognized pension and OPEB actuarial gains (losses), net of tax Other items, net of tax The Company is a global manufacturer of a broad range of industrial products and systems and is organized into Net Sales by Segment: Industrial Energy Electrical Engineered Solutions Net Sales by Reportable Product Line: Industrial Energy Electrical Vehicle Systems Other Operating Profit: Industrial Energy Electrical Engineered Solutions General Corporate Depreciation and Amortization: Industrial Energy Electrical Engineered Solutions General Corporate Capital Expenditures: Industrial Energy Electrical Engineered Solutions General Corporate Assets: Industrial Energy Electrical Engineered Solutions General Corporate Assets of discontinued operations taxes. Net Sales: United States Netherlands Germany United Kingdom All other Long-Lived Assets: United States United Kingdom Netherlands Germany All other obligations. 2013 Net sales Cost of products sold Gross profit Selling, administrative and engineering expenses Restructuring charges Amortization of intangible assets Operating profit Financing costs, net Intercompany expense (income), net Other expense (income), net Earnings from continuing operations before income tax expense Income tax expense Net earnings from continuing operations before equity in earnings of subsidiaries Equity in earnings (loss) of subsidiaries Earnings from continuing operations Loss from discontinued operations Net earnings Net sales Cost of products sold Gross profit Selling, administrative and engineering expenses Restructuring charges Impairment charges Amortization of intangible assets Operating profit (loss) Financing costs, net Intercompany expense (income), net Other income, net Earnings (loss) from continuing operations before income tax expense (benefit) Income tax expense (benefit) Net earnings (loss) from continuing operations before equity in earnings of subsidiaries Equity in earnings (loss) of subsidiaries Earnings from continuing operations Earnings (loss) from discontinued operations Net earnings (loss) Net sales Cost of products sold Gross profit Selling, administrative and engineering expenses Amortization of intangible assets Operating profit Financing costs, net Intercompany expense (income), net Other (income) expense, net Earnings before income tax expense and minority interest Income tax expense Net earnings before equity in earnings of subsidiaries Equity in earnings of subsidiaries Earnings from continuing operations Earnings (loss) from discontinued operations Net earnings ASSETS Current Assets Cash and cash equivalents Accounts receivable, net Inventories, net Deferred income taxes Prepaid expenses and other current assets Current assets of discontinued operations Total Current Assets Property, Plant & Equipment, net Goodwill Other Intangibles, net Intercompany Receivable Investment in Subsidiaries Other Long-term Assets Total Assets LIABILITIES & SHAREHOLDERS’ EQUITY Current Liabilities Trade accounts payable Accrued compensation and benefits Income taxes payable Other current liabilities Current liabilities of discontinued operations Total Current Liabilities Long-term Debt, less Current Maturities Deferred Income Taxes Pension and Post-retirement Benefit Liabilities Other Long-term Liabilities Intercompany Payable Shareholders’ Equity Total Liabilities and Shareholders’ Equity ASSETS Current Assets Cash and cash equivalents Accounts receivable, net Inventories, net Deferred income taxes Prepaid expenses and other current assets Total Current Assets Property, Plant & Equipment, net Goodwill Other Intangibles, net Investment in Subsidiaries Intercompany Receivable Other Long-term Assets Total Assets LIABILITIES & SHAREHOLDERS’ EQUITY Current Liabilities Short-term borrowings Trade accounts payable Accrued compensation and benefits Income taxes payable Other current liabilities Total Current Liabilities Long-term Debt, less Current Maturities Deferred Income Taxes Pension and Post-retirement Benefit Liabilities Other Long-term Liabilities Intercompany Payable Shareholders’ Equity Total Liabilities and Shareholders’ Equity Operating Activities Net cash provided by (used in) operating activities Investing Activities Proceeds from sale of property, plant & equipment Proceeds from sale of businesses Capital expenditures Business acquisitions, net of cash acquired Cash used in investing activities Financing Activities Net repayments on revolving credit facilities and other debt Open market repurchases of 2% Convertible Notes Intercompany loan activity Stock option exercises, related tax benefits and other Cash dividend Cash provided by (used in) financing activities Effect of exchange rate changes on cash Net increase in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period Operating Activities Net cash provided by operating activities Investing Activities Proceeds from sale of property, plant & equipment Proceeds from sale of business Capital expenditures Business acquisitions, net of cash acquired Cash used in investing activities Financing Activities Net borrowings on revolving credit facilities and other debt Intercompany loan activity Principal repayments on term loans and other debt Proceeds from issuance of term loans Debt issuance costs Proceeds from equity offering, net of transaction costs Stock option exercises, related tax benefits and other Cash dividend Cash provided by (used in) financing activities Effect of exchange rate changes on cash Net decrease in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period Operating Activities Net cash provided by operating activities Investing Activities Proceeds from sale of property, plant & equipment Capital expenditures Business acquisitions, net of cash acquired Cash used in investing activities Financing Activities Net borrowings on revolving credit facilities and other debt Intercompany loan activity Principal repayments on term loans and other debt Cash dividend Stock option exercises, related tax benefits and other Cash provided by (used in) financing activities Effect of exchange rate changes on cash Net increase in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period Net sales Gross profit Restructuring charges Earnings from continuing operations Loss from discontinued operations Net earnings (loss) Earnings from continuing operations per share: Basic Diluted Earnings (loss) from discontinued operations per share: Basic Diluted Net earnings (loss) per share Basic Diluted Net sales Gross profit Restructuring charges Earnings from continuing operations Earnings (loss) from discontinued operations Net earnings (loss) Earnings from continuing operations per share: Basic Diluted Earnings (loss) from discontinued operations per share: Basic Diluted Net earnings (loss) per share Basic Diluted Description Allowance for losses—Trade accounts receivable August 31, 2010 August 31, 2009 August 31, 2008 Allowance for losses—Inventory August 31, 2010 August 31, 2009 August 31, 2008 Valuation allowance—Income taxes August 31, 2010 August 31, 2009 August 31, 2008 2013 Information about the Company’s directors is incorporated by reference from the “Election of Directors” section of the Company’s Proxy Statement for its Annual Meeting of Shareholders to be held on January 14, The information required by this item is incorporated by reference from the “Election of Directors,” “Corporate Governance Matters” and the “Executive Compensation” sections (other than the subsection thereof entitled “Report of the Audit Committee”) of the The information required by this item is incorporated by reference from the “Certain Beneficial Owners” and “Executive Compensation—Equity Compensation Plan Information” sections of the PART IItem 1.Business 1 Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. 8 Item 1B.Unresolved Staff Comments13Item 2.Properties13Item 3.Legal Proceedings14Item 4.14PART IIItem 5.14Item 6. 16Item 7. 17Item 7A. 30Item 8. 31Item 9. Item 9A. Item 9B. 72 Item 9A.Controls and Procedures72Item 9B.Other Information72PART IIIItem 10.73Item 11. 73Item 12. 73Item 13. 73Item 14. 73 PART IVItem 15. 74truck, automotive, recreational vehicle, industrial, production, oil & gas, energy, power generation, marine, infrastructure, commercial construction, truck, automotive, specialty vehicle and retail electrical Do-It-Yourself (“DIY”)agriculture industries, market acceptance of existing and new products, successful integration of acquisitions and related restructuring, operating margin risk due to competitive pricing and operating efficiencies, supply chain risk, material, labor, or overhead cost increases, foreign currency risk, interest rate risk, commodity risk, the impact of geopolitical activity on the economy, changes in government regulations such as income taxes, climate control initiatives and healthcare reform, the timing or strength of an economic recovery in the Company’s markets, litigation matters, the Company’s ability to access capital markets and other factors that may be referred to or noted in the Company’s reports filed with the Securities and Exchange Commission from time to time. 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.Butler,Menomonee Falls, Wisconsin, is a Wisconsin corporation incorporated in 1910. The Company isWe are a global manufacturer ofdiversified company that designs, manufactures and distributes a broad range of industrial products and systems.systems to various end markets. The Company is organized into fourthree operating and reportable segments as follows: Industrial, Energy Electrical and Engineered Solutions. umbilical, rope and cable solutions to the global oil & gas, power generation and other energy markets. The Electrical segment is primarily involved in the design, manufacture and distribution of a broad range of electrical products to the retail DIY, wholesale, original equipment manufacturer (“OEM”), utility and harsh environment markets. The Engineered Solutions segment provides highly engineered position and motion control systems to OEMsoriginal equipment manufacturers (“OEM”) in various on and off-highway vehicle markets, as well as, a variety of other products to the industrial products.leading market positions to generate annual internalcore sales growth (overall sales growth excluding the impact of acquisitions, divestitures and foreign currency rate changes) that exceeds the annual growth rates of the gross domestic product in the geographic regions in which we operate. In addition to internalcore sales growth, we are focused on acquiring complementary businesses. Following an acquisition, we seek to drive cost reductions, develop additional cross-selling opportunities and deepen customer relationships. We also focus on profit margin expansion and cash flowand EPS growth goals.objectives. Our LEAD (“Lean Enterprise Across Disciplines”) operational excellence process utilizes various continuous improvement techniques to drive outreduce costs and improve efficiencies across all locations and functions worldwide, thereby expanding profit margins. Strong cash flow generation is achieved by maximizing returns on assets and minimizing primary working capital needs. Our LEAD efforts also support our Growth + Innovation (“G + I”) initiative, a process focused on increasing core sales growth. The cash flow that results from efficient asset management and improved profitability is used to reduce debt and fund additionalstrategic acquisitions, treasury share repurchases and internal growth opportunities.We believe thebusinesssegment is a leading global supplier of branded hydraulic and mechanical tools to thea broad array of end markets, including general maintenance and repair, industrial, infrastructure and production automation markets. We design, produceautomation. Its primary products include high-force hydraulic tools, highly engineered heavy lifting solutions, workholding (production automation) solutions and market our industrialconcrete stressing products. Our hydraulic and mechanical tools are marketed primarily through ourthe Enerpac, Simplex, Precision Sure-Lock and Milwaukee Cylinder and TTF brand names.We believe Enerpac is a leading global supplier of specializedindustrialand mechanical tools, operating at very high pressures of approximately 5,000 pounds per square inchincluding cylinders, pumps, valves, specialty tools and presses are designed to 12,000 pounds per square inch. The hydraulic tool line consists of a broad range of products that are generally sold by industrial and specialty fluid power distributors to customers in the infrastructure, mining, steel mill, cement, rail, oil & gas and general maintenance industries. While the majority of its customers are specialty fluid power distributors, Enerpac generates approximately 20% of its revenue by working closely with infrastructure firms to supply products that are used in major infrastructure projects such as bridges, stadiums, tunnels and offshore platforms. Enerpac and Simplex products allow users to apply controlled force and motion to increase productivity, reduce labor costs and make work safer and easier to perform. In additionThese hydraulic tools operate at very high pressures of approximately 5,000 to 12,000 pounds per square inch and are generally sold by a diverse group of industrial and specialty fluid power distributors to customers in the infrastructure, mining, steel mill, cement, rail, oil & gas, power generation and global infrastructure firms, Enerpac maintains strong customer relationships with leadinggeneral maintenance industries. Key industrial distributors such asinclude W.W. Grainger, Applied Industrial Technologies, MSC, Maskin K. Lund, Industrial Air Tool and MSC which collectively generate less than 10% of its sales.We also believe Enerpac is a leading supplier of hydraulic workholding components and systems. Workholding products hold parts in position in metal cutting machine tools during the machining process. The products are marketed through distributors to the automotive, machine tool and fixture design markets.Enerpacto providing a comprehensive line of industrial tools, the segment also provides high-force hydraulic systems (integrated solutions) to meet customer specific requirements for safe and precise control of movement and positioning. These customized hydraulicsolutions, which combine hydraulics, steel fabrication and electronic controls with engineering and application knowledge, are typically utilized in major infrastructure projects (bridges, stadiums, tunnels and offshore platforms) for heavy lifting, launching & skidding or synchronous lifting applications.systemssystem components) that are soldmarketed through distributors to construction firms or directly to OEM customers. Our product development staff works closely with customers to develop hydraulic solutions for specific industrial, infrastructure or construction applications.Precision Sure-Lockthe automotive, machine tool and TTF maintain a leading market position infixture design markets. In addition, the segment designs, manufactures and distributes concrete pre- and post-tensioning product markets in the U.S. and Europe, respectively. Products include one-time use and reusable chucksproducts (chucks and wedges, stressing jacks and anchors thatanchors) which are used by concrete tensioning system designers, fabricators and installers. Primary end markets includeinstallers for the residential and commercial construction, railroad, bridges andbridge, infrastructure and underground mining and tunnels.We believe ourbusiness is a leading supplier of joint integritysegment provides technical products and services to the global energy markets, where safety, reliability, up-time and productivity are key value drivers. Products include joint integrity tools and connectors for oil & gas and power generation installations, mooring solutions, as well as umbilical, rope and cable solutionssolutions. In addition to these products, the global oil & gas, power generationEnergy segment also provides manpower services, including machining, engineering and energy marketsmaintenance activities. The products and services of the Energy segment are distributed and marketed under thevarious brand names (principally Hydratight, D.L. Ricci, Morgrip, Cortland, FibronBX, Puget Sound Rope, Biach, Selantic, Viking SeaTech and Selantic brand names. through distributors or rented to end users. These products are used in the maintenance of bolted joints on oil rigs and platforms, wind turbines, refineries and pipelines, petrochemical installations, as well as fossil fuel and nuclear power plants to reduce customer downtime and provide increased safety and reliability. WeHydratight also provideprovides manpower services wherebywhere our highly trained technicians perform bolting, machining and joint integrity work for customers. TheOur joint integrity business operates to world class safety standards while delivering products and services through a localized infrastructure of rental and maintenance depots. Service, product sales and rental revenue each generate approximately one-third of our joint integrity product line sales.Our Energy segment also provides custom engineered umbilicals, cable and high performance slings and synthetic rope to service providers and asset owners, which are used in the maintenance and installation of sub-sea oil & gas production equipment, as well as in oil & gas exploration. These highly engineered products provide the critical linkages between the surface and the ocean floor and must meet robust safety standards. Custom designed products are also sold into a variety of other niche markets including medical, defense and marine applications.Energy segment sales and services are provided to customers in emerging markets, as well as in the North Sea, Middle East, South America, China, Asia, Gulf of Mexico and Canada. This business maintains strong relationships with a variety of leading firms such as Statoil, BJ Services, Petrobras, British Petroleum, CGG Veritas, ExproBaker Hughes, Bechtel and Sercel.ElectricalWe believeTig Tesco Intl.ElectricalCortland business is aable to provide customized synthetic ropes, heavy lift slings, specialized mooring, rigging and towing systems, electro-optical-mechanical cables and umbilicals to customers, including leading supplier of a wide array of branded specialized electrical toolsfirms such as Sercel, Expro, General Electric and suppliesHalliburton. These products are utilized in North Americacritical applications, often deployed in harsh operating conditions (sub-sea oil & gas production, maintenance and exploration) and are required to electrical wholesale distributors, catalog houses, retail home centers, hardware cooperatives, OEM’s, utilities and the retail marine distribution channel. Our Electrical businesses share core competencies in product branding, distribution and channel management, global sourcing and managing the logistics of SKU intensive product lines.We believe our Electrical business is a leading supplier of electrical tools and supplies to the Retail DIY, power transformation and harsh environment electrical markets. We provide the Retail DIY market withmeet robust safety standards. Additional custom designed products are also sold into a variety of electrical toolsother niche markets including mining, medical, security, aerospace and consumables such as cable ties, staplesdefense.wire management products underservices provided to the Gardner Bender, Del City, A.W. Sperryglobal energy market. Headquartered in Aberdeen, Scotland, Viking is an offshore support specialist providing a comprehensive range of equipment and Calterm brands. These products are soldservices to leading retailers such as Lowe’s, The Home Depot, Menards, True Value and Ace Hardware. We also sell power transformation products such as low voltage, single-phase dry type transformers and custom toroidal transformers under the Acme Electric, Actown and Amveco brand names and high voltage switches under the Turner Electric brand name. The low voltage transformers are sold through electrical wholesale distributors, as well as directly to OEMs such as Rockwell Automation, Powerware, Intermatic and General Electric. The high voltage switches are sold intooil & gas industry. Viking servesAmerican electrical utility market.Sea (U.K. and Norway) and Australia. The product linemajority of Viking's revenue is derived from offshore vessel mooring solutions which include design, rental, installation and inspection. Viking also includes a broad offering of electrical productsprovides survey, manpower and systems for the harsh environment electrical market under the Ancor, Marinco, Guest, AFI, Nicroother marine services to offshore operators, drillers and B.E.P Marine brand names. These products are primarily sold to various customers in the industrial, marine, power generation and retail markets, including West Marine, Applied Materials and Kohler.We believe that thebusinesssegment is a leading global designer and assembler of customized position and motion control systems and other industrial products forto various transportation and other niche markets. This segment focuses on providing technical and highly engineered products, including actuation systems, mechanical power transmission products, engine air flow management systems, human to machine interface ("HMI") solutions and other rugged electronic instrumentation. Products in the Engineered Solutions segment are primarily marketed directly to OEMs inthrough a varietytechnical sales organization. Within this segment, engineering capabilities, technical service, quality and established customer relationships are key competitive advantages.niche markets.Thethis segment’s revenue comes from the Vehicle Systems product line primarily serves(Power-Packer, Gits and Power Gear brands), with sales to the truck, automotive, off-highway and specialty vehicle markets. Products include hydraulic cab-tilt and latching systems electro-hydraulic convertible top latching and actuation systems, diesel engine air flow handling and turbocharger components and systems, as well ashydraulic leveling solutions for specialty vehicles. We believe that the segment’s principal brands, Power-Packer, Gits and Power Gear are recognized for their engineering quality and integrated custom design. A summary of the end markets, customers and products are as follows:Our hydraulic cab-tilt and latching systemswhich are sold to leading global heavy duty truck OEMs such as Volvo, Iveco, Scania, Paccar-DAF, FAW and CNHTC.Audi, Volkswagen, Renault, Peugeot, Saab, BMW, Volvo and Nissan. We maintain strong relationships with leading customers such as Wilhelm Karmann GmbH, CTS Dachsysteme and Webasto-Edscha.(EGR)(“EGR”) systems and air flow actuators, are used by diesel engine and turbocharger manufacturers to reduce emissions, improve fuel efficiency and increase horsepower. Primary end markets include heavy duty truck and off-highway equipment serving customers such as Caterpillar, Detroit Diesel, Garrett Turbochargers, Holset Engineering, IHICummins, Honeywell and Borg Warner.products under the Power-Packeractuation systems to various automotive and Power Gear brand names to specialty vehicle markets, principallycustomers (principally in the defense, recreational vehicle and off-highway markets to customersmarkets) such as Honeywell, BorgWarner, Oshkosh BAE Systems and Winnebago.this segment providesthe segment. Products include severe-duty electronic instrumentation (including displays and clusters, machine controls and sensors), HMI solutions and power transmission products (highly engineered power transmission components including drive shafts, torque limiters, gearboxes, torsional dampers and flexible shafts). These products are sold to a variety of niche markets including agricultural implement, lawn & turf, construction, forestry, industrial, aerospace, material handling and security.engineered solutions to other niche markets. Maxima engineers, manufacturesservices are generally available globally, with our principal markets outside the United States being Europe and markets electronic controls and instrumentation systems for severe-duty applications such as agriculture, construction and other specialty vehicles under the Datcon, Stewart Warner and AST brand names. Nielsen offers a comprehensive line of case, container and industrial hardware. Elliott produces custom designed flexible shafts and push pull cable assemblies for a variety of end markets including agriculture, aerospace, medical and other industrial markets. Sanlo designs and manufactures custom steel cable assemblies for aerospace, infrastructure, material handling, security and other niche markets.International BusinessActuant is a global company.Asia. In fiscal 2010,52%43% of our net sales (continuing operations) from the United States, 33%38% from Europe 11%and the Middle East, 14% from Asia 1%and 5% from Canada and 3% from South America and other countries. International sales are influenced by fluctuations in exchange rates of foreign currencies, foreign economic conditions and other factors associated with foreign trade.areas. We have implementedoperations around the world and this geographic diversity allows us to draw on the skills of a global infrastructure for the manufacturing, sourcing, distribution and sale ofworkforce, provides flexibility to our products. This infrastructure enablesoperations, allows us to supportdrive economies of scale, provides revenue streams that may help offset economic trends that are specific to individual countries and offers us an opportunity to access new markets. In addition, we believe that our future growth depends, in part, on our ability to develop products and sales opportunities that successfully target developing countries. Although international operations are subject to certain risks, we continue to believe that a global presence is key to maintaining strong relationships with many global customers, who are leaders in their industries.Distribution and MarketingWe have established a global network to source and distribute products and components effectively while maintaining efficient inventory levels. The Industrial segment sells products through distributors and OEM channels while the Energy segment sells products and services primarily to OEMs, maintenance and service organizations and energy producers. The Electrical segment sells its products through a combination of distributors, direct sales personnel and manufacturers’ representatives into the retail, distribution and OEM channels. Our distributor networks are one of our key competitive strengths in providing exceptional service to our endglobal customers.Retail: We utilize a combination of internal account managers and independent manufacturers’ representatives to serve the retail customers of our Electrical segment, including home centers, marine and automotive retailers, mass merchandisers and hardware cooperatives. Sales and marketing personnel provide significant marketing support, including promotional planning, sales programs, retail point-of-purchase materials and displays, effective product packaging, strong advertising programs and state of the art merchandising.Wholesale Distribution: The Industrial and portions of the Electrical segments sell products through thousands of wholesale distributors via internal direct sales managers dedicated Financial information related to the distributor channelCompany's geographic areas is included in Note 10, "Income Taxes" and independent sales representatives. DueNote 13, "Business Segment, Geographic and Customer Information" in the notes to the fragmentation of the distribution channel, we rely extensively on independent manufacturers’ representatives to provide ongoing customer sales and service support.consolidated financial statements.OEM: Sales to this channel are made through a combination of internal direct field sales representatives, independent sales representatives, catalogs, telemarketers and the internet.Products in the Engineered Solutions segment are primarily marketed directly to OEMs through a direct technical sales organization. Product lines also have dedicated market managers, as well as a technical support organization. We utilize an experienced sales force that is organized by end-market, typically resides in the respective manufacturing facility and reports to market sales leaders. Within the Engineered Solutions segment, engineering capabilities, technical service, quality and established customer relationships are key competitive advantages in winning new contracts.earned a reputation forbeen key drivers of our success in the marketplace. Our advanced design and engineering expertisecapabilities contribute to the development of innovative and for the creation of highly engineered innovativeproducts, maintain our technological leadership in each segment and enhance our ability to provide customers with unique and customized solutions and products. While we generally do not operate stand-alonemuch research and development centers, we maintainactivity supports improvements to existing products, our engineering staff at several locations that designengages in research for new products and product enhancements. We anticipate that we will continue to make improvementssignificant expenditures for research and development as we seek to existing product lines.provide innovative products to maintain and improve our competitive position. Research and development costs consist primarily of an allocation of overall engineering and development resources and are expensed as incurred, and were approximately $15$21 million $16, $17 million and $17$12 million in fiscal 2010, 20092013, 2012 and 2008,2011, respectively. We also incur significant application engineering costs in connection with fulfilling custom customer orders and executingdeveloping unique solutions for unique customer projects thatneeds, which are not capturedincluded in these allocated research and development costs. expense totals.over 600approximately 586 patents (including(excluding pending applications), we create products that satisfy specific customer needs and make jobstasks easier and more efficient for our customers.CompetitionWe generally have numerous competitors in each of our markets, but believe that we are well positioned to compete successfully. Although we face larger competitors in some markets, our competition in our niche markets is primarily composed of small regional competitors who often lack the infrastructure and financial resources to support global customers. Given our diversity, we generally do not compete with the same companies in more than one of our business segments. We believe that our global scale and infrastructure help to build and maintain strong relationships with major customers.Patents and TrademarksWe own numerous United States and foreign patents and trademarks. However, noNo individual patent or trademark is believed to be of such importance that its termination would have a material adverse effect on our businesses.Ouroperations. However,of components we do have stamping, extruding, machining, automated welding and painting lines in certain businesses.source from a network of global suppliers. We have implemented single piece flow methodology in most of our manufacturing plants, which reduces inventory levels, lowers “re-work” costs and shortens lead timetimes to customers. We assemble the majority of the products we sell, but strategically outsource components and finished goods from an established global network of qualified suppliers. Components are purchased frombuilt to our highly engineered specifications by a variety of suppliers, including those in low cost countries.countries such as China, Turkey and Mexico. We have built strong relationships with our key suppliers over many years, and, while we single source manycertain of our components, we believe that in most cases there are several qualified alternative sources.Energy and ElectricalEnergy segments have relatively short order-to-ship cycles, while our OEM oriented Engineered Solutions segment has a longer cycle, and therefore typically has a larger backlog. We had an order backlogbacklogs of approximately $204$209 million and $160 million at both August 31, 20102013 and 2009,2012, respectively. Substantially all orders are expected to be completed prior to the end of fiscal 2011. The fluctuations in sales between quarters during fiscal 2010 and 2009 were primarily due to changes in the overall economic environment and not seasonality. Absent economic variations, sales in thefilled within twelve months. While we typically enjoy a stronger second quarterhalf of our fiscal year, (December through February)our consolidated sales in total are typically lower than other quarters duenot subject to holidays and weakersignificant seasonal demand during winter months in the Northern Hemisphere. 2010 2009 23 % 30 % 23 % 24 % 27 % 23 % 27 % 23 % 100 % 100 % 2013 2012 Quarter 1 (September-November) 24 % 24 % Quarter 2 (December - February) 23 % 24 % Quarter 3 (March - May) 27 % 27 % Quarter 4 (June- August) 26 % 25 % 100 % 100 % Employees2010,2013, we employed approximately 5,500 people in continuing operations.6,700 individuals. Our employees are not subject to collective bargaining agreements, with the exception of approximately 125365 U.S. production employees, as well as certain international employees covered by government mandated collective labor agreements. We believe we have a good working relationshipsrelationship with our employees are good.othermost industrial businesses, are subject to federal, state, local and foreign laws and regulations relating to the protection of the environment, including those regulating discharges of hazardous materials into the air and water, the storage and disposal of such materials and the clean-up of soil and groundwater contamination. Pursuant to certain environmental laws, a current or prior owner or operator of a site may be liable for the cost of an investigation and any remediation of contamination, while those who arrange for the disposal or treatment of hazardous materials may be liable for such costs at a disposal or treatment site, whether or not they owned or operated it. These laws impose strict, and under certain circumstances, joint and several liability.laws.regulations. Compliance with these laws has and will require expenditures on an ongoing basis. However, environmental expenditures over the last three years have not been material. Soil and groundwater contamination has been identified at a few facilities that we operate or formerly owned or operated. We are also a party to certain state and local environmental matters, and have provided environmental indemnifications for certain divested business units,businesses, and as such retain responsibility for certain potential environmental liabilities.We have facilities in numerous geographic locations that are subject to a range of environmental laws and regulations. Environmental costs that have no future economic value are expensed. Liabilities are recorded when environmental remediation is probable and the costs are reasonably estimable. Environmental expenditures over the last three years have not been material. Management believes that such costs will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. Nevertheless, more stringent environmental laws, unanticipated or burdensome remedy requirements or discovery of previously unknown conditions could have a material adverse effect upon our financial position, results of operations or cash flows. Environmental remediation liabilities in our consolidated balance sheets are not significant. For further information, see Note 17,14, “Contingencies and Litigation” in the notes to consolidated financial statements.OtherFor additional information regarding revenues, profits and total assets of each business segment, geographic financial information and information on customers, see Note 16, “Business Segment, Geographic and Customer Information” in the notes to consolidated financial statements.August 31, 2010October 15, 2013 are listed below. Age 5053 President and Chief Executive Officer; Chairman of the BoardL. Axline 6257Executive Vice President—Electrical SegmentWilliam S. Blackmore54 Executive Vice President—Engineered Solutions Segment 6568 Executive Vice President; Director 5457President; Director Sheri R. Grissom 49 Executive Vice President and Chief Operating OfficerPresident—Global Human Resources 4447 Executive Vice President—Industrial Segment and Energy SegmentsChina 4750 Executive Vice President and Chief Financial Officer Sheri L. Roberts 47 Executive Vice President—Energy Segment David L. Scheer 54 Executive Vice President—Electrical Segment Theodore C. Wozniak 55 Executive Vice President—Business Development President and Chief Executive Officer and Chairman of the Board of Directors. Mr. Arzbaecher was namedwill continue in his role as Chairman of Board, but will step down as Chief Executive Officer of the Company at the January 2014 Annual Meeting, after having served as President and Chief Executive Officer of the Company in Augustsince 2000. HePrior to that, he served as Vice President and Chief Financial Officer of Actuantthe Company starting in 1994 and Senior Vice President in 1998. He served as Vice President, Finance of Tools & Supplies from 1993 to 1994. He joined Actuantthe Company in 1992 as Corporate Controller. From 1988 through 1991, Mr. Arzbaecher was employed by Grabill Aerospace Industries LTD, where he last held the position of Chief Financial Officer.William L. Axline, Executive Vice President—Electrical Segment. Mr. Axline joined Actuant in January 2008 as Executive Vice President of the Electrical Segment. Prior to Actuant, Mr. Axline held the role of Executive Vice President, Chief Operating Officer of Fluidmaster,Arzbaecher is also a director at CF Industries Holding, Inc. from 2003 to 2007. Prior to joining Fluidmaster, he served as President, Chief Executive Officer, of Distribution America,and Fiduciary Management, Inc. from 2001 to 2003 and held the role of Vice President, General Manager at Alltrade, Inc. from 1999 to 2000. Mr. Axline also had over 27 years of leadership experience with The Stanley Works.(“Rexnord”) from 1997 to 2000. Prior to 1997, Mr. Blackmore held various general management positions at Rexnord and Pillar Industries.2530 years currently(in various executive roles) and has served as a member of the Board of Directors and an Executive Vice President in charge ofsince 2000. In addition to his Board responsibilities, Mr. Boel currently oversees our LEAD initiatives. Following the spin-off of the Company’s Electronics segment in fiscal 2000,Mr. Boel has announced that he leftwill retire from the Company as an employee but served as aand not stand for re-election to his Board of Directors role at the January 2014 Annual Meeting.During this time heMr Goldstein was employed by APW Ltd., where he last held the position of Senior Vice President. In September 2002, he rejoined the Company as an employee and was named business leader of the European Electrical business in addition to his Board responsibilities. Prior to the spin-off, he held various positions with Actuant, including President of the Industrial business segment, PresidentCompany and added to the Board of Engineered Solutions EuropeDirectors in August 2013, and President of Enerpac.Mark E. Goldstein,will assume Chief Executive Vice President and Chief Operating Officer.Officer responsibilities after the January 2014 Annual Meeting. Mr. Goldstein was appointed to the newly created position ofActuant’s Chief Operating Officer insince fiscal 2007. He joined the Company in fiscal 2001 as theEnergy Segments.China. Mr. Kobylinski joined Actuantthe Company in 1993 and progressed through a number of management roles within Gardner Bender and Del City. In 2000, Mr. Kobylinski was named Vice President of Gardner Bender and led the business’ sales and marketing.Electrical Segment. He became Vice President of Business Development for Actuant in 2002 and was named Global Business Leader, Hydratight in 2005. InFrom 2007 to 2013, he was promoted to the position of Industrial and Energy Segment Leader.Leader and currently serves as the Industrial Segment Leader with responsibility for the Company's China operations. Prior to Actuant,joining the Company, Mr. Kobylinski was employed by Fort Howard Corporation and Federated Insurance.Actuantthe Company in 1993 as Corporate Controller, a position he held until 1996 when he was appointed Vice President of Finance for Gardner Bender. In 1998, Mr. Lampereur was appointed Vice President, General Manager for Gardner Bender. He was appointed to his present position in August 2000. Prior to joining Actuant,the Company, Mr. Lampereur held a number of financial management positions at Terex Corporation. Mr. Lampereur was also a director of Robbins & Myers, Inc. from 2005 through 2013.adversely affected our industry, businessidentified as material, but are not the only risks and results of operations.Since 2008 the global economy has undergone a period of unprecedented volatility due to the effectsuncertainties facing us. If any of the subprime lending crisis, general credit market issues, increased energy costs, concerns about inflation, slower economic activity, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns. This had a significant impact on our operations in fiscal 2009 and 2010, resulting in lower sales and profits, which necessitated major restructuring actions. Certain of our businesses and served end markets are now experiencing improved customer demand and business conditions but there is continued uncertainty asevents contemplated by the worldwide economy recovers. Conditions like these make it difficult for our customers, our vendors and us to accurately forecast and plan future business activities and could cause U.S. and foreign businesses to slow spending on our products, which would delay and lengthen sales cycles. Several of our principal markets including the vehicle, industrial, marine, energy and electrical markets experienced a significant deterioration due to these economic effects, and as a consequence,following risks actually occurs, then our business, financial condition, andor results of operations have beencould be materially adversely affected. Changes in these generalAdditional risks and uncertainties not currently known to us or that we currently believe are immaterial also may adversely impact our business.conditions also impact the expenseuncertainty, a prolonged European recession and cash requirements associated with our defined benefit pension plans, which invest in fixed income and equity securities to fund related benefit obligations. Declines in financialoverall challenging end market conditions could increase funding requirementsimpact our ability to grow our business and expense for these defined benefit pension plans. We cannot accurately predict the strength of the current economic recovery, or the timing or duration of a future economic slowdown. Changes in the worldwide economic and capital market conditions are beyondadversely impact our control, are unpredictable and could have a material adverse effect on ourfinancial condition, results of operations or liquidity.Market demand for our products may suffer cyclical declines. market demand for our products depends, in part, on the general economic condition of the marketsconditions that exist in which we compete.our served end markets. A substantial portion of our revenues are derived from customers in cyclical industries (vehicles, industrial, oil & gas) that have been significantly andtypically are adversely affected by the downward economic cycle, which resulted in significantly lower demand for products in the affected business segments. For example, we generate sales in the infrastructure, marine, retail electrical DIY, heavy-duty truck, RV and automotive markets. In particular, thecycles. As global economic downturn led to significant pressure on numerous industries in the United States and globally, causing some ofuncertainty continues, our customers to file for bankruptcymay experience deterioration of their businesses, which may delay or announce significant restructuring actions in the midst of unprecedented declines in the production levels and consumer demand. Further declines in consumer demand could negatively impact ourlengthen sales and our ability to collect accounts receivables from our customers. The recent downturn in the global economy (the “Great Recession”) resulted in a material decrease in the demand for our products in a number of these markets. A prolonged downturn or additional deterioration in the conditions in any of thesemarkets, as well as in any of the other industries in which we operate, could adversely affect our businesses. If consumer confidence continues to decline, consumer discretionary spending on vehicle purchases and remodeling and other construction projects would continue to be negatively impacted, adversely impacting our sales to customers in these markets.Our restructuring program could negatively affect our financial performance.In response to the deteriorating economic environment, we implemented various restructuring initiatives aimed at reducing our cost structure and improving operational performance. During fiscal 2010 and 2009, we recognized restructuring charges of $17 million and $21 million, respectively, which included facility consolidations and workforce reductions to reduce costs in our business.cycles. Unforeseen events may also require additional restructuring costs. Although we expect that the related cost savings and realization of efficiencies will offset the restructuring related costs over time, we may not achieve the net benefits.Our indebtedness could harm Like most industrial companies, our operating flexibility and competitive position.We have incurred, and may in the future incur, significant indebtedness in connection with acquisitions. We have, and will continuesensitivity to have, a substantial amount of debt which will continue to require significant interest and principal payments. Our level of debt and the limitations imposed on us by our debt agreements could adversely affect our operating flexibility and put us at a competitive disadvantage. Our substantial debt level may adversely affect our future performance.Our ability to make scheduled payments of principal of, to pay interest on, or to refinance our indebtedness, and to satisfy our other debt and lease obligations will depend upon our future operating performance and credit market conditions, which will be affected by factors beyond our control. In addition, there can be no assurance that future borrowings or equity financings will be available to us on favorable terms or at all for the payment or refinancing of our indebtedness. If we are unable to service our indebtedness, our business, financial condition and results of operations will be materially adversely affected.Our ability to service our debt obligations would be harmed if we fail to comply with the financial and other covenants in our debt agreements.Our amended senior credit agreement and our other debt agreements contain financial and other restrictive covenants. These covenants could adversely affect us by limiting our financial and operating flexibility as well as our ability to plan for and react to market conditions and to meet our capital needs. While we consider our relationships with our lenders to be very good, our failure to comply with these covenants could result in events of default which, if not cured or waived, could result in our being required to repay indebtedness before its due date, and we may not have the financial resources or be able to arrange alternative financing to do so. Borrowings under our amended senior credit facility are secured by most domestic personal property assets and are guaranteed by most of our domestic subsidiaries and by a pledge of the stock of most of our domestic subsidiaries and certain foreign subsidiaries. If borrowings under our amended senior credit facility were declared or became due and payable immediately as the result of an event of default and we were unable to repay or refinance those borrowings, the lenders could foreclose on the pledged assets and stock. Any event that requires us to repay any of our debt before it is due could require us to borrow additional amounts at unfavorable borrowing terms, cause a significant decrease in our liquidity and impair our ability to pay amounts due on our indebtedness. Moreover, if we are required to repay any of our debt before it becomes due, we may be unable to borrow additional amounts or otherwise obtain the cash necessary to repay that debt, when due, which could seriously harm our business.Our businesses operate in highly competitive markets, so we may be forced to cut prices or incur additional costs.Our businesses generally face substantial competition in each of their respective markets. We may be forced to reduce prices, incur increased costs or lose market share in certain business units. We compete on the basis ofproduct design, quality, availability, performance, customer service and price. Present or future competitors may have greater financial, technical or other resources which could put us at a disadvantage in the affected business or businesses.Our international operations pose currency and other risks.Our international operations present additional risks, primarily from currency exchange rate fluctuations, exposure to local economic and political conditions, export and import restrictions, controls on repatriation of cash and exposure to local political conditions. In particular, our results of operations have been significantly affected by fluctuations in foreign currency exchange rates, especially the euro and British pound. For example, a meaningful strengthening of the China RMB against the U.S. dollar or euro would result in higher costs of products we source from China. In addition, there have been several proposals to reform international taxation rules in the United States. We earn a substantial portion of our income from international operations and therefore changes to United States international tax rulescycles may have a material adverse effect on futureour financial condition, results of operations, orcash flows and liquidity. To the extent that we expand our international presence, these risks may increase.Our goodwill and other intangible assets represent a substantial amountAlthough we have been successful with our acquisition strategies in the past, ourOur ability to successfully execute acquisitions will be impacted by a number of factors, including the availability of financing for acquisitions on terms acceptable to us, our ability to identify acquisition candidates and increased competition for acquisitions, which may increase acquisition costs and affect our ability to consummate acquisitions on favorable terms.acquisitions. The process of integrating acquired businesses into our existing operations may result in unforeseen operating difficulties and may require additional financial resources and attention from management that would otherwise be available for the ongoing development or expansion of our existing operations. Furthermore, even if successfully integrated, the acquired business may not achieve the results we expected or produce expected benefits in the time frame planned. Failure to continue witheffectively execute our acquisition strategy or successfully integrate the acquired businesses could have an adverse effect on our business,financial condition, results of operations, liquiditycash flows and financial condition.our company.the Company. Factors that could affect our ability to achieve these benefits include:businesses into our company;business customers;businesses; or any of the key managers of acquired businesses.harmimpact our business, financial condition and results of operations. In addition, acquired businesses may operate in niche markets in which we have little or no experience. Accordingly,In such instances, we will be highly dependent uponon existing managers and employees to manage those businesses, and the loss of any key managers or employees of the acquired business could have a material adverse effect on our business.recent governmental climate change initiatives could negatively affect our financial performance. rules, health care reform and recent governmental climate change initiatives, may be adopted or become applicable to us or our customers. These regulations are complex, change frequently and have tended to become more stringent over time and may increase our costs and reduce profitability.time. We cannot predict the form any such new laws or regulations will take or the impact any of these laws and regulations will have on our business or operations. However,Any significant changeschange in governmental laws andany of these regulations could adversely affectreduce demand for our futureproducts or increase our cost of producing these products.costs.or to investigate or remediate, third party as well as currentlycertain matters at current or previously owned and operated sites. In addition, we provided environmental indemnities in connection with the sale of certain businesses and product lines. Liability as an owner or operator, or as an arranger for the treatment or disposal of hazardous substances, can be joint and several and can be imposed without regard to fault. There is a risk that our costs relating to these matters could be greater than what we currently expect or exceed our insurance coverage, orChief Operating Officer,President, Chief Financial Officer and executives in charge of our segments. We currently do not have employment agreements with most of these or other officers. The departure of key personnel without adequate replacement could severely disrupt our business operations. Additionally, we need qualified managers and skilled employees with technical and manufacturing industry experience to operate our businesses successfully. From time to time there may be shortages of skilled labor which may make it more difficult and expensive for us to attract and retain qualified employees. If we are unable to attract and retain qualified individuals or our costs to do so increase significantly, our operations would be materially adversely affected.patents,patent, trademark, copyright and trade secret laws, employee and third-party non-disclosure agreements and other contracts to establish and protect our technology and other intellectual property rights. The agreements may be breached or terminated, and we may not have adequate remedies for any breach, and existing trade secrets, patent and copyright law afford us limited protection. Policing unauthorized use of our intellectual property is difficult. A third party could copy or otherwise obtain and use our products or technology without authorization. Litigation may be necessary for us to defend against claims of infringement or to protect our intellectual property rights and could result in substantial cost to us and diversion of our efforts. Further, we might not prevail in such litigation which could harm our business.Large or rapid increases in the costs of raw materials or substantial decreases in their availability could adversely affect our operations.The primary raw materials that we use include steel, plastic resin, copper, brass, steel wire and rubber. Most of our suppliers are not currently parties to long-term contracts with us. Consequently, we are vulnerable to fluctuations in prices of such raw materials. If market prices for certain materials such as steel, plastic resin and copper rise, it could have a negative effect on our operating results and ability to manufacture our respective products on a timely basis. From time to time we have entered into derivative contracts to hedge our exposure to commodity risk, none of which has been material. Factors such as supply and demand, freight costs and transportation availability, inventory levels, the level of imports and general economic conditions may affect the prices of raw materials that we need. If we experience any significant increases in raw material prices, or if we are unable to pass along any increases in raw material prices to our customers, our results of operations could be adversely affected. In addition, an increasing portion of our products are sourced from low cost regions. Changesin export laws, taxes and disruptions in transportation routes, especially in China, could adversely impact our results of operations.Our products create the possibility of product liability lawsuits, which may negatively impact our business.As a global manufacturer of a broad range of industrial products and systems, we face an inherent business risk related to product liability claims. Our businesses expose us to potential product liability claims associated with the design, manufacture and distribution of product. Certain of our products are included in integrated customer solutions or utilized in harsh environments (including various industrial and infrastructure applications), which could expose us to significant liability from the failure or defect of our products. Although we maintain strict quality control procedures and have liability insurance coverage, we cannot be certain that these will be adequate to cover all claims that may arise. In the event that we do not have adequate insurance coverage, our business, financial condition and results of operations may be materially adversely affected.Geopolitical unrest and terrorist activities may cause the economic conditions in the U.S. or abroad to deteriorate, which could harm our business.Terrorist attacks against targets in the U.S. or abroad, rumors or threats of war, other geopolitical activity or trade disruptions may impact our operations or cause general economic conditions in the U.S. and abroad to deteriorate. A prolonged economic slowdown or recession in the U.S. or in other areas of the world could reduce the demand for our products and, therefore, negatively affect our future sales. Any of these events could have a significant impact on our business, financial condition or results of operations.2010,2013, the Company operated the following facilities in its continuing operations (square footage in thousands): Number of Locations Square Footage Distribution /
Sales /
Admin Manufacturing Total Owned Leased Total 11 11 22 164 535 699 11 15 26 39 433 472 6 6 12 153 706 859 12 3 15 516 628 1,144 1 4 5 353 96 449 41 39 80 1,225 2,398 3,623 Number of Locations Square Footage Manufacturing Total Owned Leased Total Industrial 8 12 20 157 546 703 Energy 11 29 40 40 974 1,014 Engineered Solutions 18 5 23 634 817 1,451 Corporate and other 1 4 5 353 111 464 38 50 88 1,184 2,448 3,632 locationsfacilities are located in the United States, the United Kingdom, the Netherlands, Mexico, Turkey and China. We also maintain a presence in Australia, Austria,Azerbaijan, Brazil, Canada, Finland, France, Germany, Hong Kong, Hungary, India, Indonesia, Italy, Japan, Kazakhstan, Malaysia, Mexico, New Zealand, Norway, Poland, Russia, Singapore, South Africa, South Korea, Spain, Tunisia, TurkeySweden and the United Arab Emirates. See Note 108 “Leases” in the notes to the consolidated financial statements for information with respect to our lease commitments.approximately 17 owned or leasedfour facilities that are now idle and available for sale or sublease.insurance and patent claims.covered byrecoverable through insurance. In our opinion, the resolution of these contingencies is not likely to have a material adverse effect on our financial condition, results of operation or cash flows. For further information refer to Note 17,14, “Contingencies and Litigation” in the notes to consolidated financial statements.(Removed and Reserved)Item 5. Market for Registrant’s Common Equity, Related StockholderShareholder Matters and Issuer Purchases of Equity Securities2010,2013, there were 2,1511,655 shareholders of record of Actuant Corporation Class A common stock. The high and low sales prices of the common stock were as follows for the previous two fiscal years: High Low June 1, 2010 to August 31, 2010 $ 21.74 �� $ 17.47 March 1, 2010 to May 31, 2010 23.87 18.10 December 1, 2009 to February 28, 2010 19.80 15.93 September 1, 2009 to November 30, 2009 17.31 13.37 June 1, 2009 to August 31, 2009 $ 15.53 $ 10.20 March 1, 2009 to May 31, 2009 13.43 7.02 December 1, 2008 to February 28, 2009 20.18 9.92 September 1, 2008 to November 30, 2008 34.10 13.69 Fiscal Year Period High Low 2013 June 1, 2013 to August 31, 2013 $ 37.22 $ 31.18 March 1, 2013 to May 31, 2013 34.61 29.16 December 1, 2012 to February 28, 2013 31.77 26.20 September 1, 2012 to November 30, 2012 31.33 25.38 2012 June 1, 2012 to August 31, 2012 $ 29.12 $ 24.23 March 1, 2012 to May 31, 2012 29.97 24.33 December 1, 2011 to February 29, 2012 28.94 20.05 September 1, 2011 to November 30, 2011 24.09 17.63 2010,2013, the Company declared a dividend of $0.04$0.04 per common share payable on October 15, 20102013 to shareholders of record on September 30, 2010.2013. In fiscal 2009,2012, the Company declared a dividend of $0.040.04 per common share payable on October 15, 200916, 2012 to shareholders of record on September 30, 2009. Period June 1 to June 30, 2013 200,000 $ 31.67 3,658,606 July 1 to July 31, 2013 592,119 33.89 3,066,487 August 1 to August 31, 2013 50,000 34.76 3,016,487 842,119 $ 33.41 of holders of Actuant Corporation’s common stock with the cumulative total returns of the S&P 500 index and the Dow Jones US Diversified Industrials index. The graph tracks the performance of a $100 investment in our common stock and in each of the indexes (with the reinvestment of all dividends) from August 31, 20052008 to August 31, 2010.COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*.Among Actuant Corporation, The S&P 500 IndexAnd The Dow Jones US Diversified Industrials Index
* $100 invested on 8/31/05 in stock or index, including reinvestment of dividends.Fiscal year ending August 31.Copyright© 2010
Copyright© 2010 8/05 8/06 8/07 8/08 8/09 8/10 $ 100.00 $ 106.58 $ 144.36 $ 149.54 $ 67.07 $ 94.33 100.00 108.88 125.36 111.40 91.06 95.53 100.00 103.52 126.59 100.52 64.16 69.71 8/08 8/09 8/10 8/11 8/12 8/13 Actuant Corporation $ 100.00 $ 44.86 $ 63.08 $ 64.02 $ 89.83 $ 114.27 S&P 500 100.00 81.75 85.76 101.63 119.92 142.35 Dow Jones US Diversified Industrials 100.00 63.83 69.36 80.36 101.89 123.81 Year Ended August 31, 2010 2009 2008 2007 2006 (in millions, except per share data) $ 1,161 $ 1,118 $ 1,446 $ 1,274 $ 1,041 427 388 529 452 371 268 250 298 247 207 15 19 — — — — 31 — — — 22 20 14 10 7 122 68 217 195 157 70 26 126 114 96 $ 0.97 $ 0.43 $ 1.98 $ 1.83 $ 1.56 0.04 0.04 0.04 0.04 0.04 $ 1,622 $ 1,568 $ 1,668 $ 1,501 $ 1,213 367 400 574 562 480 Year Ended August 31, 2013 2012 2011 2010 2009 (in millions, except per share data) Net sales $ 1,280 $ 1,277 $ 1,159 $ 927 $ 876 Gross profit 507 511 465 353 322 Selling, administrative and engineering expenses 292 285 268 221 201 Restructuring charges 2 — 2 11 13 Impairment charges — — — — 26 Amortization of intangible assets 23 22 22 19 17 Operating profit 190 204 173 102 65 Earnings from continuing operations 148 125 110 56 23 Diluted earnings per share from continuing operations $ 1.98 $ 1.68 $ 1.49 $ 0.78 $ 0.39 Cash dividends per share declared 0.04 0.04 0.04 0.04 0.04 Diluted weighted average common shares 74,580 74,940 75,305 74,209 66,064 Total assets $ 2,119 $ 2,007 $ 2,063 $ 1,622 $ 1,568 Total debt 515 398 525 367 400 (1) Selected financial data above excludesResults are from continuing operations and exclude the financial results from discontinued operations, including the Europeanof previously divested businesses (European Electrical, business (which is held for sale at August 31, 2010) and the fiscal 2009 divestitures of Acme Aerospace and BH Electronics.Electronics) and discontinued operations (Electrical segment).(2) We have completed various acquisitions that impact the comparability of the selected financial data presented in the above table.data. The results of operations for these acquisitions are included in the selectedour financial dataresults for the period subsequent to their acquisition date. The following table summarizes the significant acquisitions that were completed during the last five fiscal years: Segment Date Completed Approximate
Annual Sales
(a) (in millions) Energy June 2010 $ 10 Energy April 2010 5 Industrial April 2010 25 Industrial April 2010 5 September 2008 Energy 75 Engineered Solutions 25 Energy March 2008 25 Industrial September 2007 35 Electrical July 2007 35 Industrial April 2007 10 Energy January 2007 10 Industrial January 2007 5 Engineered Solutions December 2006 65 Electrical August 2006 35 Industrial April 2006 25 Energy April 2006 25 Electrical December 2005 10 (a)Represents approximate annual sales at the time of the completion of the transaction. Acquisition Segment Date Completed Sales (a) Viking SeaTech Energy August 2013 $ 90 CrossControl AB Engineered Solutions July 2012 40 Turotest Medidores Ltda Engineered Solutions March 2012 13 Jeyco Pty Ltd Energy February 2012 20 Weasler Engineering, Inc. Engineered Solutions June 2011 85 Selantic Energy June 2010 10 Biach Industries Energy April 2010 5 Hydrospex Industrial April 2010 25 Team Hydrotec Industrial April 2010 5 The Cortland Companies September 2008 Cortland Cable Company Energy 75 Sanlo, Inc. Engineered Solutions 25 Discusseddiscussed in Item 1, “Business,” we are a global diversified global manufacturer ofcompany that manufactures a broad range of industrial products and systems and are organized into fourthree reportable segments, Industrial, Energy Electrical and Engineered Solutions. The Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Energy segment provides joint integrity products and services, customized offshore vessel mooring solutions, as well as umbilical, rope and cable solutions to the global oil & gas, power generation and energy markets. The Electrical segment is primarily involved in the design, manufacture and distribution of a broad range of electrical products to the retail DIY, wholesale, OEM, utility and harsh environment markets. The Engineered Solutions segment provides highly engineered position and motion control systems to OEMs in various vehicle markets, as well as a variety of other products to the industrial products.Business UpdateResultsOur businesses provide a vast array of operations for fiscal 2010 reflectproducts and services across multiple customers and geographies which results in significant diversification. The long-term sales growth and profitability of our segments will depend not only on improved sales trends, operating profit margin expansion driven by increased production volumes and savings from restructuring activities, strong cash flow generation, continued progress on restructuring projectsdemand in end markets and the completion of four tuck-in acquisitions. The following is a summary of the recent developmentsoverall economic environment, but also on our ability to identify, consummate and trends in each of our segments:Industrial Segment: During the fourth quarter of fiscal 2010, the Industrial segment sales trend improved significantly, with core sales growth of 33% (compared to 20% core sales growth in the third quarter) driven by improved demand across all geographic regions. This segment continues to focus on driving sales growth through the introduction ofintegrate strategic acquisitions, develop and market innovative new products, market share gains (penetration into emerging marketsexpand our business activity geographically and geographies) and strategic acquisitions (including two business acquisitions completed during fiscal 2010). The considerable improvement in fourth quarter operating profit margins, despite unfavorable acquisition mix, was drivencontinuously improve operational excellence. We remain focused on maintaining our financial strength by increased sales levels, a reduced cost structure and the benefits from restructuring activities.Energy Segment: Being a later cycle business, our Energy segment was the last of the four segments to be impacted by the global recession and generated core sales growth for the first three quarters of fiscal 2009. However, since then it has reported quarterly core sales declines in the 7% to 14% range. Similar to other energy service providers, sales trends continue to be negatively impacted by the deferral of maintenance and capital spending activities by our customers, especially those in the refining business. In response to the reduced sales and profitability levels over the past several quarters, we initiated various restructuring actions to centralize certain selling and administrative functions and rationalize manufacturing operations within this segment. Despite the difficult market conditions that continue to exist in the Energy segment, operating profit margins (excluding restructuring costs) improved sequentially from the third to the fourth quarters of fiscal 2010.Electrical Segment: The Electrical segment, which had experienced quarterly core sales declines since the first quarter of fiscal 2008, returned to positive core sales growth in the third and fourth quarters of fiscal 2010. The improvement in the core sales trend (7% core sales growth in the fourth quarter) was driven by improved end market demand from marine and transformer customers. Other served markets, including commercial construction and electric utilities, which are later cycle in nature, continue to be weak. In response to last year’s economic slow-down, this segment completed various actions to address its cost structure including reductions in workforce, consolidation of facilities and management, as well as product sourcing initiatives. The significant year-over-year and sequential improvement in operating profit (excluding restructuring costs) in the fourth quarter are directly attributable to these restructuring actions.Engineered Solutions Segment: Engineered Solutions segment core sales growth was 37% in the fourth quarter of fiscal 2010, which continued the recent trend of strong core sales growth. The improvement in core sales growth is the result of increased demand from vehicle OEMs (truck, auto and specialty) and prior year sales volumes being negatively impacted by significant inventory destocking by OEMs. A reduced coststructure from previously completed restructuring actions and the additional sales volumes (improved absorption of manufacturing costs) resulted in incremental operating margins and higher profits during the fourth quarter.Despite the challenging economic conditions that existed in early fiscal 2010, we continued to generate substantial cash flows from operations, delivered improved financial results and completed key restructuring actions to reduceadjusting our cost structure to reflect changes in demand levels and position the business for future growth as the economy recovers.by proactively managing working capital and cash flow generation. Our priorities induring fiscal 20112014 include thea continued pursuit of strategic acquisitions,focus on operational excellence, cash flow generation and a focus on growth initiatives to capitalize on niche markets(new product development, market share gains, geographic expansion and emerging economies, strengthen existing market positions and expand product offerings through new product development.Results of Operationsstrategic acquisitions). Year Ended August 31, 2010 2009 2008 $ 1,161 100 % $ 1,118 100 % $ 1,446 100 % 734 63 % 730 65 % 917 63 % 427 37 % 388 35 % 529 37 % 268 23 % 250 22 % 298 21 % 15 1 % 19 2 % — 0 % — 0 % 31 3 % — 0 % 22 2 % 20 2 % 14 1 % 122 11 % 68 6 % 217 15 % 32 3 % 42 4 % 37 3 % 1 0 % (1 ) 0 % (2 ) 0 % 89 8 % 27 2 % 182 13 % 19 2 % 1 0 % 56 4 % 70 6 % 26 2 % 126 9 % (46 ) -4 % (12 ) -1 % (3 ) 0 % $ 24 2 % $ 14 1 % $ 123 9 % $ 25 $ 30 $ 28 20 21 44 The comparability of the operating results for the fiscal years ended August 31, 2010, 2009 and 2008 has been significantly impacted by acquisitions. The financial results for acquired businesses are included in our results of operations only since their respective acquisition dates. See Note 2, “Acquisitions” in notes to consolidated financial statements for further discussion. In addition to the impact of acquisitions on operating results, foreign currency translation rates can also influence our reported results given that approximately half of our sales are denominated in currencies other than the U.S. dollar. Year Ended August 31, 2013 2012 2011 Statements of Earnings Data: Net sales $ 1,280 100 % $ 1,277 100 % $ 1,159 100 % Cost of products sold 773 60 % 765 60 % 694 60 % Gross profit 507 40 % 512 40 % 465 40 % Selling, administrative and engineering expenses 294 23 % 285 22 % 270 23 % Amortization of intangible assets 23 2 % 22 2 % 22 2 % Operating profit 190 15 % 205 16 % 173 15 % Financing costs, net 25 2 % 30 3 % 32 3 % Debt refinancing costs — 0 % 17 1 % — 0 % Other expense, net 2 0 % 3 0 % 3 0 % Earnings from continuing operations before income tax 163 13 % 155 12 % 138 12 % Income tax expense 15 1 % 30 2 % 28 2 % Earnings from continuing operations 148 12 % 125 10 % 110 10 % Earnings (loss) from discontinued operations, net of income taxes (118 ) (9 )% (38 ) (3 )% 1 0 % Net earnings $ 30 3 % $ 87 7 % $ 111 10 % Other Financial Data: Depreciation $ 26 $ 25 $ 25 Capital expenditures 24 23 23 $43$3 million (4%) from $ 1,1181,277 million in fiscal 2012 to $1,280 million million in fiscal 2009 to $1,161 million in fiscal 2010.2013. Excluding the $14$48 million of sales from acquired businesses and the $12$8 millionfavorable impact of foreign currency exchange rate changes, fiscal 2010 consolidated core sales increased 2% compared to the prior year. Consolidated net sales decreased by approximately $328 million, or 23%, from $1,446 million in fiscal 2008 to $1,118 million in fiscal 2009. Excluding the $64 million of sales from acquired businesses and the $7620092013 consolidated core sales decreased approximately 24% due primarily3%. The core sales decline (compared to 4% core sales growth in the impactprior year) is the result of challenging end market conditions and the recent recession. Changes in net sales at the segment level are discussed in further detail below.2010$122$190 million, compared with $68to $205 million and $217$173 million for fiscal 20092012 and 2008,2011, respectively. In addition to the impact of economic conditions, the comparability of results between periods is impacted by acquisitions, sales levels (operating leverage), product mix, variable incentive compensation expense and the $31 million non-cash impairment charge recognized in fiscal 2009timing and amount of restructuring charges and related benefits. Refer to Note 13,$21 million recognizedCustomer Information” in fiscal 2010 and 2009, respectively (see Note 4, “Restructuring” and Note 6 “Impairment Charges” inthe notes to the consolidated financial statements for further discussion).information regarding segment revenues, operating profits and assets.changes in consolidated operating profit atsegment continues to focus on innovative integrated solutions, the segment level are discussed in further detail below.Mostcommercialization of our businesses and end markets started experiencing the impact of the economic downturn during the second quarter of fiscal 2009. In response to this slowdown in business, we took actions to address our cost structure, including workforce reductions, consolidation of facilitiesnew products and the centralizationexpansion of certain sellingits business in fast growing regions and administrative functions. Given the improvedvertical markets. Despite tepid economic conditions in calendar 2010,globally benefits of restructuring activitiesIndustrial segment will continue to generate low single digit core sales growth over the next twelve months, driven by our vertical market initiatives, new product introductions and the fact that we believe we have anniversaried the weakest point during the economic downturn, sales and profitability comparisons improved in the second half of fiscal 2010, reflecting the benefit of higher sales and improved profit margins.Segment Results. Net SalesThe following table sets forth summary results of operations for the Industrial segment for the three most recent fiscal years (in millions): Year Ended August 31, 2010 2009 2008 $ 300 $ 287 $ 375 236 260 212 234 242 329 391 329 530 $ 1,161 $ 1,118 $ 1,446 Year Ended August 31, 2013 2012 2011 Net Sales $ 423 $ 419 $ 393 Operating Profit 118 115 98 Operating Profit % 27.8 % 27.4 % 25.0 % 20102013 compared to Fiscal 2009Industrial Segment20102013 Industrial segment net sales increased by $13$4 million (5%(1%) to $300$423 million relative. Higher global integrated solutions sales and market share gains contributed to the prior year. Excluding foreign currency rate changes (which favorably impacted sales comparisons by $6 million) and sales from acquired businesses,modest core sales decreased 1% duringgrowth in a time of global economic weakness and tough prior year comparables. Operating profit was $118 million in fiscal 2010. End markets2013, compared to $115 million in thefiscal 2012, a $3 million (2%) increase. Operating profit and related margins improved in fiscal 2013 due to productivity improvements, slightly higher sales and lower incentive compensation expense, which were somewhat offset by unfavorable product mix.were not significantly impactednet sales increased by the global economic environment until the second quarter of fiscal 2009, and therefore fiscal 2010 core sales comparisons were unfavorable. However, sales levels and the core sales trend has improved significantly during the third and fourth quarters of fiscal 2010, primarily$26 million (7%) to $419 million, the result of increasingsolid industrial tool demand globallyacross most geographies. Excluding the unfavorable impact of foreign currency exchange rate changes ($7 million), year-over-year core sales growth for fiscal 2012 was 9%. Growth + Innovation initiatives, including targeted vertical market strategies on mining and comparativelybolting and integrated solutions market share gains, also contributed to sales growth. These higher sales volumes, coupled with favorable product mix and lower sales levelsincentive compensation costs, resulted in operating profit margin expansion during fiscal 2012. Operating profit in fiscal 2012 grew 17% to $115 million, compared to $98 million in fiscal 2011.prior year period (dueglobal energy markets and successfully integrating the recent Viking acquisition. The Energy segment is expected to the impact of the recessiongenerate modest core sales growth in fiscal 2009)2014, the result of solid maintenance and umbilical activity, offset by continued soft demand from non-energy markets (defense, marine and aerospace).Segment Year Ended August 31, 2013 2012 2011 Net Sales $ 363 $ 349 $ 293 Operating Profit 63 62 49 Operating Profit % 17.4 % 17.8 % 16.8 % 2010 were $236year ended August 31, 2013 increased $14 million a $24 (4%) to $363 million (9%) reduction compared to from $349 million in the prior year. Excluding $12 million of sales from acquired businesses and foreign currency rate changes (which favorably impacted sales comparisons by $2 million), core sales decreased 10% during fiscal 2010. This decline reflects thecontinued deferral of maintenance activities at certain existing oil & gas installations (especially in mature refinery markets) and lower capital project based revenue. The core sales trend has improved slightly during the second half of fiscal 2010 due to growth in emerging markets, alternative energy and adjacent markets.Electrical SegmentElectrical segment net sales decreased by $8 million (3%) to $234 million in fiscal 2010. Foreign currency rate changes favorably impacted sales comparisons for fiscal 2010 by $2 million. Excluding foreign currency rate changes, core sales declined 4% for the year, reflecting lower demand in the first half of fiscal 2010 across all end markets, especially retail DIY, commercial construction and utility markets. However, the core sales trend has since improved, due to increased demand in early cycle markets including the marine and transformer markets.Engineered Solutions SegmentEngineered Solutions segment net sales increased by $62 million (19%) to $391 million in fiscal 2010. Excluding the $2 million favorable impact of foreign currency rate changes and sales from acquired businesses, core sales increased 15% in fiscal 2010. The core sales increase was due to a strong rebound in demand in the Vehicle Systems product line (new automotive platforms, growth in China and Europe truck shipments and substantially higher recreational vehicle OEM production)acquisitions and the impact of prior year inventory destocking by OEMs.Fiscal 2009 compared to Fiscal 2008Industrial SegmentIndustrial segment net sales decreased by $88$3 million (23%) from $375 million for fiscal 2008 to $287 million for fiscal 2009. Foreign currency rate changes negatively impacted sales comparisons for fiscal 2009 by $17 million. Excluding foreign currency rate changes and sales from the Templeton, Kenly & Co., Inc. (Simplex) acquisition, core sales declined 17%. The core sales decline reflects a significant weakening of end market demand across all geographic regions and customer inventory destocking.Energy SegmentEnergy segment net sales increased by $48 million (22%) from $212 million for fiscal 2008 to $260 for fiscal 2009, reflecting core sales growth and the acquisitions of Superior Plant Services, LLC (“SPS”) in March 2008 and Cortland Cable Company (“Cortland”) in September 2008. Foreign currency rate changes on translated results negatively impacted sales comparisons for fiscal 2009 by $26 million. Excluding foreign currency rate changes and acquisitions, core sales increased 4% for fiscal 2009, reflecting increased market share and geographic expansion, which was partially offset by declining market conditions.Electrical SegmentElectrical segment net sales decreased by $87 million (27%) from $329 million for fiscal 2008 to $242 million for fiscal 2009. Foreign currency rate changes negatively impacted sales comparisons for fiscal 2009 by $3 million. Excluding foreign currency rate changes, core sales declined 26%, the result of substantially weaker demand in essentially all markets, driven by the global economic slowdown. Additionally, year-over-year comparisons are negatively affected by the loss of certain business with a large DIY customer during the second half of fiscal 2008.Engineered Solutions SegmentEngineered Solutions segment net sales decreased by $201 million (38%) from $530 million for fiscal 2008 to $329 million for fiscal 2009. Foreign currency rate changes negatively impacted sales comparisons for fiscal2009 by $30 million. Excluding foreign currency rate changes and sales from the Sanlo acquisition, core sales declined 37% for fiscal 2009. The core sales decline reflects sharply lower orders and production from vehicle OEMs serving the truck, automotive, RV, off-highway, construction and agricultural markets. Weak economic conditions globally and our customers’ inventory destocking resulted in a substantial reduction in customer production levels and adversely impacted our sales.Operating Profit (in millions) Year Ended August 31, 2010 2009 2008 $ 66 $ 67 $ 114 31 44 48 20 4 35 32 (28 ) 51 (27 ) (19 ) (31 ) $ 122 $ 68 $ 217 Fiscal 2010 compared to Fiscal 2009Industrial SegmentIndustrial segment operating profit decreased by $1 million (2%) to $66 million for fiscal 2010. This decline in operating profit was primarily due to lower sales levels in the first half of fiscal 2010, $2 million of incremental restructuring costs in the current year (related to the consolidation of facilities), unfavorable acquisition mix and higher incentive compensation costs, somewhat offset by cost savings from restructuring actions.Energy SegmentEnergy segment operating profit decreased by $13 million (30%) to $31 million for fiscal 2010. Reduced operating profits are primarily due to lower sales volumes, unfavorable product mix and an additional $1 million of restructuring costs in fiscal 2010, relative to the prior year period.Electrical SegmentElectrical segment operating profit increased by $16 million, to $20 million in fiscal 2010, primarily as a result of the prior year period including a $5 million non-cash asset impairment charge related to the harsh environment electrical business and $2 million of incremental restructuring charges. Excluding these charges, the improvement in operating profit primarily reflected restructuring related cost savings as we realized the benefits of facility consolidations, reduced headcount and the movement of production and product sourcing to low cost countries.Engineered Solutions SegmentEngineered Solutions segment operating profit increased by $60 million from an operating loss of $28 million in fiscal 2009 to an operating profit of $32 million in fiscal 2010. The loss from operations in fiscal 2009 included a $27 million non-cash asset impairment charge related the RV business and an incremental $5 million of restructuring charges, relative to the current year. Excluding these charges, operating profit improved during fiscal 2010 due to increased sales and production levels (higher absorption of fixed manufacturing costs), favorable product mix, the benefits of completed restructuring activities and the favorable impact of foreign currency rate changes, which were partially offset by increased incentive compensation costs.General CorporateGeneral Corporate expenses increased by $8 million (43%) to $27 million in fiscal 2010 due to investments in growth initiatives, transaction costs for business acquisitions and annual incentive compensation costs, somewhat offset by the benefits of cost reduction efforts and reduced discretionary spending.Fiscal 2009 compared to Fiscal 2008Industrial SegmentIndustrial segment operating profit decreased by $47 million (41%) from $114 million for fiscal 2008 to $67 million for fiscal 2009. Excluding the Simplex acquisition and the unfavorable impact of foreign currency rate changes, year-over-year core sales grew declined by 35% forwas $63 million in fiscal 2009. This decline was due2013 compared to lower sales,$62 million in fiscal 2012. Excluding a $3 million favorable adjustment to an acquisition earn out provision in fiscal 2012, fiscal 2013 operating profit improved $4 million (7%), as a result of restructuring charges and reduced profit margins, the latter of which resulted from unfavorableincreased operating leverage (driven by higher sales volumes), favorable product mix and lower absorption of manufacturing costs dueincentive compensation costs.lower production levels.Energy Segmentoperating profit decreased by $4net sales for the fiscal year ended August 31, 2012 increased 19% from $293 million (8%)to $349 million. Excluding $7 million of sales from $48 million for fiscal 2008 to $44 million for fiscal 2009. Excluding the SPS and Cortland acquisitionsJeyco acquisition in 2012 and the unfavorable impact of foreign currency rate changes (which unfavorably impacted sales by $5 million), core sales grew 19% in fiscal 2012. The core sales growth reflects market share gains and continued strong demand for our products, rental assets and technical manpower services across the global energy market. Energy segment operating profit forincreased $13 million (26%) to $62 million in fiscal 2009 decreased 3%, which was2012 compared to $49 million in fiscal 2011. The year-over-year improvement in operating profit margins is primarily the result of $1 million of restructuring charges.Electrical SegmentElectrical segment operating profit decreased by $31 million from $35 million for fiscal 2008 to $4 million for fiscal 2009. Fiscal 2009 operating profit was adversely impacted by $5 million of non-cash impairment charges related to the harsh environment electrical business and $7 million of restructuring charges. Excluding these charges, the decline in operating profit for fiscal 2009 resulted from lowercontinued productivity improvements, higher sales volumes and profit margins. Year Ended August 31, 2013 2012 2011 Net Sales $ 494 $ 508 $ 473 Operating Profit 40 61 64 Operating Profit % 8.2 % 12.0 % 13.4 % decreased by $79declined to $40 million from $51 during fiscal 2013 compared to $61 million for fiscal 2008 in the prior year, primarily due to an operating lossthe impact of $28 million for fiscal 2009. The operating results for fiscal 2009 were adversely impacted by $8lower volumes, unfavorable sales mix and $2 million of restructuring costscosts.a $27the headwind from the weaker Euro (which unfavorably impacted sales by $12 million non-cash RV goodwill), core sales declined 9% from the prior year. This decline resulted from sharply lower demand and intangible asset impairment charge. Fiscal 2009reduced production schedules from vehicle OEM’s serving the convertible top auto and European and China heavy-duty truck markets. Engineered Solutions segment operating results were also significantly impacted byprofit declined modestly to $61 million during fiscal 2012 compared to $64 million in the prior year, primarily the result of lower sales and production levels (resulting in decreased absorption of fixed costs) and the unfavorable impact of foreign currency rate changes.General CorporateGeneral Corporate expenses decreased by $12 million (39%) from $31 million for fiscal 2008 to $19 million for fiscal 2009 due to lower incentive compensation expense, headcount reductions and the benefit of other cost reduction efforts.Restructuring ChargesIn fiscal 2010 and 2009, the Company committed to various restructuring initiatives including workforce reductions, plant consolidations to reduce manufacturing overhead, the continued movement of production and product sourcing to low cost countries and the centralization of certain selling and administrative functions. Total restructuring costs for these activities were $17 million and $21 million for the year ended August 31, 2010 and 2009, respectively. We believe these restructuring actions, which were substantially complete by August 31, 2010, will better align our resources with strategic growth opportunities, optimize existing manufacturingcapabilities, improve our overall cost structure and deliver increased free cash flow and profitability. These restructuring actions are expected to generate $45 million of annual cost savings. See Note 4, “Restructuring” in the notes to consolidated financial statements for further discussion.Impairment Chargesmix.Significant adverse developments in the RV market during the first quarter of fiscal 2009, including sharply lower wholesale motorhome shipments by OEM’s, decreased consumer confidence and the lack of financing available to RV dealers and retail customers negatively impacted the financial results of our RV business. As a result, during the first quarter of fiscal 2009, we recognized a $27 million non-cash impairment charge related to the goodwill and long-lived assets of the RV business (Engineered Solutions Segment).Difficult economic conditions, low consumer confidence, increased unemployment and tight credit markets during the third quarter of fiscal 2009, also negatively impacted consumer discretionary spending, resulting in a substantial reduction in recreational boating industry sales. During 2009, OEM boat builders responded to the sharp drop in demand and high levels of finished goods inventory by temporarily suspending operations as well as eliminating brands and permanently closing facilities. As a result, in the third quarter of fiscal 2009, we recognized a $32 million non-cash asset impairment charge related to the goodwill, indefinite lived intangibles and long-lived assets of the harsh environment electrical business (Electrical Segment). Approximately $27 million of the impairment charge is included in the Loss from Discontinued Operations. See Note 6, “Impairment Charges” in the notes to consolidated financial statements for further discussion.As a result of an overall weak European economy, low consumer confidence and reduced demand in the retail DIY markets, the Company committed to a plan to divest its European Electrical business during the fourth quarter of fiscal 2010. The European Electrical business designs, manufactures and markets electrical sockets, switches and other tools and consumables, predominately in the European DIY retail market. This planned divestiture is also part of the Company’s portfolio management process to focus on businesses that create the most shareholder value. As a result, a $36 million non-cash asset impairment charge was recognized in the fourth quarter of fiscal 2010 to adjust the carrying value of the asset group to fair value. See Note 3, “Discontinued Operations” in the notes to consolidated financial statements for further discussion. have not been allocated to our segments. The $10 million year-over-year decrease inNet financing costs were $25 million, $30 million and $32 million for the years ended August 31, 2013, 2012 and 2011, respectively. The reduction in interest expense in fiscal 20102013 reflects substantiallythe conversion of our 2% Convertible Notes into average debt levels and reduced interest rates on variable rate debt.carryforwards. The effectivecarryforwards to reduce income tax rate was 21.1% in fiscal 2010, compared to 2.3% and 31.0% in fiscal 2009 and 2008, respectively. The incomeexpense. Income tax expense recognized in fiscal 2010 benefited from foreign tax credits, increased taxable earnings in foreign jurisdictions (with statutory tax rates lower thanalso includes the U.S. statutory rate) and favorableimpact of provision to return adjustments, changes in valuation allowances offset somewhat by unfavorable provision to return adjustments and additional provisionsreserve requirements for unrecognized tax benefits. decrease in the effective tax rate in fiscal 2009, relative to fiscal 2008, reflects the tax benefit on the impairment and restructuring charges being recognized at the domestic tax rate which is higher than our consolidated global effective tax rate. In addition, the effective income tax rate for fiscal 2009 includes2013 was 9.4%, compared to 19.0% and 20.2% in fiscal 2012 and 2011, respectively. The lower fiscal 2013 effective tax rate reflects the benefitbenefits of tax minimization planning, the utilization of tax net operating losses, favorable changes in tax laws, increased foreign tax credit utilization and favorable discrete items. Discrete period income tax reserve adjustments resulting from settlingbenefits in fiscal 2013 included a $10 million reversal of tax audits for amounts less than previously accrued andreserves established in prior years (as a result of the lapsing of variousnon-U.S. income tax statutesstatues of limitations.plancustomers' return on investment in solar systems, thereby creating downward pressure on solar inverter pricing. During the fourth quarter of fiscal 2012, reduced incentive schemes were announced and implemented in Mastervolt's key served markets (United Kingdom, France, Belgium, Germany and Italy). The combination of all of these factors reduced Mastervolt's solar sales and margins. This necessitated several actions, including negotiating lower product cost from Mastervolt's suppliers, increasing our efforts to divestreduce solar inventory levels, initiating management changes, narrowing the European Electrical business, the assets and liabilitiesfocus of the solar business are considered held for sale at August 31, 2010to certain key markets and thereforeproduct lines and reducing overhead through facility closures and headcount reductions.financial$63 million fourth quarter non-cash impairment charge. Despite the year-over-year improvement in operating results are reported as discontinued operations in the consolidated financial statements. Discontinued operationssecond half of fiscal 2012 (relative to operating losses in the prior year comparable periods) the business continued to underperform relative to expectations in its solar product line. While we believe the solar industry will continue to grow, we reduced Mastervolt's long-term sales and profitability expectations as a result of continued pricing pressure, the frequent imbalance between solar industry inverter supply and demand (resulting in excess inventory) and the volatile nature of end market demand given frequent unfavorable FiT changes. We also reflectreviewed the resultslong-term strategic fit of the Acme Aerospace and BH Electronics, Inc. businesses, which were divestedMastervolt business in the fourth quarter of fiscal 20092012, as part of our annual strategic plan and portfolio management process. Various actions to address the Mastervolt business, and the solar product line in particular, were considered, including continuing to operate and invest in the business, implementing significant restructuring and downsizing actions or exiting the entire business or the solar product line through a possible closure or sale. The adverse business, economic and competitive factors, coupled with the uncertainty regarding the long-term strategic fit of the business, resulted in a $63 million impairment charge during the fourth quarter of fiscal 2012. This consisted of the write-down of $37 million of goodwill and $26 million of indefinite lived intangible assets (tradename). The remaining carrying value of the Mastervolt business was $87 million at August 31, 2012 (including $3 million of net tangible assets and $84 million of intangible assets, goodwill and deferred income taxes).net cash proceedsthe segment. Following additional portfolio management discussions, we committed to a plan to divest the entire Electrical segment in May 2013. We have engaged an investment bank to assist us in the sale process and believe that a sale will be completed in the first half of $38 million. Seefiscal 2014, subject to terms that are usual and customary for the sale of a business. The divestiture will allow us to streamline our business portfolio and refocus on the remaining three segments in a way that better positions the Company to take advantage of our core competencies, current business model and global growth trends. As a result, we recognized an impairment charge in fiscal 2013 of $159 million, including a write-down of $138 million of goodwill and $21 million of tradenames. Following this write-down, there is no remaining goodwill associated with the Mastervolt reporting unit and $77 million of remaining North American Electrical goodwill. Refer to Note 3, “Discontinued Operations” in the notes to the consolidated financial statements for further information.information regarding the carrying value of assets held for sale.: Year Ended August 31, 2010 2009 2008 $ 106 $ 146 $ 218 — 18 — (41 ) (34 ) (4 ) 5 (4 ) (1 ) $ (46 ) $ (12 ) $ (3 ) (1)Includes non-cash asset impairment charges of $36 million (European Electrical) and $27 million (BH Electronics) in fiscal 2010 and 2009, respectively. Year Ended August 31, 2013 2012 2011 Net sales $ 286 $ 329 $ 335 Operating profit 34 28 28 Impairment charges (159 ) (62 ) — Net loss on disposal (1) — — (16 ) Income tax benefit (expense) 7 (4 ) (11 ) Income (loss) from discontinued operations, net of taxes $ (118 ) $ (38 ) $ 1 for the three years ended August 31, 2010 (in millions): Year Ended August 31, 2010 2009 2008 $ 121 $ 147 $ 170 (57 ) (221 ) (140 ) (37 ) (30 ) 5 2 (7 ) 1 $ 29 $ (111 ) $ 36 In fiscal 2010, cash Year Ended August 31, 2013 2012 2011 Net cash provided by operating activities $ 194 $ 182 $ 172 Net cash used in investing activities (253 ) (83 ) (331 ) Net cash provided by (used in) financing activities 99 (72 ) 158 Effect of exchange rate changes on cash (4 ) (3 ) 5 Net increase in cash and cash equivalents $ 36 $ 24 $ 4 $121 million. Excluding the $37$194 million, negative impact onprimarily consisting of net earnings and effective working capital duemanagement, offset by the payment of $17 million of fiscal 2012 incentive compensation costs. Investing activities during fiscal 2013 included $24 million of net capital expenditures and the receipt of $5 million in proceeds related to the expirationdivestiture of the accounts receivable securitization program, netNielsen Sessions business. Existing cash, provided byborrowings under the revolving credit facility and operating cash flows funded the $235 million purchase price of the Viking acquisition, the repurchase of approximately 1.3 million shares of the Company’s common stock ($42 million) and the annual dividend.increased relative toin fiscal 2012 were $182 million, the prior year as a result of increasedstrong cash earnings and effective working capital management, which were partially offset by the use of $30 million in the debt refinancing. This net operating cash flow and the proceeds from the debt refinancing funded $63 million of share repurchases, $69 million of business acquisitions and the repayment of revolving credit facility borrowings. Proceeds from the sale of property, plant and equipment (which included the sale-leaseback of certain equipment and the sale of a vacant facility) were $9 million, while capital expenditures totaled $23 million.effectiveand the ongoing focus on working capital managementmanagement. We utilized this cash flow, as well as borrowings under our Senior Credit Facility and the receipt of income tax refunds. These operating cash flows and the $8$4 million of proceeds from the sale of a portion of the European Electrical product line inbusiness to fund the second quarter, funded $46Mastervolt and Weasler acquisitions (totaling $313 million) and $23 million of acquisitions and $20 million of capital expenditures, while reducing net debt by $67 million.Effective cash flow management during fiscal 2009 resulted in substantial cash flow from operating activities of $147 million and an improved financial position at August 31, 2009. Operating cash flows benefited from lower working capital requirements, especially accounts receivable, given the decline in sales levels. During fiscal 2009, cash flows from operations, along with the $125 million proceeds from the follow-on equity offering and $38 million of proceeds from the divestiture of two businesses, funded $239 million of strategic acquisitions (including the acquisition of the Cortland Companies), $21 million of capital expenditures and a net reduction in debt of $147 million.In fiscal 2008, we generated $170 million of cash from operating activities, driven by net earnings of $122 million, which included non-cash expenses (principally depreciation and amortization) of $57 million. The netearnings were somewhat offset by additional working capital requirements of $9 million. These operating cash flows funded $44 million of capital expenditures and $110 million of capital deployment in two strategic acquisitions. Cash provided by financing activities was $5 million in fiscal 2008, consisting primarily of proceeds and the related tax benefits from stock option exercises. Borrowings on the revolving credit facility during fiscal 2008 were repaid by August 31, 2008.outstanding balances on the accounts receivable securitization facility, and net inventory less accounts payable, divided by the past three months sales annualized. We view this as a measure of asset management efficiency. The following table shows the components of the metric (amounts in millions): August 31, 2010 August 31, 2009 $ PWC % $ PWC % $ 186 $ 156 — 37 186 15 % 193 16 % 146 12 % 161 14 % (130 ) (11 %) (108 ) (9 %) $ 202 16 % $ 246 21 % August 31, 2013 August 31, 2012 $ PWC % $ PWC % Accounts receivable, net $ 219 16 % $ 235 15 % Inventory, net 143 10 % 212 13 % Accounts payable (154 ) (11 )% (175 ) (11 )% Net primary working capital $ 208 15 % $ 272 17 % net primary working capital percentage decreased year-over-year from 21% to 16%, the combined result of the increase in sales and the continued focus on effective working capital management. Excluding acquisitions and changes in foreign currency exchange rates, accounts receivable increased $15 million and inventory increased $8 million (due to the accelerated ramp up in production and improved economic conditions in certain end markets we serve), while accounts payable balances increased $32 million.LiquidityThe Senior Credit Facility, which matures on November 10, 2011, consists of$400$600 million revolving credit facility, is secured by substantially alla $90 million term loan and a $350 million expansion option. Quarterly principal payments of our domestic personal property assets$1 million begin on the term loan on September 30, 2014, increasing to $2 million per quarter beginning on September 30, 2015, with the remaining principal due at maturity. At August 31, 2013, we had $104 million of cash and bears interestcash equivalents and $472 million of LIBOR plus 3.25%unused capacity on the revolver (all of which was available to borrow). The two financial covenants included inWe believe that the availability under the Senior Credit Facility, agreement are a maximum leverage ratio of 3.5:1 and a minimum fixed charge coverage ratio of 1.65:1. We were in compliance with all debt covenants at August 31, 2010.Holders of our 2% Convertible Notes have the option to require us to repurchase, for cash, all or a portion of the 2% Convertible Notes on November 15, 2010, November 15, 2013 and November 15, 2018 at a repurchase price equal to 100% of the principal amount of the notes, plus accrued interest. If certain conditions are met, holders may also convert the 2% Convertible Notes into shares of our common stock prior to the November 2023 maturity date. In addition, we may redeem all or part of the 2% Convertible Notes on or after November 20, 2010 at a cash redemption price equal to 100% of the principal amount, plus accrued interest. We will fund any “put” of the 2% Convertible Notes through revolver borrowings under the Senior Credit Facility. In the fourth quarter of fiscal 2009 we repurchased on the open market $9 million of 2% Convertible Notes and during the first quarter of fiscal 2010, we repurchased an additional $23 million of 2% Convertible Notes. See Note 8, “Debt” in the notes to consolidated financial statements for further discussion of the repurchases.At August 31, 2010, we had $40 million of cash and no borrowings under our $400 million revolver. Approximately $325 million of the revolver was available for borrowing, based on credit agreement terms. We believe that this cash and revolver availability, combined with funds generated from operationsour existing cash on hand and anticipated operating cash flows will be adequate to meet operating, debt service, stock buyback, acquisition funding and capital expenditure requirements for the foreseeable future.NoWe have no single customer which generated 5% or more of fiscal 2010, 2009 and 20082013 net sales.WeAs a result, we believe that our capital expenditure requirements are not as extensive as many other industrial companies given the assembly nature of our operations. Capital expenditures were $20 million, $21 million and $44 million in fiscal 2010, 2009 and 2008, respectively. Capital expenditures(which have historically been funded by operating cash flowsflows) were $24 million in fiscal 2013 and borrowings under the Senior Credit Facility. Fiscal 2008 capital expenditures were unusually high due to construction of our new $17$23 million China manufacturing facility. in both fiscal 2012 and 2011. Capital expenditures for fiscal 20112014 are expected to be approximately $20 – $25 million.10,8, “Leases,” in the notes to consolidated financial statements and the “Contractual Obligations” table below for further information.agreements held bypayments under leases of businesses included in our former Electronics segment, which was spun-off to shareholders in fiscal 2000.that we previously divested or spun-off. Some of these businesses were subsequently sold to third parties. If any of these businesses do not fulfill their future lease$3$11 million at August 31, 2010.$9$11 million and $9 million at August 31, 20102013 and 2009,2012, respectively, the majority of which secure self-insured workers compensation liabilities.Off-Balance Sheet ArrangementsAs more fully discussed in Note 5, “Accounts Receivable Securitization” in the notes to consolidated financial statements, we were a party to an accounts receivable securitization arrangement whereby we sold certain trade receivables to a wholly owned bankruptcy-remote special purpose subsidiary, which in turn, sold participating interests in the receivables to a third party financial institution. We did not renew the securitization program on its September 9, 2009 maturity date and, as a result, utilized availability under the Senior Credit Facility to fund the corresponding $37 million increase in accounts receivable. Payments Due 2011 2012 2013 2014 2015 Thereafter Total $ — $ 118 $ — $ — $ — $ 249 $ 367 20 18 17 17 17 31 120 18 14 12 9 7 22 82 1 — 6 — — — 7 $ 39 $ 150 $ 35 $ 26 $ 24 $ 302 $ 576 The above table includes deferred purchase price and contingent consideration related to acquisitions, completed in fiscal 2010 and previous years. We made payments on past acquisitions totaling $2 million, $1 million and $5 million in fiscal 2010, 2009 and 2008, respectively. For further information see Note 2, “Acquisitions” in the notes to consolidated financial statements.The contractual obligation schedule for long-term debt assumes we do not call the remaining 2% Convertible Notes or have them put back to us in fiscal 2011. For further information, see Note 8, “Debt” in the notes to consolidated financial statements. Payments Due 2014 2015 2016 2017 2018 Thereafter Total Long-term debt (principal) $ — $ 4 $ 9 $ 9 $ 193 $ 300 $ 515 Interest on long-term debt 20 20 20 20 19 61 160 Operating leases 24 19 16 13 10 39 121 Deferred acquisition purchase price 2 3 — 1 — — 6 $ 46 $ 46 $ 45 $ 43 $ 222 $ 400 $ 802 ThoseOnly those obligations that are not cancelable are included in the table. the purchase of inventory and other supplies. These purchase orders are generally cancelable with reasonable notice to the vendor, and as such, they are therefore excluded from the contractual obligationsthis table.at August 31, 2010 (excludedthat are excluded from the contractual obligations table). Our liabilities related to these plans arethis table, summarized in Note 11,9, “Employee Benefit Plans” in the notes to consolidated financial statements.1210, “Income Taxes” in the notes to consolidated financial statements, we have unrecognized tax benefits of $28$18 million at August 31, 2010.2013. The liability for unrecognized tax benefits was not included in the table of contractual obligations above because the timing of the potential settlements of these uncertain tax positions cannot be reasonably estimated.Raw Material Costs and InflationWe source a wide variety of materials and components from a network of global suppliers. While such materials are typically available from numerous suppliers, commodity raw materials, such as steel, plastic resin and copper, are subject to price fluctuations, which could have a negative impact on our results. Additionally, many of our components are sourced from low cost countries, in currencies different than the functional currency of the acquiring business. Potential changes in exchange rates also create variations in material costs that could reduce our profitability. We strive to offset such cost inflation by price increases to customers and driving operational cost reductions and improvement. We also selectively utilize commodity derivative contracts to hedge against changing raw material prices. However we did not have any significant derivative contracts in place at August 31, 2010 or 2009. See our Risk Factors for additional information on the Company’s commodity risks.No meaningful measures of inflation are available because we have significant operations in countries with diverse rates of inflation and currency rate movements. However, we believe that the overall rate of inflation in recent years has been relatively low and has not had a significant effect on our results of operations, after factoring in price increases and other manufacturing cost reductions.Inventories:Revenue recognition: We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility of the sales price is reasonably assured. For product sales, delivery does not occur until the passage of title and risk of loss have transferred to the customer (generally when products are shipped). Revenue from services are recognized when the services are provided or ratably over the contract term. We record allowances for discounts, product returns and customer incentives at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends. We also offer warranty on our products and accrue for warranty claims at the time of sale based upon the length of the warranty period, historical warranty cost trends and any other related information.24%21% and 22%19% of total inventories at August 31, 20102013 and 2009,2012, respectively). The first-in, first-out or average cost method is used for all other inventories. If the LIFO method were not used, the inventory balance would be higher than the amount in the consolidated balance sheet by $5approximately $6 million at both August 31, 20102013 and 2009.$7 million at August 31, 2012. We perform an analysis of the historical sales usage of the individual inventory items on hand and a reserve is recorded to adjust inventory cost to market value. The inventory valuation assumptions used are based on historical experience. We believe that such estimates are made based on consistent and appropriate methods; however, actual results may differ from these estimates under different assumptions or conditions.Assets: Goodwill is tested for impairment annually,Assets:or changes in circumstances indicate thatoccur, we compare the asset might be impaired. We perform impairment reviews forestimated fair value of our reporting units usingto the carrying value to determine if a potential goodwill impairment exists. If the fair value method based on our judgmentsof a reporting unit is less than its carrying value, an impairment loss, if any, is recorded for the difference between the implied fair value and assumptions.the carrying value of the reporting unit's goodwill. The estimated fair value represents the amount at whichwe think a reporting unit could be bought or sold for in a current transaction between willing parties on an arms-length basis.estimatedexpected future revenue growth rates and operating profit margins are determined after taking into consideration our historical revenue growth rates and earnings levels, our assessment of future market potential and our expectations of future business performance. Under the discounted cash flow approach, the fair value is compared withcalculated as the carrying amountsum of the projected discounted cash flows over a discrete seven year period plus an estimated terminal value. In certain circumstances we also review a market approach in which a trading multiple is applied to a forecasted EBITDA (earnings before interest, income taxes, depreciation and amortization) of the reporting unit including goodwill.to arrive at the estimated fair value.annual impairment testing performedcarrying value of the North American Electrical reporting unit was $254 million at August 31, 2010 for continuing operations2012, including $174 million of goodwill from previously completed acquisitions. Key financial assumptions utilized to determine the fair value of the North American Electrical reporting unit included single digit sales growth (including 3% in the terminal year) and a 12.9% discount rate. The estimated future cash flows assumed improved profitability (relative to actual fiscal 2012 results) - driven by savings and efficiencies from the consolidation of manufacturing facilities (which was completed in late fiscal 2012). The assumptions that have the most significant impact on the determination of the fair value of the reporting unit are market valuation multiples, the discount rate and sales growth rates. A 100 basis point increase in the discount rate results in a decrease to the estimated fair value by approximately 9%, while a reduction in the terminal year sales growth rate assumption by 100 basis points would decrease the estimated fair value by approximately 5%. For the remaining seven reporting units, our annual goodwill impairment testing in fiscal 2012 indicated that the estimated fair value of each reporting unit exceeded the carrying value (expressed as a percentage of the carrying value) in excess of 30%.correspondingvolatile nature and recent industry consolidations/exits by suppliers, also negatively impacted market multiple assumptions (consistent with declining valuations of public solar companies). Our decision to divest the Electrical segment in May 2013 also impacted the impairment calculations, shortening the holding period of the businesses and placing more weighting on the market approach to determine the fair value of the reporting units.amount and, as such, no impairment existed.value of the Electrical segment may be required.model,income approach, are evaluated to determine if an impairment charge is required. In the fourth quarter of fiscal 2012 we recognized a $26 million impairment of the Mastervolt tradename - the result of a reduction in the assumed royal rate (from 3.5% to 2%) and lower projected long-term Mastervolt solar sales. In the third quarter of fiscal 2013 we also reassessed the recoverability of all Electrical segment tradenames as a result of the plan to divest the segment, and recognized an additional $21 million tradename impairment. The estimated fair value of the tradenames were adversely impacted by further reductions in royalty rate assumptions, an increase in the discount rate and lower projected sales volumes.Refer to Note 3, “Discontinued Operations” and Note 6, “Impairment Charges” inDuring the notes to consolidated financial statements for further discussion.A considerable amountthird quarter of management judgment and assumptions are required in performingfiscal 2013, we recognized an $11 million impairment of Electrical segment long-lived assets, representing the impairment tests, principally in determiningexcess of the fairnet book value of each reporting unit and the indefinite lived intangible assets. While we believe our judgments and assumptions were reasonable; different assumptions or adverse market developments could changeassets held for sale over the estimated fair value, less selling costs. We re-assessed our initial estimate of fair value less selling costs (based on additional information available as a result of the sale process) as of August 31, 2013 and recognized an $11 million increase to the carrying value of the Electrical segment assets.therefore, impairment charges could be required.Plans:Plans: We provide a variety of benefits to employees and former employees, including in some cases, pensions and postretirement health benefits.care. Plan assets and obligations are recorded based on ana August 31 measurement date utilizing various actuarial assumptions such as discount rates, assumed rates of return and health care cost trend rates. TheWe determine the discount rate is based onassumptions by referencing high-quality long-term bond rates that are matched to the interest rateduration of non-callable high-quality corporate bonds,our benefit obligations, with appropriate consideration of local market factors, participant demographics and benefit payment terms.forecasts. At August 31, 20102013 and 2009,2012, the weighted-average discount rate on domestic benefit plans was 4.60%4.9% and 5.60%, respectively. A change in the discount rate by 25 basis points would impact domestic benefit plan expense in fiscal 2011 by less than $0.1 million. At August 31, 2010 and 2009, the weighted-average discount rate on foreign benefit plans was 4.28% and 5.53%3.9%, respectively. In estimating the expected return on plan assets, we consider the historical returns on plan assets, forward-looking considerations, inflation assumptions and the impact of the management of the plans’ invested assets. Domestic benefit plan assets consist primarily of participating units in common stock,mutual funds, index funds and bond funds. The expected return on domestic8.00%7.65% and 8.25%7.75% at August 31, 20102013 and 2009,2012, respectively. A 25 basis point change in this assumption would impact fiscal 2011 domestic benefit plan expense by less than $0.1 million. Due to the limited amount of foreign benefit plan assets, changes inassumptions for the discount rate or expected return on plan assets doeswould not materially impact our results of operations.theany modifications are recorded currently or amortized over future periods. Based on information provided by independent actuaries and other relevant sources, we believe that the assumptions used are reasonable; however, changes in these assumptions could impact our financial position, results of operations or cash flows. See Note 11,9, “Employee Benefit Plans” in the notes to the consolidated financial statements for further discussion.Taxes:Taxes: We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Income tax expense also reflects our best estimates and assumptions regarding, among other things, the level of future taxable income and the effect of various tax planning strategies. FutureHowever, future tax authority rulings and changes in tax laws, changes in projected levels of taxable income and future tax planning strategies could affect the actual effective tax rate and tax balances recorded.recordedEstimates:Estimates: We record reserves or allowances for customer rebates, returns and discounts, doubtful accounts, inventory, incurred but not reported medical claims, environmental matters, warranty claims, workers compensation claims, product and non-product litigation and incentive compensation. These reserves require the use of estimates and judgment. We base our estimates on historical experience input from third party advisors and on various other assumptions that are believed to be reasonable under the circumstances. We believe that such estimates are made on a consistent basis and with appropriate assumptions and methods. However, actual results may differ from these estimates.New Accounting PronouncementsIn June 2008, the Financial Accounting Standards Board (FASB) issued an update to Accounting Standards Codification (ASC) No. 260, “Earnings Per Share,” which concluded that unvested share-based awards that contain non-forfeitable rights to dividends are participating securities and, therefore, must be included in the computation of earnings per share pursuant to the two-class method. Outstanding unvested share-based awards (restricted stock awards) granted under the Actuant Corporation 2001 and 2002 Stock Plans are participating securities as they contain non-forfeitable rights to dividends. The application of the two-class method in computing basic and dilutive earnings per share, effective September 1, 2009, did not have a material impact on the weighted average shares outstanding or earnings per share amounts.In December 2007, the FASB issued an update to ASC No. 810, “Consolidations,” which changed the accounting and reporting for non-controlling (minority) interests. The Company has one joint venture with a non-controlling interest, which is not significant to the Company’s financial position and results of operations. As a result, the adoption of this guidance on September 1, 2009 did not have a material effect on the consolidated financial statements.In December 2007, the FASB issued an update to ASC No. 805, “Business Combinations,” which changed the accounting for certain aspects of business combinations, including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development and restructuring costs. This guidance also requires adjustments associated with changes in deferred tax balances or tax contingencies, that occur after the one year measurement period, be recorded as adjustments to income tax expense. ASC No. 805 was effective for the Company for all acquisitions after September 1, 2009; however, the guidance in this standard regarding the treatment of changes in income tax balances was applied retrospectively to all business combinations. exposure to foreign currency exchange fluctuations. Approximately 48%, 46% and 47% of our revenues for the years ended August 31, 2010, 2009 and 2008, respectively, were denominated in currencies other than the U.S. dollar. Of those non-U.S. dollar denominated amounts, approximately 49% were denominated in euro, with the remainder denominated in British pounds and various Asian and other currencies. Our identifiable foreign currency exchange exposure results primarilyrisk relating to receipts from the anticipated purchase of product from affiliates and third partycustomers, payments to suppliers and from the repayment of intercompany loans between subsidiariestransactions denominated in foreign currencies. Under certain conditions, we enter into hedging transactions, primarily forward foreign currency swaps, that enable us to mitigate the potential adverse impact of foreign currency exchange rate risk (see Note 7, “Derivatives” in the notes to the consolidated financial statements for further information). We periodically identify areas where we do not engage in trading or other speculative activities with these transactions, as established policies require that these hedging transactions relate to specific currency exposures.naturally occurring offsetting positionsbeen $75 million and then may purchase hedging instruments to protect against anticipated exposures. At$8 million lower, respectively, for the twelve months ended August 31, 2010 and 2009, there are no material hedging instruments related2013. This sensitivity analysis assumed that each exchange rate would change in the same directionpurchase of products from affiliatesU.S. dollar and third party suppliers. Ourexcludes the potential effects that changes in foreign currency exchange rates may have on actual sales or price levels. Similarly, a ten percent decline in foreign currency exchange rates relative to the U.S. dollar on our August 31, 2013 financial position is not materially sensitivewould result in a $32 million reduction to fluctuations in exchange ratesequity (accumulated other comprehensive loss), as any gains or losses on foreign currency exposures are generally offset by gainsa result of non U.S. dollar denominated assets and losses on underlying payables and receivables.instruments that are based onis indexed off of LIBOR interest rates. We have periodically utilizedutilize interest rate swap agreements to manage overall financing costs and interest rate risk. Since substantially all of our debtAs discussed in Note 5, “Debt” in the notes to the consolidated financial statements, at August 31, 2010 was2011 we were a party to interest rate swap agreements that converted $100 million of floating rate debt to a fixed rate anof interest. These swaps were terminated during fiscal 2012 as part of the debt refinancing transaction. A 25 basis point increase or decrease in the applicable interest rates would have no impact on our interest costs.variable rate debt as of We also selectively utilize commodity derivative contracts to hedge against changing raw material prices. (See also “Currency Risk” above). We did not have any significant derivative contracts in place at August 31, 2010 or 2009 to hedge exposure to commodity risk.Item 8.Financial Statements and Supplementary DataPageINDEX TO CONSOLIDATED FINANCIAL STATEMENTSPage INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 32 33 34 35 36 37 71REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Directors and Shareholders of Actuant Corporation:20102013 and August 31, 2009,2012, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 20102013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2010,2013, based on criteria established in Internal Control—Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’sCompany's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’sManagement's Report on Internal Control over Financial Reporting, appearing under Item 9A.9a. Our responsibility is to express opinions on these financial statements, on the financial statement schedule and on the Company’sCompany's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.As discussed in Note 12 to the consolidated financial statements, the Company changed the manner in which it accounts for liabilities related to unrecognized tax benefits in 2008.Management’s“Management’s Report on Internal Control overOver Financial Reporting, appearing under Item 9A,” management has excluded certain elements of the Selantic, Biach Industries, Hydrospex and Team Hydrotec businessesViking SeaTech ("Viking") from its assessment of internal control over financial reporting as of August 31, 20102013 because they werethe business was acquired by the Company in a purchase business combinations during the year endedcombination on August 31, 2010. Subsequent to the acquisition certain elements27, 2013. We have also excluded Viking from our audit of the acquired businesses’ internal control over financial reporting and related processes were integrated into the Company’s existing systems and internal control over financial reporting. Those controls that were not integrated have been excluded from management’s assessmentViking is a wholly-owned subsidiary of the effectiveness of internal control over financial reporting as of August 31, 2010. We have also excluded these elements of the internal control over financial reporting of the acquired businesses from our audit of the Company’s internal control over financial reporting. The Selantic, Biach Industries, Hydrospex and Team Hydrotec businesses are wholly-owned subsidiariesCompany whose combined total assets and total revenues excluding integrated elements, represent 5%approximately 13% and less than 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended August 31, 2010.S/ PRICEWATERHOUSECOOPERSs/ PricewaterhouseCoopers LLPWI28, 2010 Year Ended August 31, 2010 2009 2008 $ 1,160,508 $ 1,117,625 $ 1,446,140 733,256 729,398 917,027 427,252 388,227 529,113 267,866 250,004 298,532 15,597 19,530 — — 31,321 — 22,017 19,644 13,941 121,772 67,728 216,640 31,859 41,849 36,409 711 (714 ) (2,049 ) 89,202 26,593 182,280 18,846 611 56,489 70,356 25,982 125,791 (46,325 ) (12,259 ) (3,247 ) $ 24,031 $ 13,723 $ 122,544 $ 1.04 $ 0.45 $ 2.25 $ 0.97 $ 0.43 $ 1.98 $ 0.36 $ 0.24 $ 2.20 $ 0.35 $ 0.24 $ 1.93 67,624 58,047 55,813 74,209 66,064 64,833 Year Ended August 31, 2013 2012 2011 Net sales $ 1,279,742 $ 1,276,521 $ 1,159,310 Cost of products sold 772,792 765,061 694,508 Gross profit 506,950 511,460 464,802 Selling, administrative and engineering expenses 293,866 284,920 270,392 Amortization of intangible assets 22,939 22,026 21,523 Operating profit 190,145 204,514 172,887 Financing costs, net 24,837 29,561 32,119 Debt refinancing costs — 16,830 — Other expense, net 2,359 3,493 2,747 Earnings from continuing operations before income tax 162,949 154,630 138,021 Income tax expense 15,372 29,354 27,833 Earnings from continuing operations 147,577 125,276 110,188 Earnings (loss) from discontinued operations, net of income taxes (117,529 ) (37,986 ) 1,371 Net earnings $ 30,048 $ 87,290 $ 111,559 Earnings from continuing operations per share: Basic $ 2.02 $ 1.79 $ 1.61 Diluted $ 1.98 $ 1.68 $ 1.49 Earnings per share: Basic $ 0.41 $ 1.25 $ 1.63 Diluted $ 0.40 $ 1.17 $ 1.50 Weighted average common shares outstanding: Basic 72,979 70,099 68,254 Diluted 74,580 74,940 75,305 BALANCE SHEETSthousands, except share and per share amounts) August 31, 2010 2009 $ 40,222 $ 11,385 185,693 155,520 146,154 160,656 30,701 20,855 12,578 15,246 44,802 — 460,150 363,662 48,301 61,649 228,270 254,591 276,571 316,240 (168,189 ) (187,122 ) 108,382 129,118 704,889 711,522 336,978 350,249 11,304 13,880 $ 1,621,703 $ 1,568,431 $ — $ 4,964 130,051 108,333 53,212 30,079 50,318 20,578 74,561 71,140 37,695 — 345,837 235,094 367,380 400,135 110,230 117,335 28,072 37,662 30,463 30,835 13,610 13,543 (175,157 ) (188,644 ) 968,373 947,070 (67,105 ) (24,599 ) (1,934 ) (1,766 ) 1,934 1,766 739,721 747,370 $ 1,621,703 $ 1,568,431 August 31, 2013 2012 2011 Net earnings $ 30,048 $ 87,290 $ 111,559 Other comprehensive income (loss), net of tax Foreign currency translation adjustments (2,918 ) (48,571 ) 46,307 Pension and other postretirement benefit plans Funded status adjustment 3,442 (6,358 ) 2,766 Reclassification adjustment for losses included in net earnings 125 — 2,988 Amortization of actuarial losses included in net periodic pension cost 360 183 187 3,927 (6,175 ) 5,941 Cash flow hedges Unrealized net loss arising during period (140 ) (80 ) (2,822 ) Reclassification adjustment for loss (gain) included in net earnings (57 ) 3,033 — (197 ) 2,953 (2,822 ) Total other comprehensive income (loss), net of tax 812 (51,793 ) 49,426 Comprehensive income $ 30,860 $ 35,497 $ 160,985 STATEMENTS OF CASH FLOWSthousands) Year Ended August 31, 2010 2009 2008 $ 24,031 $ 13,723 $ 122,544 51,875 51,978 44,709 3,969 4,531 1,372 8,399 8,609 6,847 (2,876 ) (17,847 ) 5,912 36,139 58,274 — (334 ) (15,831 ) — (855 ) 1,585 (1,576 ) (14,507 ) 71,215 (17,505 ) (37,106 ) — — (7,964 ) 57,963 (5,697 ) 3,817 1,075 429 32,727 (61,932 ) 7,586 16,000 (9,180 ) (576 ) 27,361 (25,836 ) 10,447 (19,590 ) 8,388 (4,395 ) 121,086 146,715 170,097 1,236 1,862 14,065 7,516 38,455 — (19,966 ) (21,454 ) (44,407 ) (45,866 ) (239,422 ) (110,109 ) (57,080 ) (220,559 ) (140,451 ) (14,313 ) 16,657 246 — (270,000 ) (1,015 ) — 115,000 — (22,894 ) (9,100 ) — — (9,158 ) (265 ) — 124,781 — 3,315 4,024 8,294 (2,702 ) (2,251 ) (2,221 ) (36,594 ) (30,047 ) 5,039 1,425 (7,273 ) 1,184 28,837 (111,164 ) 35,869 11,385 122,549 86,680 $ 40,222 $ 11,385 $ 122,549 August 31, 2013 2012 A S S E T S Current assets Cash and cash equivalents $ 103,986 $ 68,184 Accounts receivable, net 219,075 234,756 Inventories, net 142,549 211,690 Deferred income taxes 18,796 22,583 Prepaid expenses and other current assets 28,228 24,068 Assets of discontinued operations 272,606 — Total current assets 785,240 561,281 Property, plant and equipment Land, buildings, and improvements 52,669 49,866 Machinery and equipment 305,200 242,718 Gross property, plant and equipment 357,869 292,584 Less: Accumulated depreciation (156,373 ) (176,700 ) Property, plant and equipment, net 201,496 115,884 Goodwill 734,952 866,412 Other intangibles, net 376,692 445,884 Other long-term assets 20,952 17,658 Total assets $ 2,119,332 $ 2,007,119 L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y Current liabilities Trade accounts payable $ 154,049 $ 174,746 Accrued compensation and benefits 43,800 58,817 Current maturities of debt — 7,500 Income taxes payable 14,014 5,778 Other current liabilities 56,899 72,165 Liabilities of discontinued operations 53,080 — Total current liabilities 321,842 319,006 Long-term debt 515,000 390,000 Deferred income taxes 115,865 132,653 Pension and postretirement benefit liabilities 20,698 26,442 Other long-term liabilities 65,660 87,182 Shareholders’ equity Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 77,001,144 and 75,519,079 shares, respectively 15,399 15,102 Additional paid-in capital 49,758 7,725 Treasury stock, at cost, 3,983,513 shares and 2,658,751 shares, respectively (104,915 ) (63,083 ) Retained earnings 1,188,685 1,161,564 Accumulated other comprehensive loss (68,660 ) (69,472 ) Stock held in trust (3,124 ) (2,689 ) Deferred compensation liability 3,124 2,689 Total shareholders’ equity 1,080,267 1,051,836 Total liabilities and shareholders’ equity $ 2,119,332 $ 2,007,119 SHAREHOLDERS’ EQUITY Class A Common Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Stock
Held in
Trust Deferred
Compensation
Liability Total
Shareholders’
Equity Shares Amount 55,349 $ 11,070 $ (349,190 ) $ 825,165 $ 12,876 $ (1,744 ) $ 1,744 $ 499,921 — — — 122,544 — — — 122,544 — — — — (1,777 ) — — (1,777 ) — — — — (600 ) — — (600 ) — — — — (3,350 ) — — (3,350 ) 116,817 — — — (9,408 ) — — — (9,408 ) 313 62 9,832 — — — — 9,894 20 4 (4 ) — — — — — — — — (2,246 ) — — — (2,246 ) — — 6,847 — — — — 6,847 306 61 3,249 — — — — 3,310 — — 3,900 — — — — 3,900 14 3 468 — — (337 ) 337 471 56,002 11,200 (324,898 ) 936,055 7,149 (2,081 ) 2,081 629,506 — — — 13,723 — — — 13,723 — — — — (24,940 ) — — (24,940 ) — — — — (535 ) — — (535 ) — — — — (6,273 ) — — (6,273 ) (18,025 ) 228 46 5,198 — — — — 5,244 312 62 (62 ) — — — — — 10,925 2,185 122,441 — — — — 124,626 — — — (2,708 ) — — — (2,708 ) — — 8,609 — — — — 8,609 233 47 (1,994 ) — — — — (1,947 ) — — 1,514 — — — — 1,514 18 3 548 — — 315 (315 ) 551 67,718 13,543 (188,644 ) 947,070 (24,599 ) (1,766 ) 1,766 747,370 — — — 24,031 — — — 24,031 — — — — (34,845 ) — — (34,845 ) — — — — 15 — — 15 — — — — (7,676 ) — — (7,676 ) (18,475 ) 123 24 1,963 — — — — 1,987 (24 ) (5 ) 5 — — — — — — — — (2,728 ) — — — (2,728 ) — — 8,875 — — — — 8,875 228 46 1,686 — — — — 1,732 — — 756 — — — — 756 11 2 202 — — (168 ) 168 204 68,056 $ 13,610 $ (175,157 ) $ 968,373 $ (67,105 ) $ (1,934 ) $ 1,934 $ 739,721 Year Ended August 31, 2013 2012 2011 Operating activities Net earnings $ 30,048 $ 87,290 $ 111,559 Adjustments to reconcile net earnings to cash provided by operating activities: Non-cash items: Depreciation and amortization 53,902 54,263 52,996 Net loss on disposal of business — — 11,695 Stock-based compensation expense 13,440 13,346 10,758 Provision (benefit) for deferred income taxes (44,265 ) (10,524 ) 6,480 Amortization of debt discount and debt issuance costs 1,940 1,990 2,904 Impairment charges 158,817 62,464 — Non-cash debt refinancing costs — 2,254 — Other non-cash adjustments 328 — (46 ) Changes in components of working capital and other: Accounts receivable (10,925 ) (12,310 ) (2,564 ) Inventories 13,714 11,532 (29,909 ) Prepaid expenses and other assets (4,603 ) (2,164 ) 5,876 Trade accounts payable (9,279 ) 5,902 7,158 Income taxes payable 594 (17,903 ) 4,155 Accrued compensation and benefits (14,256 ) (6,292 ) 12,178 Other accrued liabilities 4,334 (7,519 ) (21,674 ) Cash provided by operating activities 193,789 182,329 171,566 Investing activities Proceeds from sale of property, plant and equipment 1,621 8,501 1,779 Proceeds from sale of business 4,854 — 3,463 Capital expenditures (23,668 ) (22,740 ) (23,096 ) Business acquisitions, net of cash acquired (235,489 ) (69,309 ) (313,106 ) Cash used in investing activities (252,682 ) (83,548 ) (330,960 ) Financing activities Net borrowings (repayments) on revolver 125,000 (58,167 ) 58,204 Principal repayments on term loans (7,500 ) (2,500 ) — Proceeds from issuance of term loans — — 100,000 Repurchases of 2% Convertible Notes — (102 ) (34 ) Proceeds from issuance of 5.625% Senior Notes — 300,000 — Redemption of 6.875% Senior Notes — (250,000 ) — Payment of deferred acquisition consideration (5,378 ) (958 ) (350 ) Debt issuance costs (2,035 ) (5,490 ) (5,197 ) Purchase of treasury shares (41,832 ) (63,083 ) — Stock option exercises, related tax benefits and other 33,261 10,913 8,235 Cash dividend (2,911 ) (2,748 ) (2,716 ) Cash provided by (used in) financing activities 98,605 (72,135 ) 158,142 Effect of exchange rate changes on cash (3,910 ) (2,683 ) 5,251 Net increase in cash and cash equivalents 35,802 23,963 3,999 Cash and cash equivalents—beginning of year 68,184 44,221 40,222 Cash and cash equivalents—end of year $ 103,986 $ 68,184 $ 44,221 Common Stock Amount Balance at August 31, 2010 68,056 $ 13,610 $ (175,157 ) $ — $ 968,373 $ (67,105 ) $ (1,934 ) $ 1,934 $ 739,721 Net earnings — — — — 111,559 — — — 111,559 Other comprehensive income, net of tax — — — — — 49,426 — — 49,426 Company stock contribution to employee benefit plans and other 138 29 3,050 — — — — — 3,079 Restricted stock awards (31 ) (7 ) 7 — — — — — — Cash dividend ($0.04 per share) — — — — (2,740 ) — — — (2,740 ) Stock based compensation expense — — 11,036 — — — — — 11,036 Stock option exercises 484 97 4,227 — — — — — 4,324 Excess tax benefit on stock option exercises — — 2,364 — — — — — 2,364 Stock issued to, acquired for and distributed from rabbi trust 10 2 242 — — — (203 ) 203 244 Balance at August 31, 2011 68,657 13,731 (154,231 ) — 1,077,192 (17,679 ) (2,137 ) 2,137 919,013 Net earnings — — — — 87,290 — — — 87,290 Other comprehensive income, net of tax — — — — — (51,793 ) — — (51,793 ) Company stock contribution to employee benefit plans and other 277 55 5,530 — — — — — 5,585 Conversion of 2% Convertible Notes 5,962 1,192 133,757 — — — — — 134,949 Restricted stock awards 17 3 (3 ) — — — — — — Cash dividend ($0.04 per share) — — — — (2,918 ) — — — (2,918 ) Treasury stock repurchases — — — (63,083 ) — — — — (63,083 ) Stock based compensation expense — — 13,346 — — — — — 13,346 Stock option exercises 580 116 6,434 — — — — — 6,550 Excess tax benefit on stock option exercises — — 2,349 — — — — — 2,349 Stock issued to, acquired for and distributed from rabbi trust 26 5 543 — — — (552 ) 552 548 Balance at August 31, 2012 75,519 15,102 7,725 (63,083 ) 1,161,564 (69,472 ) (2,689 ) 2,689 1,051,836 Net earnings — — — — 30,048 — — — 30,048 Other comprehensive income, net of tax — — — — — 812 — — 812 Company stock contribution to employee benefit plans and other 21 5 592 — — — — — 597 Restricted stock awards 169 34 (34 ) — — — — — — Cash dividend ($0.04 per share) — — — — (2,927 ) — — — (2,927 ) Treasury stock repurchases — — — (41,832 ) — — — — (41,832 ) Stock based compensation expense — — 13,440 — — — — — 13,440 Stock option exercises 1,276 255 24,585 — — — — — 24,840 Excess tax benefit on stock option exercises — — 2,954 — — — — — 2,954 Stock issued to, acquired for and distributed from rabbi trust 16 3 496 — — — (435 ) 435 499 Balance at August 31, 2013 77,001 $ 15,399 $ 49,758 $ (104,915 ) $ 1,188,685 $ (68,660 ) $ (3,124 ) $ 3,124 $ 1,080,267 (in thousands, except share and per share amounts)fourthree reportable segments. The Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Energy segment provides joint integrity products and services, customized offshore vessel mooring solutions, as well as umbilical, rope and cable solutions to the global oil & gas, power generation and other energy markets. The Electrical segment is primarily involved in the design, manufacture and distribution of a broad range of electrical products to the retail DIY, wholesale, original equipment manufacturer (“OEM”), utility and harsh environment markets. The Engineered Solutions segment provides highly engineered position and motion control systems to OEMs in various vehicle markets, as well as a variety of other products to the industrial products.and agricultural markets.Actuant Corporationthe Company and its consolidated subsidiaries (“Actuant” or the “Company”).subsidiaries. Actuant consolidates companies in which it owns or controls more than fifty percent of the voting shares. The results of companies acquired or disposed of during the fiscal year are included in the consolidated financial statements from the effective date of acquisition or until the date of disposal.divestiture. All intercompany balances, transactions and profits have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation, including amounts related to discontinued operations.presentation.24%21% and 22%19% of total inventories in 20102013 and 2009,2012, respectively). The first-in, first-out or average cost methods are used for all other inventories. If the LIFO method were not used, inventory balances would be higher than the amounts in the consolidated balance sheets by $4.9approximately $5.8 million and $4.8$6.6 million at August 31, 20102013 and 2009,2012, respectively.sevenfifteen years for machinery and equipment. Leasehold improvements are amortized over the life of the related asset or the term of the lease, whichever is shorter.Long-livedLong-Lived and Other Intangible Assets:The Company reviewsevaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived and finite-lived intangible assets for impairment whenever eventsmay warrant revision or changes in business circumstances indicate that the carrying amountremaining balance of the assetsasset may not be fully recoverable. In those cases,The measurement of possible impairment is generally estimated by the Company performs undiscountedability to recover the balance of assets from expected future operating cash flow analyses to determine ifflows on an impairment exists for property, plant and equipment and other long-lived assets, excluding indefinite livedACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)intangible assets.undiscounted basis. If an impairment is determined to exist, any related impairment loss is calculated based on the fair value.value of the asset. See Note 3, “Discontinued Operations” and Note 6, “Impairment Charges” for details on long–livedlong-lived asset impairment charges recognized in fiscal 2009.Goodwill2012 and Other Intangible Assets: Other intangible assets with definite lives, consisting primarily of purchased customer relationships, patents, trademarks and non-compete agreements, are amortized over periods from two to twenty-five years. Goodwill and other intangible assets with indefinite lives are not subject to amortization, but are subject to annual impairment testing.2013.The Company’s goodwill is tested for impairment annually, at August 31, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. The Company performs impairment reviews for its reporting units using a fair value method based on management’s judgments and assumptions. In estimating the fair value, we use a discounted cash flow model, which is dependent on a number of assumptions including estimated future revenues and expenses, weighted average cost of capital, capital expenditures and other variables. The estimated fair value of the reporting unit is compared to the carrying amount of the reporting unit, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the goodwill is potentially impaired and the Company then determines the implied fair value of goodwill, which is compared to the carrying value to determine if impairment exists. Indefinite lived intangible assets are also subject to an annual impairment test. On an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired, the fair value of the indefinite lived intangible assets are evaluated by the Company to determine if an impairment charge is required. A considerable amount of management judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of each reporting unit and the indefinite lived intangible assets. While management believes the judgments and assumptions were reasonable; different assumptions or adverse market developments could change the estimated fair values, and therefore, impairment charges could be required.As discussed in Note 3, “Discontinued Operations” and Note 6, “Impairment Charges” the Company recognized goodwill and long-lived asset impairment charges of $36.1 million in fiscal 2010 (included in discontinued operations) and $58.3 million in fiscal 2009 ($31.3 million is included in continuing operations with the remainder in discontinued operations).recognizesgenerally offers its customers a warranty on products sold, although warranty periods may vary by product type and application. During fiscal 2012 the cost associated with its product warranties atwarranty reserve was reduced by $7.7 million, the timeresult of sale.a purchase accounting adjustment to Mastervolt's initial estimated warranty reserve. The amount recognizedreserve for future warranty claims is generally based on historical claimsclaim rates and current claimwarranty cost experience. The following is a rollforwardreconciliation of the accruedchanges in product warranty reservereserves for fiscal years 20102013 and 20092012 (in thousands): 2010 2009 $ 8,989 $ 9,309 920 1,461 5,153 7,800 (5,959 ) (9,079 ) (939 ) (279 ) (296 ) (223 ) $ 7,868 $ 8,989 2013 2012 Beginning balance $ 12,869 $ 23,707 Warranty reserves of acquired businesses 981 338 Purchase accounting adjustments — (7,726 ) Provision for warranties 7,907 9,219 Warranty payments and costs incurred (11,616 ) (10,893 ) Discontinued operations reclassification (3,107 ) — Impact of changes in foreign currency rates 379 (1,776 ) Ending balance $ 7,413 $ 12,869 Customer sales are recognized as The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility of the sales price is reasonably assured. For product sales, delivery does not occur until the passage of title and risk of loss and title passhave transferred to the customer which(generally when products are shipped). Revenue from services is generally upon shipment.recognized when the services are provided or ratably over the contract term. Customer sales are recorded net of allowances for returns and discounts, which are recognized as a deduction from sales at the time of sale. The Company commits to one-time or on-going trade discounts and promotions with certain customers in some markets that require the Company toACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)presentedstated net of an allowance for doubtful accounts of $7.7$3.7 million and $8.6$4.4 million at August 31, 20102013 and 2009,2012, respectively.withinin cost of products sold.totaled approximately $14.5were $21.0 million $16.2, $17.1 million and $16.9$12.5 million in fiscal 2010, 20092013, 2012 and 2008,2011, respectively. WeThe Company also incurincurs significant engineering application costs in connection with fulfilling custom customer orders and executingdeveloping unique solutions for unique customer projects thatneeds which are not capturedincluded in these allocated research and development costs.expense totals.gainstransaction losses of $2.7 million, $3.9 million and losses and royalties. Net (gains)/losses resulting from foreign currency transactions were $(1.5)$3.3 million $1.1 million, and $2.3 million in fiscal 2010, 20092013, 2012 and 2008,2011, respectively.Short-term Borrowings: Short-term borrowings consist of foreign and domestic subsidiary overdraft borrowings. Certain of the Company’s foreign subsidiaries are parties to unsecured non-committed lines of credit with various banks. Interest rates vary depending on the currency being borrowed.and accounts receivable financing costs, net of interest income.and export programs, are recognized as a reduction of the provision for income taxes in the year in which they are available for U.S. tax purposes. Deferred taxes are provided on temporary differences between assets and liabilities for financial and tax reporting purposes as measured by enacted tax rates expected to apply when temporary differences are settled or realized. Future tax benefits are recognized to the extent that realization of those benefits is considered to be more likely than not. A valuation allowance is established for deferred tax assets for which realization is not more likely than not of being realized. The Company has not provided for any residual U.S. income taxes on unremitted earnings of non-U.S. subsidiaries as such earnings are intended to be indefinitely reinvested. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.expenses, and gains and losses.expenses. Translation adjustments are reflected in the consolidated balance sheets and consolidated statements of shareholders’shareholders' equity caption “Accumulated other comprehensive loss.Other Comprehensive Loss.”issues,matters, warranty claims, workers compensation claims, product and non-product litigation and incentive compensation. These reserves require the use of estimates and judgment. The Company bases its estimates on historical experience input from third party advisors and on various other assumptions that are believed to be reasonable under the circumstances. The Company believes that such estimates are made with consistent and appropriate methods.assumptions. Actual results may differ from these estimates.ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)Accounting for Derivatives and Hedging Activities: All derivatives are recognized on the balance sheet at their estimated fair value. On the date a derivative contract is entered into, the Company designates the derivative as a hedge of a recognized assetestimates under different assumptions or liability (fair value hedge) or a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). The Company does not enter into derivatives for speculative purposes. Changes in the value of a fair value hedge are recorded in earnings along with the gain or loss on the hedged asset or liability, while changes in the value of cash flow hedges are recorded in accumulated other comprehensive loss, until earnings are affected by the variability of cash flows.conditions.New Accounting Pronouncements: In June 2008, the Financial Accounting Standards Board (FASB) issued an update to Accounting Standards Codification (ASC) No. 260, “Earnings Per Share,” which concluded that unvested share-based equity awards that contain non-forfeitable rights to dividends are participating securities and, therefore, must be included in the computation of earnings per share pursuant to the two-class method. Outstanding unvested share-based awards (restricted stock awards) granted under the Actuant Corporation 2001 and 2002 Stock Plans are participating securities as they contain non-forfeitable rights to dividends. The application of the two-class method in computing basic and dilutive earnings per share, effective September 1, 2009, did not have a material impact on the weighted average shares outstanding or earnings per share amounts.In December 2007, the FASB issued an update to ASC No. 810, “Consolidations,” which changed the accounting and reporting for non-controlling (minority) interests. The Company has one joint venture with a non-controlling interest, which is not significant to the Company’s financial position and results of operations. As a result, the adoption of this guidance on September 1, 2009 did not have a material effect on the consolidated financial statements.In December 2007, the FASB issued an update to ASC No. 805, “Business Combinations,” which changed the accounting for certain aspects of business combinations, including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development and restructuring costs. This guidance also requires adjustments associated with changes in deferred tax balances or tax contingencies, that occur after the one year measurement period, be recorded as adjustments to income tax expense. ASC No. 805 was effective for the Company for all acquisitions after September 1, 2009; however, the guidance in this standard regarding the treatment of changes in income tax balances was applied retrospectively to all business combinations. has completed several business acquisitions during each of the last three years. All of thesethe acquisitions resulted in the recognition of goodwill in the Company’s consolidated financial statements because the purchase prices reflect the future earnings and cash flow potential of these companies, as well as the complementary strategic fit and resulting synergies these businesses bring to existing operations. The Company is continuingincurred acquisition transaction costs of $3.7 million, $1.4 million and $1.9 million in fiscal 2013, 2012 and 2011, respectively, related to evaluatevarious business acquisition activities. initial purchase price, allocations forat the acquisitions completeddate of acquisition, based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains this information during due diligence and through other sources. If additional information is obtained about these assets and liabilities within the past twelve monthsmeasurement period (not to exceed one year from the date of acquisition), through asset appraisals and learning more about the newly acquired business, the Company will refine its estimates of fair value and adjust the allocations if additional information relativepurchase price allocation. During fiscal 2013, goodwill related to prior year acquisitions increased by less than $0.1 million, the net result of purchase accounting adjustments to the fair valuesvalue of theacquired assets and liabilities of the acquired businesses become known.2010During fiscal 2010, the Company completed four tuck-in acquisitions for $43.9 million of cash (net of cash acquired), $2.5 million of deferred purchase price and $4.5 million of contingent consideration. On April 9, 2010 the2013Team Hydrotec, a Singapore based business that provides engineering and integrated solutions primarily toViking SeaTech (“Viking”) for $235.4 million on August 27, 2013. Viking expands the infrastructure, energy and industrial markets. This was followed by the acquisition ofACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)Hydrospex on April 14, 2010. Headquartered in The Netherlands, Hydrospex is a leading provider of a broad range of heavy-liftEnergy segment's geographic presence, technologies including strand jacks and gantries for the global infrastructure, power generation and other industrial markets. The products, technologies, engineering and geographic breadth of both Team Hydrotec and Hydrospex will further strengthen the market positions of the Industrial Segment. On April 27, 2010, the Company completed the acquisition of New Jersey based Biach Industries, which provides custom designed bolt and stud tensioning products and services predominately for the North American nuclear market. Biach Industries, through its strong customer relationships, engineering expertise and customized products will broaden the product and service offerings of the Energy segmentprovided to the global power generationenergy market. Finally, on June 11, 2010Headquartered in Aberdeen, Scotland, Viking is a support specialist providing a comprehensive range of equipment and services to the Company completed the acquisition of Norway based Selantic, which is includedoffshore oil & gas industry. Viking serves customers globally with primary markets in the Energy Segment. SelanticNorth Sea (U.K. and Norway) and Australia. The majority of Viking's revenue is derived from offshore vessel mooring solutions which include design, rental, installation and inspection. Viking also provides custom designed high performance slings, tetherssurvey, manpower and related products for heavy lifting applications.allocationsallocation for fiscal 2010 acquisitionsthis acquisition resulted in the recognition of $33.7(a portion of which(which is not deductible for tax purposes) and $18.2$65.4 million of intangible assets, including $14.5$40.5 million of customer relationships $2.5and $24.9 million of tradenames, $1.2 million of non-compete agreements and patents. The amounts assigned to customer relationships and non-compete agreements are amortized over 15 years and 3-5 years, respectively. The operating results of the acquired businesses (which were not significant during fiscal 2010) are included in the consolidated financial statements only since their respective acquisition dates. During fiscal 2010, the Company also paid $2.0 million of deferred purchase price for acquisitions completed in previous years and recognized acquisition transaction costs of $1.1 million in the consolidated statement of earnings related to various business acquisition activities.acquisition for the businesses acquired during fiscal 2010Viking acquisition (in thousands): Total $ 7,395 10,996 141 2,250 33,701 18,230 (3,242 ) (14,667 ) (7,065 ) (3,667 ) (206 ) $ 43,866 Total Accounts receivable, net $ 17,225 Inventories 1,582 Property, plant & equipment 99,776 Goodwill 87,734 Other intangible assets 65,360 Other assets 1,755 Trade accounts payable (7,664 ) Deferred income taxes (25,923 ) Other liabilities (4,439 ) Cash paid, net of cash acquired $ 235,406 20092012September 26, 2008,July 20, 2012 the Company completed the acquisition of the stock of The Cortland CompaniesCrossControl AB (“Cortland”CrossControl”) for approximately $231.2$40.6 million in cash, net of cash, acquired. Cortland is a global designer, manufacturerplus potential contingent consideration. CrossControl, headquartered in Sweden, provides advanced electronic solutions for human-machine interaction, vehicle control and distributormobile connectivity in critical environments. On March 28, 2012 the Company acquired the stock of custom-engineered electro-mechanical cables and umbilicals, high performance synthetic ropes and value-added steel cable assemblies. The majoritynon-compete agreements, $4.3$8.1 million to patents of cash and $81.4$5.3 million to customer relationships. The amounts assigned to non-compete agreements, patents of deferred purchase price. Turotest, headquartered in Brazil, designs and customer relationships are being amortized over 3, 8manufactures instrument panels and 15 years, respectively.toon February 10, 2012 the Company completed the acquisition of Cortland, the Company also completed several smaller product line acquisitions for an aggregate purchase pricestock of $7.4 million of cash and a deferred purchase price of $2.5 million. During fiscal 2009, the Company also paid approximately $0.8 million in earn-out payments for acquisitions completed in previous years.Fiscal 2008On March 3, 2008, the Company acquired Superior Plant Services, LLC,Jeyco Pty Ltd (“SPS”Jeyco”) for approximately $57.7SPS, which is included inThis Cortland (Energy segment) tuck-in acquisition, designs and provides specialized mooring, rigging and towing systems and services to the Energy Segment, is a specialized maintenance services company serving the North Americanoffshore oil & gas industry in Australia and nuclear power industries. Its services include field machining, flange weld testing, line isolation, bolting, heat treatingother international markets. Additionally, Jeyco’s products are used in a variety of applications for other markets including cyclone mooring and metal disintegration. marine, defense and mining tow systems.$22.9the recognition of $40.1 million assigned to of goodwill (which is not deductible for tax purposes), $0.2 and $32.8 million to trademarks, $1.5 of intangible assets, including $24.2 million to non-compete agreements and $25.3 million customer relationships. The amounts assigned to tradenames, non-compete agreements, and of customer relationships, are being amortized over 1, 5$5.7 million of tradenames, $2.2 million of technologies and 15 years, respectively.$0.7 million of non-compete agreements.September 13, 2007,June 2, 2011, the Company acquired Templeton, Kenly & Co,completed the acquisition of the stock of Weasler Engineering, Inc. (“TK”Weasler”) for approximately $47.3$153.2 million of cash. TK,The purchase consideration was funded through the Company’s existing cash balances and borrowings under the revolving credit facility. Weasler, which is includedheadquartered in Wisconsin, is a global designer and manufacturer of highly engineered drive train components and systems for agriculture, lawn & turf and industrial equipment. Weasler also supplies a variety of torque limiters, high-end gear boxes, clutches and torsional dampers.Industrial segment, manufactures hydraulic pumps and tools, mechanical jacks, wrenches and actuators. The purchase price allocation resulted in $14.4recognition of $152.4 million assigned to of goodwill (which is not deductible for tax purposes), $1.7 and $157.5 million to of intangible assets, including $81.5 million of customer relationships, $69.9 million of tradenames, $0.3$5.5 million to non-compete agreements, $0.3 to of patents and $19.2technologies and $0.6 million assigned to customer relationships. The amounts assigned to of non-compete agreements, patents and customer relationships are being amortized over 3, 5 and 15 years, respectively.In addition to the $105.0 million of cash used for these two acquisitions in fiscal 2008, the Company paid approximately $5.1 million in contingent consideration and other related payments for previous acquisitions, which resulted in additional goodwill.since September 1, 2007in the last three years as though the transactions and related financing activities had occurred on September 1, 20072010 (in thousands, except per share amounts). Fiscal Year Ended August 31, 2010 2009 2008 $ 1,160,508 $ 1,117,625 $ 1,446,140 1,190,521 1,169,994 1,600,421 $ 70,356 $ 25,982 $ 125,791 72,827 28,654 126,150 $ 1.04 $ 0.45 $ 2.25 1.08 0.49 2.26 $ 0.97 $ 0.43 $ 1.98 1.01 0.47 1.98 Year Ended August 31, 2013 2012 2011 Net sales As reported $ 1,279,742 $ 1,276,521 $ 1,159,310 Pro forma 1,365,115 1,419,173 1,393,061 Earnings from continuing operations As reported $ 147,577 $ 125,276 $ 110,188 Pro forma 153,946 134,581 125,785 Basic earnings per share from continuing operations As reported $ 2.02 $ 1.79 $ 1.61 Pro forma 2.11 1.92 1.84 Diluted earnings per share from continuing operations As reported $ 1.98 $ 1.68 $ 1.49 Pro forma 2.06 1.81 1.69 During the fourth quarter of fiscal 2010, the Company committed to a plan to divest its Europeanbusiness (Electrical segment), which designs, manufactures and markets electrical sockets, switches and other tools and consumables predominatelysegment is involved in the European DIY retail market. This planned divestiture is partdesign, manufacture and distribution of the Company’s portfolio management processa broad range of electrical products to focus on businesses that create the most shareholder value. Weak economic conditions throughout Europe and reduced demand in the retail DIY, markets, combined with the decision to divest the business caused the Company to reduce the projected sales, operating profit and cash flows of the European Electrical business, which resulted in a $36.1 million non-cash asset impairment charge to adjust the carrying value of the asset group to fair value. The impairment charge consists of $24.5 million of goodwill, $2.3 million of intangible assets and $9.3 million of property, plant and equipmentwholesale, OEM, solar, utility, marine and other assets. Asharsh environment markets. The results of operations for the Electrical segment have been reported as discontinued operations in the accompanying consolidated statements of earnings for all periods presented as a result of the impairment charge there is no remaining goodwill or intangible assetsCompany announcing its intention to divest this segment in the third quarter of fiscal 2013. The following table summarizes the results of the European Electrical business.The following is a summarysegment for each of the August 31, 2010 assets and liabilities of discontinued operationslast three fiscal years (in thousands): $ 20,379 21,771 2,434 218 $ 44,802 $ 9,428 1,647 8,020 17,161 1,439 $ 37,695 Year Ended August 31, 2013 2012 2011 Net sales $ 286,308 $ 328,821 $ 335,318 Operating profit 34,536 28,148 20,029 Impairment charge (159,104 ) (62,464 ) — Net loss on disposal (1) — — (15,829 ) Income tax benefit (expense) 7,039 (3,670 ) (2,829 ) Income (loss) from discontinued operations, net of taxes $ (117,529 ) $ (37,986 ) $ 1,371 2010,2011, the Company divested a portioncompleted the sale of itsthe European Electrical product line for $7.5 million of cash proceeds, which resulted in a net pre-tax gain on disposal of $0.3 million. In addition, during the fourth quarter of fiscal 2009, the Company sold the Acme Aerospace (Engineered Solutions segment) and BH Electronics (Electrical segment) businesses in separate transactionsbusiness for total cash proceeds of $38.5$3.5 million, net of transaction costs. As a result of the sale transactions,transaction, the Company recognized a net pre-tax gainloss on disposal of $17.8$15.8 million in the fourth quarter of fiscal 2009. The results of operations for, including an $11.4 million charge to cover future lease payments on an unfavorable real estate lease used by the divested businesses have been reported as discontinued operations for all periods presented. The following table summarizes the results of discontinued operations (in thousands): 2010 2009 2008 $ 105,661 $ 145,929 $ 217,804 334 17,800 — (41,525 ) (33,933 ) (4,371 ) 5,134 (3,874 ) (1,124 ) $ (46,325 ) $ (12,259 ) $ (3,247 ) (1)Includes non-cash asset impairment charges of $36.1 million (European Electrical) and $27.0 million (BH Electronics) in fiscal 2010 and 2009, respectively.(2)Fiscal 2010 includes incremental tax expense of $4.3 million related to provision to return adjustments and the correction of prior period income tax amounts (correction amounts are immaterial to previously reported periods and the current year).ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)Note 4. RestructuringIn fiscal 2010 and 2009, the Company committed to various restructuring initiatives including workforce reductions, plant consolidations, the transfer of production and product sourcing to lower cost plants or regions and the centralization of certain administrative functions. Of the 2010 and 2009 restructuring costs recognized, $1.1 million and $1.3 million, respectively were recognized in Cost of Products Sold, with the remainder recognized in Selling, Administrative and Engineering Expenses in the consolidated statement of earnings. Total restructuring costs recognized, which impact all reportable segments are as follows (in thousands): Year Ended August 31, 2010 2009 $ 9,726 $ 15,733 1,096 1,313 5,872 3,797 $ 16,694 $ 20,843 The following is a rollforward of the restructuring reserve (included in Other Current Liabilities and Other Long Term Liabilities in the consolidated balance sheet) for fiscal years 2010 and 2009 (in thousands): 2010 2009 $ 9,282 $ — 16,694 20,843 (14,914 ) (9,333 ) (1,096 ) (1,313 ) (4,571 ) (1,658 ) 1,122 743 $ 6,517 $ 9,282 Note 5. Accounts Receivable SecuritizationHistorically, the Company was a party to an accounts receivable securitization program pursuant to which it sold certain of its trade accounts receivable to a wholly-owned, bankruptcy-remote special purpose subsidiary which, in turn, sold participating interests in its pool of receivables to a third party financial institution. The Company did not renew the securitization program on its September 9, 2009 maturity date and as a result, utilized availability under the Senior Credit Facility to fund the corresponding $37.1 million increase in accounts receivable. The retained interest at August 31, 2009 was $28.8 million and was included in Accounts Receivable, net in the accompanying consolidated balance sheets. Sales of trade receivables from the special purpose subsidiary totaled $352.7 million and $457.9 million for the years ended August 31, 2009 and 2008, respectively while related cash collections during the same periods totaled $608.0 million and $803.4 million, respectively (included in operating activities in the consolidated statement of cash flows). Financing costs related to the accounts receivable securitization program were $1.6 million and $2.6 million for the years ended August 31, 2009 and 2008, respectively.Note 6. Impairment ChargesSignificant adverse developments in the recreational vehicle (“RV”) market in the first quarter of fiscal 2009 had a dramatic effect on the Company’s RV business (Engineered Solutions segment). Its financial results were negatively impacted by lower wholesale motorhome shipments by OEM’s, decreased consumer confidence and the lack of financing as a result of the global credit crisis. These factors caused the Company to significantlyACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)reduce its projections for sales, operating profits and cash flows of the RV business, and resulted in the recognition of a $26.6 million non-cash asset impairment charge during the three months ended November 30, 2008. The asset impairment charge included the $22.2 million write-off of all remaining goodwill in the RV business. In addition, a $0.8 million impairment was recognized related to indefinite lived intangibles (tradenames). Due to the existing impairment indicators, management assessed the recoverability of the RV business fixed assets and amortizable intangible assets (customer relationships, patents and trademarks). An impairment charge of $3.6 million was recognized for the difference between the fair value and carrying value of such assets.2009,2013, the Company recordedcommitted to a $31.7plan to divest the entire Electrical segment. The divestiture will allow the Company to streamline its business portfolio and refocus on the remaining three segments in a way that better positions the Company to take advantage of its core competencies, current business model and global growth trends. As a result, the Company recognized a non-cash impairment charge in fiscal 2013 of $159.1 million, including a write-down of $137.8 million of goodwill and $21.3 million of indefinite lived intangible assets (tradename). The impairment charge represents the excess of the net book value of the assets held for sale over the estimated fair value, less selling costs. As a result of the impairment charge, there is no remaining goodwill associated with the Mastervolt business and $76.9 million for North American Electrical. The following is a summary of the August 31, 2013 assets and liabilities of the Electrical segment (in thousands):Accounts receivable, net $ 41,247 Inventories, net 55,142 Property, plant & equipment, net 9,545 Goodwill 76,877 Other intangible assets, net 84,387 Other assets 5,408 Assets of discontinued operations $ 272,606 Trade accounts payable $ 19,824 Other current liabilities 12,984 Deferred income taxes 9,376 Other long-term liabilities 10,896 Liabilities of discontinued operations $ 53,080 asset impairment charge related to the goodwill and indefinite lived intangibles and long-livedintangible assets of the harsh environment electricalElectrical segment's Mastervolt business. The impairment was the result of business (Electrical Segment). Approximately $27.0 million of the impairment charge is includedunderperformance and volatility in the Loss From Discontinued Operations for fiscal 2009 in the consolidated statement of earnings. Poor economic conditions, low consumer confidence, increased unemployment and tight credit markets have negatively impacted consumer discretionary spending, resulting in a substantial reduction in recreational boating industry sales. OEM boat builders responded to the sharp drop in demand and high levels of finished goods inventory by suspending operations as well as eliminating brands and permanently closing facilities. These actions caused the Company to significantly reduce its projections for sales, operating profits and cash flows for the harsh environment electrical business, which resulted in a $14.4 million goodwill impairment charge and a $7.5 million impairment of indefinite lived intangibles (tradenames). As a result of the impairment charges there is no remaining goodwill or indefinite lived intangibles related to the marine OEM business. Due to the then existing indicators of impairment, management also assessed the recoverability of the related long-lived assets during the three months ended May 31, 2009 and recorded a $1.6 million impairment on fixed assets and an $8.2 million impairment of amortizable intangibles (customer relationships), for the difference between the fair value and carrying value. As discussed in Note 3, “Discontinued Operations,” the Company subsequently divested the marine OEM business, BH Electronics, insolar market. During the fourth quarter of fiscal 2009.2012, industry-wide solar inverter inventory levels and production capacity exceeded demand, significant pricing competition existed and less favorable government incentive schemes were announced and implemented in Mastervolt's served European markets. This challenging economic and competitive environment, as well as uncertainty regarding the long-term strategic fit of the7.4. Goodwill and otherOther Intangible Assets20102013 and 20092012 are presented in the following tableas follows (in thousands): Industrial Energy Electrical Engineered
Solutions Total (1) $ 65,337 $ 133,157 $ 214,407 $ 226,961 $ 639,862 — 111,828 — 20,294 132,122 — 331 — 750 1,081 — — (14,440 ) (22,205 ) (36,645 ) — — — (6,719 ) (6,719 ) (649 ) (16,782 ) (738 ) (10 ) (18,179 ) 64,688 228,534 199,229 219,071 711,522 15,630 18,071 — — 33,701 — 1,581 — — 1,581 — — (24,542 ) — (24,542 ) (2,382 ) (7,596 ) (3,148 ) (4,247 ) (17,373 ) $ 77,936 $ 240,590 $ 171,539 $ 214,824 $ 704,889 (1)Cumulative goodwill impairment charges were $61.2 million and $36.6 million at August 31, 2010 and 2009, respectively.ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Industrial Energy Electrical Engineered
Solutions Total Balance as of August 31, 2011 $ 85,409 $ 252,285 $ 260,777 $ 289,995 $ 888,466 Businesses acquired — 14,101 — 26,188 40,289 Purchase accounting adjustments — — (3,995 ) 715 (3,280 ) Impairment charge — — (36,557 ) — (36,557 ) Impact of changes in foreign currency rates (4,005 ) (6,865 ) (6,355 ) (5,281 ) (22,506 ) Balance as of August 31, 2012 81,404 259,521 213,870 311,617 866,412 Business acquired — 87,734 — — 87,734 Purchase accounting adjustments — 117 — (100 ) 17 Impairment charge — — (137,804 ) — (137,804 ) Reclassification to discontinued operations — — (76,877 ) — (76,877 ) Divestiture of Nielsen Sessions business — — — (2,556 ) (2,556 ) Impact of changes in foreign currency rates 1,207 (5,469 ) 811 1,477 (1,974 ) Balance as of August 31, 2013 $ 82,611 $ 341,903 $ — $ 310,438 $ 734,952 that have defined useful lives and are subject to amortization as of August 31, 2010 and 2009 are as follows (in thousands): August 31, 2010 August 31, 2009 Gross
Carrying
Amount Accumulated
Amortization Net Book
Value Gross
Carrying
Amount Accumulated
Amortization Net Book
Value $ 242,384 $ 53,013 $ 189,371 $ 232,751 $ 37,396 $ 195,355 44,987 27,264 17,723 45,153 23,871 21,282 6,205 5,103 1,102 6,258 4,928 1,330 6,220 4,171 2,049 5,277 2,817 2,460 721 584 137 792 549 243 $ 300,517 $ 90,135 $ 210,382 $ 290,231 $ 69,561 $ 220,670 The Weighted
Average
Amortization
Period (Years) August 31, 2013 August 31, 2012 Gross
Carrying
Amount Accumulated
Amortization Net Book
Value Gross
Carrying
Amount Accumulated
Amortization Net Book
ValueAmortizable intangible assets: Customer relationships 15 $ 318,143 $ 95,215 $ 222,928 $ 347,739 $ 93,768 $ 253,971 Patents 11 30,564 18,747 11,817 52,851 34,842 18,009 Trademarks and tradenames 19 24,088 7,356 16,732 43,820 8,670 35,150 Non-compete agreements and other 4 7,034 6,458 576 7,677 6,316 1,361 Indefinite lived intangible assets: Tradenames N/A 124,639 — 124,639 137,393 — 137,393 $ 504,468 $ 127,776 $ 376,692 $ 589,480 $ 143,596 $ 445,884 amountvalue of the Company’s intangible assets that have indefinite livesresult from foreign currency exchange rate changes, impairment charges and are not subjectthe reclassification of Electrical segment intangible assets to amortization as of August 31, 2010 and 2009 are $126.6 million and $129.6 million, respectively. These assets are comprised of acquired tradenames.2010, 200920082011 was $22.0$22.9 million $19.7, $22.0 million and $13.9$21.5 million, respectively. Amortization expense for future years is estimated to be as follows: $22.1be: $24.6 million in each of fiscal years 2014 and 2015, $24.5 million in fiscal 2011, $19.92016, $23.4 million in fiscal 2012, $18.32017, $23.0 million in fiscal 2013, $17.62018 and $132.0 million in fiscal 2014, $17.5 million in fiscal 2015, and $115.0 millionaggregate thereafter. The future amortization expense amounts represent estimates, which may change based on future acquisitions, or changes in foreign currency exchange rates.8.5. DebtLong-term Debt: August 31, 2010 2009 $ — $ 10,000 249,334 249,235 203 — 249,537 259,235 117,843 140,900 $ 367,380 $ 400,135 August 31, 2013 2012 Senior Credit Facility Revolver $ 125,000 $ — Term Loan 90,000 97,500 215,000 97,500 5.625% Senior Notes 300,000 300,000 Total Senior Indebtedness 515,000 397,500 Less: current maturities of long-term debt — (7,500 ) Total long-term debt, less current maturities $ 515,000 $ 390,000 November 10, 2011,July 18, 2018, provides a $400$600.0 million revolving credit facility, a $90.0 million term loan and bears interest at LIBOR plus 3.25% (aggregating 3.56% at August 31, 2010).a $350.0 million expansion option, subject to certain conditions. Borrowings are subject to a pricing grid, which can result in increases or decreases to the borrowing spread, on a quarterly basis, depending on the Company’s leverage ratio.ratio, ranging from 1.00% to 2.50% in the case of loans bearing interest at LIBOR and from 0.00% to 1.50% in the case of loans bearing interest at the base rate. As of August 31, 2013, the borrowing spread on LIBOR based borrowings was 1.25% (aggregating to approximately 1.50%). In addition, a non-use fee is payable quarterly on the average unused credit line under the revolver. At revolver ranging from 0.15% to 0.40% per annum. As of August 31, 2010,2013 the non-use fee was 0.5% annually,available and the unused credit line under the revolver was approximately $398.1$471.6 million. Quarterly term loan principal payments of which $325.0$1.1 million was available for borrowings. begin on September 30, 2014, increase to $2.3 million per quarter on September 30, 2015, with the remaining principal due at maturity. The Senior Credit Facility, which is secured by substantially all of the Company’s domestic personal property assets, also contains customary limits and restrictions concerning investments, sales of assets, liens on assets, dividends and other payments. The two financial covenants included in the Senior Credit Facility agreement are a maximum leverage ratio of 3.5:3.75:1 and a minimum fixed chargeinterest coverage ratio of 1.65:3.50:1. The Company was in compliance with all debtits financial covenants at August 31, 2010.ACTUANT CORPORATION.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)June 12, 2007,April 16, 2012, the Company issued $250.0$300.0 million of 6.875%5.625% Senior Notes due 2022 (the “Senior Notes”) at an approximate $1.0 million discount, generating net proceeds of $249.0 million.. The Senior Notes were issued at a price of 99.607% to yield 6.93%, and require no principal installments prior to their June 15, 2017 maturity. The $1.0 million initial issuance discount is being amortized through2022 maturity, require semiannual interest expense over the 10 year life of the Senior Notes. Semiannual interest payments on the Senior Notes are due in December and June of each year.$150.0$150.0 million of Senior Subordinated Convertible Debentures due November 15, 2023 (the “2%“2% Convertible Notes”). The Prior to fiscal 2012, the Company had repurchased (for cash) $32.2 million of 2% Convertible Notes bear interest at a rate of 2.0% annually which is payable on November 15 and May 15 of each year. Beginning with the six-month interest period commencing November 15, 2010, holders will receive contingent interest if the tradingan average price of the 99.3% of par value. In addition, $0.2 million of 2% Convertible Notes equals or exceeds 120% of their underlying principal amount over a specified trading period. If payable, the contingent interest shall equal 0.25% of the average trading price of the 2% Convertible Notes during the five days immediately preceding the applicable nine month interest periods. The Company may redeem all or part of the 2% Convertible Notes on or after November 20, 2010 for cash, at a redemption price equal to 100% of the principal amount, plus accrued interest. In addition, holders of the 2% Convertible Notes have the option to require the Company to repurchase all or a portion of their 2% Convertible Notes for cash on November 15, 2010, November 15, 2013 and November 15, 2018 at a repurchase price equal to 100% of the principal amount of the notes, plus accrued interest. Any “put” of 2% Convertible Notes will be funded through availability under the Senior Credit Facility (which matures on November 10, 2011); and therefore, the outstanding 2% Convertible Notes are classified as long-term indebtedness in the consolidated balance sheets. If certain conditions are met, holders may also convert their 2% Convertible Noteswere converted into shares of the Company’s Class A common stock prior to the scheduled maturity date. In the fourth quarter of fiscal 2009, the Company repurchased $9.1 million of 2% Convertible Notes and in addition, repurchased an additional $23.1 million during the first quarter of fiscal 2010. These cash repurchases were made at an average price of 99.3%2012. In March 2012, the Company called all of the par value. The remaining $117.8$117.6 million of 2% Convertible Notes are convertibleoutstanding for cash at par. As a result of the call notice, substantially all of the holders of the 2% Convertible Notes converted them into 5,905,419newly issued shares of the Company’s Class A common stock, at a conversion rate of 50.112650.6554 shares per $1,000 of principal amount which equates to(resulting in the issuance of 5,951,440 shares of common stock), while the remaining $0.1 million of 2% Convertible Notes were repurchased for cash. The impact of the additional share issuance was already included in the diluted earnings per share calculation on an if-converted method. As a conversion priceresult of the 2% Convertible Notes being redeemed for the Company’s common stock, $15.6 million of related prior income tax benefit was recaptured and repaid in the fourth quarter of fiscal 2012.$19.96 per share.2.06%. These interest rate swap contracts were entered into to synthetically convert $100.0 million of the Senior Credit Facility variable rate borrowings into fixed rate debt. In connection with the debt refinancing transactions discussed above, the Company terminated the interest rate swap contracts on April 3, 2012, which resulted in a cash payment to the counterparty of $4.1 million, in full settlement of the fair value of the contracts.$26.8$20.8 million $36.1, $25.9 million and $35.0$26.1 million in fiscal 2010, 20092013, 2012 and 2008,2011, respectively.9.6. Fair Value MeasurementsIn accordance with ASC No. 820, “Fair Value Measurements and Disclosures,” theCompany has nofollowing financial assets orand liabilities, that are recordedmeasured at fair value, using significant unobservable inputs (Level 3). The fair value of financial assets and liabilitiesare included in the consolidated balance sheet are as follows (in thousands): August 31, 2010 2009 $ 5,092 $ 653 1,313 1,320 $ 207 $ 759 August 31, 2013 2012 Level 1 Valuation: Cash equivalents $ 1,092 $ 5,154 Investments 1,793 1,602 Level 2 Valuation: Foreign currency forward contracts $ 143 $ 945 ACTUANT CORPORATIONAt August 31, 2012, Mastervolt's goodwill (NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)$40.0 millionshort-term borrowings and its variable rate long-term debt approximated book value as ofat August 31, 20102013 and 20092012 due to their short-term nature and the fact that the interest rates approximated year-end market rates of interest.rates. The fair value of the Company’s outstanding $117.8$300.0 million of 5.625% Senior Notes was $300.8 million and $140.9$309.8 million 2% Convertible Notes at August 31, 20102013 and 2009, respectively, was $126.4 million and $139.5 million.2012, respectively. The fair value of the Company’s outstanding $250.0 million of Senior Notes was based on quoted inactive market prices and are therefore classified as Level 2 within the valuation hierarchy.20102013 and 20092012, respectively.$252.5$9.7 million and $228.1$3.0 million, at August 31, 2013 and 2012, respectively. At August 31, 2013, unrealized losses of $0.1 million on these contracts were included in accumulated other comprehensive loss and are expected to be reclassified to earnings during the next twelve months.valuesvalue of the 2% Convertible Notesforeign currency exchange contracts and Senior Notes were basedthe related non-functional currency asset or liability. The U.S. dollar equivalent notional value of these short duration foreign currency forward contracts was $383.6 million and $197.5 million, at August 31, 2013 and 2012, respectively. Net foreign currency gains related to these derivative instruments was $0.8 million for the year ended August 31, 2013, which offset foreign currency losses from the related revaluation on non-functional currency assets and liabilities (amounts included in other income and expense in the quoted market prices.10.8. LeasesFuturein effect at August 31, 2010 are(related to continuing operations) were as follows: $18.5$24.1 million in fiscal 2011; $14.12014; $19.1 million in fiscal 2012; $11.52015; $15.9 million in fiscal 2013; $8.82016; $13.3 million in fiscal 2014; $6.72017; $10.3 million in fiscal 20152018; and $22.3$38.6 million in aggregate thereafter. Total related rental expense under operating leases was $22.3$26.0 million $28.8, $24.2 million and $26.3$21.1 million in fiscal 2010, 20092013, 2012 and 2008,2011, respectively. As discussed in Note 17,14, “Contingencies and Litigation” the Company is also contingently liable for certain leases entered into by a former subsidiary.ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)11.9. Employee Benefit PlansU.S. acquisition. Allacquisition, or existing and former employees of foreign businesses. Most of the U.S. defined benefit pension plans are frozen, and as a result, the majority of the plan participants no longer earn additional benefits. The following table provides detail of changes in the projected benefit obligations, the fair value of plan assets and the funded status of the Company’s U.S. defined benefit pension plans as of the Company’s August 31 measurement date (in thousands). 2010 2009 $ 42,281 $ 36,692 — 2,097 2,306 2,483 5,275 3,694 (2,895 ) (2,685 ) $ 46,967 $ 42,281 $ 26,786 $ 31,042 — 1,713 1,233 (3,489 ) 305 205 (2,895 ) (2,685 ) 25,429 26,786 $ (21,538 ) $ (15,495 ) $ (161 ) $ (166 ) (21,377 ) (15,329 ) $ (21,538 ) $ (15,495 ) 2013 2012 Reconciliation of benefit obligations: Benefit obligation at beginning of year $ 50,870 $ 44,430 Adjustment (280 ) — Interest cost 1,928 2,162 Actuarial (gain) loss (4,983 ) 6,855 Benefits paid (2,489 ) (2,577 ) Benefit obligation at end of year $ 45,046 $ 50,870 Reconciliation of plan assets: Fair value of plan assets at beginning of year $ 33,695 $ 32,412 Actual return on plan assets 2,252 2,911 Company contributions 596 949 Benefits paid from plan assets (2,489 ) (2,577 ) Fair value of plan assets at end of year 34,054 33,695 Funded status of the plans (underfunded) $ (10,992 ) $ (17,175 ) Year ended August 31, 2010 2009 2008 $ — $ — $ 83 2,306 2,483 2,254 (2,568 ) (2,934 ) (2,807 ) 310 78 8 $ 48 $ (373 ) $ (462 ) Year ended August 31, 2013 2012 2011 Interest cost $ 1,928 $ 2,162 $ 2,108 Expected return on assets (2,468 ) (2,471 ) (2,221 ) Amortization of actuarial loss 878 675 669 Net benefit cost $ 338 $ 366 $ 556 20102013 and 2009, $14.32012, $12.0 million and $10.4$15.6 million, respectively, related toof pension plan actuarial gains and losses, which have not yet been recognized in net periodic benefit cost, were included in Accumulated Other Comprehensive Loss,accumulated other comprehensive loss, net of2011, $0.42014, $0.4 million of these actuarial gains and losses are expected to be recognized in net periodic benefit cost, net of tax.ACTUANT CORPORATIONcost.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)benefitU.S. pension plan obligations as of August 31 and weighted-average assumptions used to determine net periodic benefit cost for the years ended August 31 are as follows: 2010 2009 2008 4.60 % 5.60 % 6.50 % 5.60 % 6.50 % 6.25 % 8.25 % 8.50 % 8.50 % The accumulated benefit obligation is the actuarial present value of benefits based on service rendered and current and past compensation levels. This differs from the projected benefit obligation in that it includes no assumption about future compensation levels. There is no difference between the accumulated and projected benefit obligations of the Company’s domestic defined benefit pension plans because the majority of these plans are frozen and plan participants no longer earn benefits under the Company’s defined benefit plans. 2013 2012 2011 Assumptions for benefit obligations: Discount rate 4.90 % 3.90 % 5.00 % Assumptions for net periodic benefit cost: Discount rate 3.90 % 5.00 % 4.60 % Expected return on plan assets 7.75 % 7.90 % 8.00 % equitiesequity and fixed income investments are used to maximize the long-term return for plan assets, at a prudent level of risk. The investment portfolio contains a diversified blend of equity and fixed income investments. Within the equity allocation, a blend of growth and value investments are maintained in a variety of market capitalizations and diversified between U.S. and non-U.S. stocks. The Company’s targeted asset allocation as a percentage of total market valueplan assets is 60% to - 80% in equity securities, andwith the remainder invested in fixed income securities and cash. Additionally, cashCash balances are maintained at levels adequate to meet near-term plan expenses and benefit payments. Investment risk is measured and monitored on an ongoing basis through semi-annual investment portfolio reviews.2010,2013, Company’s overall expected long-term rate of return for assets in U.S. pension plans was 8.00%7.65%. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The target return is based on historical returns adjusted to reflect the current view of the long-term investment market.9,6, “Fair Value Measurements”.Measurements.” The following table summarizes the U.S. pension plan investment allocations by asset category were as follows (in thousands): August 31,
2010 % August 31,
2009 % $ 470 1.9 % $ 758 2.8 % 405 1.6 721 2.7 7,104 27.9 7,070 26.4 29 0.1 — — 7,538 29.6 7,791 29.1 13,712 53.9 13,884 51.8 3,709 14.6 4,353 16.3 17,421 68.5 18,237 68.1 $ 25,429 100.0 % $ 26,786 100.0 % Year Ended August 31, 2013 % 2012 % Cash and cash equivalents $ 348 1.0 % $ 250 0.7 % Fixed income securities: Government bonds — — 310 0.9 Corporate bonds 8,741 25.7 7,489 22.2 Mutual funds 3,464 10.2 2,678 8.0 12,205 35.9 10,477 31.1 Equity securities: Mutual funds 21,501 63.1 22,968 68.2 Total plan assets $ 34,054 100.0 % $ 33,695 100.0 % ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)$2.5$2.6 million per year for fiscal 20112014 through 20152018 and $13.9$14.9 million in aggregate for fiscal 2016 through 2020. During fiscal 2011, the Company anticipates contributing $1.4 million to U.S. pension plans.Non-U.S.non-U.S. defined benefit pension plans which cover certain existing and former employees of businesses outside the U.S. Most of the Non-U.S.non-U.S. defined benefit pension plans continue to earn additional benefits. The funded status of these plans (continuing operations) at August 31, 2010 and 2009 is summarized as follows: 2010 2009 $ 8,892 $ 8,002 6,479 5,938 $ (2,413 ) $ (2,064 ) August 31, 2013 2012 Benefit obligation $ 12,912 $ 12,227 Fair value of plan assets 7,790 7,440 Funded status of plans (underfunded) $ (5,122 ) $ (4,787 ) Non-U.S.non-U.S. plans was $0.3$0.8 million $0.4, $0.5 million and $0.4$0.5 million in fiscal 2010, 20092013, 2012 and 2008,2011, respectively. The weighted average discount rate utilized for determining the benefit obligation at August 31, 20102013 and 20092012 was 4.3% and 5.5%4.0%, respectively. The plan assets of these non-U.S. pension plans consist primarily of participating units in common stock and bond funds. The Company’s overall expected long-term rate of return on these investments is 4.5%4.6%. During fiscal 2011,2014, the Company anticipates contributing $0.3$0.6 million in aggregate to non-U.S.these pension plans.Post-RetirementPostretirement Health Benefit Planspost-retirementpostretirement health benefits (“OPEB”) to certain existing and former employees of U.S.domestic businesses it acquired, thatwho were entitled to thosesuch benefits prior to acquisition. These unfunded plans had a benefit obligation of $3.7$2.9 million and $3.5$3.4 million at August 31, 20102013 and 2009,2012, respectively. The valuation of theseThese obligations utilizedare determined utilizing assumptions consistent with those used for U.S. pension plans and a health care cost trend rate of 7.0%7.5%, trending downward to 5% by the year 2014,2018, and remaining level thereafter. A one percentage-point increase or decrease in the assumed health care cost trend rate would increase or decrease the postretirement benefit obligation by approximately $0.2 million and would not have a material effect on aggregate service and interest cost components. Net periodic benefit costs (credit) for the other post-retirementpostretirement benefits were $(0.2)was a credit of approximately $0.2 million for each of the three years ended August 31, 2010, 2009,2013, 2012 and 2008.2011. Benefit payments from the plan are funded through participant contributions and Company contributions, the latter of which are projected to be $0.3$0.3 million for the year ended August 31, 2011. in fiscal 2014.Common Stockcommon stock for its contributions and allocates such sharescontributions. Amounts are allocated to accounts set aside for each employee’s retirement. Employees generally may contribute up to 50% of their compensation to individual accounts within the 401(k) Plan, subject to IRS limitations.Plan. While contributions vary, the Company generally makes core contributions to employee accounts that generally equal to 3% of each employee’s eligible annual cash compensation, subject to IRS limitations. The Company also maintains a Restoration Plan that allows eligible highly compensated employees (as defined by the Internal Revenue Code) to receive a core contribution as if no IRS limits were in place. Company contributions to the Restoration Plan are made in the form of Actuant common stock and are contributed into each eligible participant’s Deferred Compensation Plan account. In addition, the Company matches approximately 25% of each employee’s contribution up to 6% of the employee’s eligible compensation. Expense recognized related to the 401(k) plan totaled approximately $2.7$4.5 million $1.4, $5.1 million and $4.7$4.6 million during for theACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)2010, 20092008,2011, respectively.reductionunfunded SERP plan covers certain executive level employees and has a benefit accrual formula based on age and years of service (with Company contributions ranging from 3% to 6% of eligible wages). Expense recognized in expensefiscal 2013 and 2012 for the year ended August 31, 2010SERP Plan was $0.6 million and 2009 was a result of the temporary suspension (due to adverse economic conditions) of the core contribution for fiscal 2009 and the first half of fiscal 2010.$0.7 million, respectively.at a specified interest rate, in Actuant Common Stock,Company common stock, or a combination of the two. The fixed income portion of the plan is currently unfunded, and therefore all compensation deferred under the plan is held by the Company and commingled with its general assets. Liabilities of $13.0$23.2 million and $12.6$19.6 million are included in “Other current liabilities” and “Other long-term liabilities” on the consolidated balance sheets at August 31, 20102013 and 2009,2012, respectively, to reflect the unfunded portion of the deferred compensation liability. The Company recorded expense of $1.0$1.6 million $0.9, $1.5 million and $0.7$1.2 million for the years ended August 31, 2010, 20092013, 2012 and 2008,2011, respectively, related tofor non-funded interest on participant deferrals in the fixed income investment option. Actuant Common Stock issued by the Company common stock contributions to fund the plan isare held in a rabbi trust. Company shares held by the rabbi trust, are accounted for in a manner similar to treasury stock and are recorded at cost in “Stock held in trust” within shareholders’ equity with the corresponding deferred compensation liability also recorded within shareholders’ equity. Since no investment diversification is permitted within the trust, changes in fair value of Actuant common stock are not recognized. The shares held in the trust are included in both the basic and diluted earnings per share calculations. The cost of the shares held in the trust was $1.0$1.9 million and $0.8$1.5 million at August 31, 20102013 and 2009,2012, respectively.the attainment of a $50Actuant’s common stock meeting or exceeding $50 per share Actuant Common Stock priceover an 8 year period.prior to May 1, 2014. The Company recorded (income)/expense of $0.4$0.3 million $(2.6), $0.1 million and $1.7$0.1 million for the years ended August 31, 2010, 20092013, 2012 and 2008,2011, respectively, pursuant to this plan. A related liability of $0.9$1.3 million and $0.5$1.1 million is included in “Other long-termcurrent liabilities” on the consolidated balance sheets at August 31, 20102013 and 2009,2012, respectively. TheAs of August 31, 2013 the minimum and maximum payoutspayments available under the plan, depending on the attainment of the $50$50 per share stock price appreciation target, are $0$0 and $10.0 million and $20 million,, respectively.Other Non-U.S. Benefit PlansThe Company contributes to a number of other retirement programs, primarily government mandated, for employees outside the United States. Benefit expense under these programs amounted to approximately $3.5 million, $4.3 million and $4.4 million in fiscal 2010, 2009 and 2008, respectively.ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)12.10. Income Taxesbelowas follows (in thousands): Year ended August 31, 2010 2009 2008 $ 9,708 $ — $ 20,914 15,834 19,491 28,464 784 (1,570 ) 2,180 26,326 17,921 51,558 (4,892 ) (12,439 ) 5,416 (2,147 ) (8,053 ) (595 ) (441 ) 3,182 110 (7,480 ) (17,310 ) 4,931 $ 18,846 $ 611 $ 56,489 Year ended August 31, 2013 2012 2011 Currently payable: Federal $ 24,809 $ 22,078 $ (78 ) Foreign 13,335 10,396 20,903 State 902 1,534 586 39,046 34,008 21,411 Deferred: Federal (13,514 ) (495 ) 14,948 Foreign (9,942 ) (4,598 ) (4,223 ) State (218 ) 439 (4,303 ) (23,674 ) (4,654 ) 6,422 $ 15,372 $ 29,354 $ 27,833 Year ended August 31, 2010(1) 2009(2) 2008 35.0 % 35.0 % 35.0 % 0.4 2.0 1.3 (23.5 ) (39.3 ) (10.6 ) (1.9 ) 15.4 1.9 11.1 (10.8 ) 3.4 21.1 % 2.3 % 31.0 % (1)Other items for the year ended August 31, 2010 of 11.1% includes provision to return adjustments and additional provisions for unrecognized tax benefits.(2)Other items for the year ended August 31, 2009 of (10.8%) reflects the benefit of income tax reserve adjustments resulting from settling over twenty tax audits for amounts less than previously accrued. Year ended August 31, 2013 2012 2011 Federal statutory rate 35.0 % 35.0 % 35.0 % State income taxes, net of Federal effect 0.9 1.2 0.4 Net effect of foreign tax rates and credits (8.8 ) (14.6 ) (14.0 ) NOL utilization and changes in valuation allowance (3.1 ) 0.1 (3.0 ) Tax contingency reserve (5.6 ) (2.2 ) (1.6 ) Prior period correction (1) (6.5 ) — — Other items (2.5 ) (0.5 ) 3.4 Effective income tax rate 9.4 % 19.0 % 20.2 % Year ended August 31, 2010 2009 $ 21,391 $ 28,181 12,766 4,365 11,126 8,655 6,522 6,414 2,248 3,046 1,009 1,127 11,940 9,481 67,002 61,269 (8,542 ) (20,238 ) 58,460 41,031 (107,738 ) (112,235 ) (29,346 ) (24,316 ) (905 ) (960 ) (137,989 ) (137,511 ) $ (79,529 ) $ (96,480 ) August 31, 2013 2012 Deferred income tax assets: Operating loss and tax credit carryforwards $ 35,071 $ 16,393 Compensation related liabilities 20,812 9,909 Postretirement benefits 7,731 10,679 Inventory reserves 7,049 8,045 Book reserves and other items 11,523 12,781 Total deferred income tax assets 82,186 57,807 Valuation allowance (22,777 ) (8,153 ) Net deferred income tax assets 59,409 49,654 Deferred income tax liabilities: Depreciation and amortization (129,498 ) (156,751 ) Other items (1,985 ) (2,098 ) Deferred income tax liabilities (131,483 ) (158,849 ) Net deferred income tax liability $ (72,074 ) $ (109,195 ) at August 31, 2010 and 2009 primarily represents a reserve for domesticoperating loss and foreign losstax credit carryforwards for which utilization is uncertain. The reduction in valuation allowance from August 31, 2009 to August 31, 2010 is primarily attributable to amounts reclassified to assets and liabilities of discontinued operations.The deductibility for tax purposes of the 2% Convertible Notes interest may have to be recaptured, in part or in whole, if the notes are redeemed for cash instead of converted into the Company’s Class A common stock. If the 2% Convertible Notes are ultimately converted into the Company’s Class A common stock, the deferred tax liability would be eliminated through an adjustment to the Company’s shareholders’ equity and would not impact current tax accounts.The Company adopted the provisions of accounting for uncertain tax positions on September 1, 2007. 2010 2009 2008 $ 28,541 $ 29,872 $ 20,801 2,868 4,633 9,158 (484 ) — (87 ) (2,700 ) (5,964 ) — $ 28,225 $ 28,541 $ 29,872 2013 2012 2011 Beginning balance $ 24,608 $ 26,179 $ 28,225 Increase for tax positions taken in a prior period 3,601 3,400 4,026 Decrease for tax positions taken in a prior period (7,622 ) (4,579 ) (6,072 ) Decrease due to settlements (2,581 ) (392 ) — Ending balance $ 18,006 $ 24,608 $ 26,179 ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)2010, 20092013, 2012 and 2008,2011, the Company recognized $4.2$2.9 million $3.5, $4.5 million and 3.2$5.1 million, respectively for the payment of interest and penalties related to unrecognized tax benefits. With few exceptions, the Company is no longer subject to U.S. federal, state and local and foreign income tax examinations by tax authorities in our major tax jurisdictions for years before fiscal 2005.2006. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by a range of $2.5up to $4.3 million to $3.5 million within the next twelve months.$387.5$427.1 million at August 31, 2010.2013. If all such undistributed earnings were remitted, an additional income tax provision of approximately $100.8$79.8 million would have been necessary as of August 31, 2010.2013. Year Ended August 31, 2013 2012 2011 Domestic $ 67,392 $ 65,685 $ 47,445 Foreign 95,557 88,945 90,576 $ 162,949 $ 154,630 $ 138,021 to non-United States operations were $33.1benefits, growth investments, debt levels, interest rates and the impact of changes in foreign currency exchange rates. In addition, fiscal 2012 domestic pre-tax earnings include a $16.8 million $43.9 million and $105.3 million for the years ended August 31, 2010, 2009 and 2008, respectively. (domestic) debt refinancing charge.(netnet of refunds)refunds was $6.5$42.1 million $20.1, $56.5 million and $43.4$23.1 million during the years ended August 31, 2010, 20092013, 2012 and 2008,2011, respectively.Note 13.Capital Stock20102013 consisted of 168,000,000 shares of Class A Common Stock, $0.20common stock, $0.20 par value, of which 68,056,38777,001,144 shares were issued and 73,017,631outstanding; 1,500,000 shares of Class B Common Stock, $0.20common stock, $0.20 par value, none of which were issued and outstanding; and 160,000 shares of Cumulative Preferred Stock, $1.00cumulative preferred stock, $1.00 par value (“Preferred Stock”preferred stock”), none of which have been issued. Holders of both classes of the Company’s Common Stockcommon stock are entitled to dividends, as the Company’s board of directors may declare out of funds legally available, subject to any contractual restrictions on the payment of dividends or other distributions.distributions on the common stock. If the Company were to issue any of its Preferred Stock,preferred stock, no dividends could be paid or set asideapart for payment on shares of Common Stock,common stock, unless paid in Common Stock,common stock, until dividends on all of the issued and outstanding shares of Preferred Stockpreferred stock had been paid or set asideapart for payment and provision had been made for any mandatory sinking fund payments.Infourth quarterCompany’s Board of fiscal 2009, the Company completedDirectors authorized a follow-on equity offering of 10,925,000 shares of its Class A common stock. Total proceeds from the offering, net of transactions costs, were $124.8 million, and were usedshare buyback program for up to reduce Senior Credit Facility borrowings.As described in Note 8, “Debt,” the remaining $117.8 million of 2% Convertible Notes are convertible into 5,905,419Common Stock if certain stock price targetscommon stock. The share repurchase plan may be implemented from time to time on the open market or in privately negotiated transactions, with repurchased shares available for use in connection with the Company’s stock-based compensation plans and for other conditions are met. Year Ended August 31, 2010 2009 2008 $ 24,031 $ 13,723 $ 122,544 1,898 2,429 2,444 $ 25,929 $ 16,152 $ 124,988 67,624 58,047 55,813 661 514 1,503 5,924 7,503 7,517 74,209 66,064 64,833 $ 0.36 $ 0.24 $ 2.20 $ 0.35 $ 0.24 $ 1.93 Year Ended August 31, 2013 2012 2011 Numerator: Net earnings $ 30,048 $ 87,290 $ 111,559 Plus: 2% Convertible Notes financings costs, net of taxes — 425 1,755 Net earnings for diluted earnings per share $ 30,048 $ 87,715 $ 113,314 Denominator: Weighted average common shares outstanding for basic earnings per share 72,979 70,099 68,254 Net effect of dilutive securities—employee stock compensation plans 1,601 1,119 1,089 Net effect of 2% Convertible Notes based on the if-converted method — 3,722 5,962 Weighted average common shares outstanding for diluted earnings per share 74,580 74,940 75,305 Basic Earnings Per Share: $ 0.41 $ 1.25 $ 1.63 Diluted Earnings Per Share: $ 0.40 $ 1.17 $ 1.50 20102013, 2012 and 2009,2011, outstanding share based awards to acquire 4,371,000619,000, 2,582,000 and 4,319,0002,582,000 shares of common stock were not included in the Company’s computation of diluted earnings per share because the effect would have been anti-dilutive. The increase in the weighted average common shares outstanding for the year ended August 31, 2010 results from the 10,925,000 shares of common stock issued in connection with the follow-on equity offering in the fourth quarter of 2009.Note 14.Stock PlansShare-based awardsofficerskey employees and key employeesdirectors under the Actuant Corporation 2009 Omnibus Incentive Plan (the Plan)“Plan”). At August 31, 2010, 5,400,0002013, 9,400,000 shares of Class A Common Stockcommon stock were authorized for issuance under the Plan, of which 2,992,3984,503,394 shares arewere available for future award grants. The Plan permits the Company to grant share-based awards, including stock options and restricted stock, to employees and directors. Options generally have a maximum term of ten years, an exercise price equal to 100% of the fair market value of the Company’s common stock at the date of grant and generally vest 50% after three years and 100% after five years. The Company’s restricted stock grants generally have similar vesting provisions. In addition, in fiscal 2012 the Company began issuing Performance Shares under the Plan. The Performance Shares include a three-year performance period, with vesting based 50% on achievement of an absolute Free Cash Flow Conversion target and 50% on the Company’s Total Shareholder Return (TSR) relative to the S&P 600 SmallCap Industrial index. The provisions of share-based awards may vary by individual grant with respect to vesting period, dividend and voting rights, performance conditions and forfeitures, among other things.ACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)under all plansduring fiscal 2013 is as follows: Shares Weighted-Average
Exercise Price (Per Share) Weighted-Average
Remaining Contractual
Term Aggregate
Intrinsic ValueOutstanding on September 1, 2012 5,289,384 $ 22.33 Granted 276,136 28.70 Exercised (1,278,626 ) 19.48 Forfeited (107,343 ) 22.10 Outstanding on August 31, 2013 4,179,551 $ 23.66 5.3 $ 48.8 million Exercisable on August 31, 2013 2,609,876 $ 23.92 4.2 $ 30.8 million Year Ended August 31, 2010 2009 2008 $ 7.56 $ 6.78 $ 10.39 2,607 5,881 6,575 1,732 365 3,310 Year Ended August 31, 2013 2012 2011 Weighted-average fair value of options granted (per share) $ 10.49 $ 8.73 $ 10.74 Intrinsic value of options exercised 15,803 7,946 7,540 Cash receipts from exercise of options 24,840 6,550 4,324 the statusrestricted stock activity (including Performance Shares) during fiscal 2013 is as follows: Number of
Shares Weighted-Average Fair Value at Grant Date (Per Share) Outstanding August 31, 2012 1,507,443 $23.85 Granted 430,793 29.18 Forfeited (131,688 ) 22.76 Vested (212,359 ) 20.46 Outstanding August 31, 2013 1,594,189 25.83 the Company’s restricted shares as of August 31, 2010, and changes during the year then ended, is presented below: Number of
Shares Weighted-
Average
Fair Value
at Grant
Date
(Per Share) 484,724 $ 20.91 432,963 19.30 (49,969 ) 20.28 (38,682 ) 27.88 829,036 $ 19.78 As of August 31, 2010,2013$27.4$29.8 million of total unrecognized compensation cost related to share-based compensation forawards, including stock options and restricted stock outstanding.awards/units. That cost is expected to be recognized over a weighted average period of 3.32.9 years. The total fair value of shares vested during the fiscal years ended August 31, 20102013 and 20092012 was $0.7$6.2 million and $3.3$3.3 million, respectively. The Company issues previously unissued shares of Class A common stock to satisfy stock option exercises and restricted stock vesting.was calculatedis determined using the Black-Scholes option pricing model for options granted in the first half of fiscal 2005 and aACTUANT CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)options granted thereafter.options. The fair value of Performance Shares with market vesting conditions is determined utilizing a Monte Carlo simulation model. Assumptions used to determine the fair value of each option were based upon historical data and standard industry valuation practices and methodology. The following weighted-average assumptions were used for new grants in each fiscal year: Fiscal Year Ended August 31, 2010 2009 2008 0.23 % 0.22 % 0.14 % 40.01 % 38.07 % 32.77 % 2.76 % 1.70 % 3.24 % 15 % 15 % 15 % 6.1 years 6.0 years 6.0 years Outside Director Deferred Compensation PlanThe Company has a deferred compensation plan that enables non-employee directors, Fiscal Year Ended August 31, 2013 2012 2011 Dividend yield 0.14 % 0.18 % 0.15 % Expected volatility 38.36 % 39.97 % 39.62 % Risk-free rate of return 0.84 % 1.19 % 2.53 % Expected forfeiture rate 15 % 15 % 15 % Expected life 6.1 years 6.1 years 6.1 years its board of directors to defer the receipt of fees earned for their services in exchange for newly issued shares of Company common stock (which is placed in a rabbi trust). All distributions from the trust are required to be made in Company stock. Company shares held by the rabbi trust are accounted for in a manner similar to treasury stock and are recorded at cost as “stock held in trust” within shareholders’ equity with the corresponding deferred compensation liability also recorded within shareholders’ equity. Since no investment diversification is permitted within the trust, changes in fair value of Actuant common stock are not recognized. The shares held in the trust are included in both the basic and diluted earnings per share calculations. The cost of the shares held in the trust at August 31, 2010 and 2009 was $0.9 million and $0.8 million, respectively.Note 15.Accumulated Other Comprehensive Income (loss)Accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets and consolidated statements of shareholders equity consists of the following (in thousands): 2010 2009 $ (50,590 ) $ (15,745 ) (16,515 ) (8,839 ) — (15 ) $ (67,105 ) $ (24,599 ) Note 16.Business Segment, Geographic and Customer Informationfour Electrical and Engineered Solutions. The Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Energy segment provides joint integrity products and services, customized offshore vessel mooring solutions, as well as umbilical, rope and cable solutions to the global oil & gas, power generation and energy markets. The Electrical segment is primarily involved in the design, manufacture and distribution of a broad range of electrical products to the retail DIY, wholesale, OEM, utility and harsh environment markets. The Engineered Solutions segment provides highly engineered position and motion control systems to OEMs in various vehicle markets, as well as a variety of other products to the industrial products.ACTUANT CORPORATIONand agricultural markets.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Year Ended August 31, 2010 2009 2008 $ 299,983 $ 286,851 $ 374,498 235,723 259,490 212,400 233,702 241,988 329,395 391,100 329,296 529,847 $ 1,160,508 $ 1,117,625 $ 1,446,140 $ 299,983 $ 286,851 $ 374,498 235,723 259,490 212,400 233,702 241,988 329,395 284,633 228,031 407,964 106,467 101,265 121,883 $ 1,160,508 $ 1,117,625 $ 1,446,140 $ 66,344 $ 67,451 $ 113,808 30,702 44,092 47,985 19,853 3,327 35,145 31,681 (28,432 ) 50,614 (26,808 ) (18,710 ) (30,912 ) $ 121,772 $ 67,728 $ 216,640 $ 6,571 $ 6,413 $ 5,222 17,276 17,322 11,466 10,470 8,594 9,334 14,898 16,763 17,365 2,660 2,886 1,322 $ 51,875 $ 51,978 $ 44,709 $ 779 $ 2,804 $ 6,203 7,212 5,568 9,228 5,662 3,731 4,828 4,517 1,568 10,642 1,796 7,783 13,506 $ 19,966 $ 21,454 $ 44,407 August 31, 2010 2009 $ 241,036 $ 190,397 491,053 471,158 326,129 392,126 434,976 423,238 83,707 91,512 44,802 — $ 1,621,703 $ 1,568,431 Year Ended August 31, 2013 2012 2011 Net Sales by Segment: Industrial $ 422,620 $ 419,295 $ 393,013 Energy 363,372 349,163 293,060 Engineered Solutions 493,750 508,063 473,237 $ 1,279,742 $ 1,276,521 $ 1,159,310 Net Sales by Reportable Product Line: Industrial $ 422,620 $ 419,295 $ 393,013 Energy 363,372 349,163 293,060 Vehicle Systems 253,073 279,549 328,763 Other 240,677 228,514 144,474 $ 1,279,742 $ 1,276,521 $ 1,159,310 Operating Profit (Loss): Industrial $ 117,644 $ 114,777 $ 98,415 Energy 63,280 62,205 49,345 Engineered Solutions 40,328 60,851 63,612 General Corporate (31,107 ) (33,319 ) (38,485 ) $ 190,145 $ 204,514 $ 172,887 Depreciation and Amortization: Industrial $ 8,553 $ 8,358 $ 8,655 Energy 18,451 18,115 18,152 Engineered Solutions 16,949 15,093 13,916 General Corporate 2,145 2,030 2,579 Discontinued Operations 7,804 10,667 9,694 $ 53,902 $ 54,263 $ 52,996 Capital Expenditures: Industrial $ 3,524 $ 5,333 $ 3,590 Energy 9,417 8,962 8,978 Engineered Solutions 7,001 3,463 5,966 General Corporate 867 1,905 1,902 Discontinued Operations 2,859 3,077 2,660 $ 23,668 $ 22,740 $ 23,096 August 31, 2013 2012 Assets: Industrial $ 280,110 $ 268,735 Energy 817,547 540,409 Electrical — 437,914 Engineered Solutions 652,581 667,550 General Corporate 96,488 92,511 Assets of discontinued operations 272,606 — $ 2,119,332 $ 2,007,119 acquisitions, divestitures,acquisition/divestiture activities, restructuring costs and related benefits and the non-cash asset impairment charges in fiscal 2009 of $26.6 million and $4.7 million in the Engineered Solutions and Electrical segments, respectively.benefits. Corporate assets, which are not allocated, principally represent cash and cash equivalents, capitalized debt issuance costs and deferred income taxes, the fair value of derivative instruments and, prior to fiscal 2010, the retained interest in trade accounts receivable (subject to the accounts receivable program discussed in Note 5, “Accounts Receivable Securitization.”) Year Ended August 31, 2010 2009 2008 $ 602,546 $ 608,783 $ 764,729 164,822 138,733 228,983 42,882 44,647 58,962 98,027 114,342 111,010 252,231 211,120 282,456 $ 1,160,508 $ 1,117,625 $ 1,446,140 August 31, 2010 2009 $ 48,193 $ 56,378 16,440 16,970 12,014 16,876 1,506 4,397 34,692 37,402 $ 112,845 $ 132,023 Year Ended August 31, 2013 2012 2011 Net Sales: United States $ 549,057 $ 599,831 $ 479,070 Netherlands 159,396 185,112 207,787 United Kingdom 144,131 141,037 116,935 Australia 68,255 47,472 27,854 France 52,806 48,681 49,971 All other 306,097 254,388 277,693 $ 1,279,742 $ 1,276,521 $ 1,159,310 August 31, 2013 2012 Long-lived Assets: Norway $ 59,557 $ 941 United Kingdom 54,136 17,672 United States 41,161 50,950 China 19,551 20,166 Netherlands 10,418 12,166 All other 20,358 17,725 $ 205,181 $ 119,620 2.8%, 2.8%, and 2.4%less than 3.0% of its sales in each of the last three fiscal 2010, 2009 and 2008, respectively.years. Export sales from domestic operations were less than 7.2%approximately 8.0% of total net sales in each of the periods presented.17.14. Contingencies and Litigation$9.1$10.7 million and $8.9$8.5 million at August 31, 20102013 and 2009,2012, respectively, the majority of which secure self-insured workers compensation liabilities. insurance, patent claims and divestiture disputes. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable that a loss has been incurred as of the balance sheet date, can be reasonably estimated and is not covered by insurance. In the opinion of management, the resolution of these contingencies will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.The Company, in the normal course of business, enters into certain real estate and equipment leases or guarantees such leases on behalf of its subsidiaries. In conjunction with the spin-off of a former subsidiary in fiscal 2000, the Company assigned its rights in the leases used by the former subsidiary, but was not released as a responsible party from all such leases by the lessors. All of these businesses were subsequently sold. thoselease payments under leases if any of thesebusinesses that it previously divested or spun-off, in the event that such businesses are unable to fulfill their obligations thereunder.future lease payment obligations. The discounted present value of future minimum lease payments for these leases was $3.3$10.9 million at August 31, 2010.costs that have no future economic value are expensed. Liabilities are recorded when environmental remediation is probable and the costs are reasonably estimable. Environmental expenditures over the lastpast three years have not been material. Management believes that such costs will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.18.15. Guarantor SubsidiariesJune 12, 2007,April 16, 2012, Actuant Corporation (the “Parent”) issued $250.0$300.0 million of 6.875%5.625% Senior Notes. All of our material domestic wholly owned subsidiaries (the “Guarantors”) fully and unconditionally guarantee (except for certain customary limitations) the 6.875%5.625% Senior Notes on a joint and several basis. There are no significant restrictions on the ability of the Guarantors to make distributions to the Parent. The following tables present the results of operations, financial position and cash flows of Actuant Corporation and its subsidiaries, the Guarantor and non-Guarantor entities, and the eliminations necessary to arrive at the information for the Company on a consolidated basis.Certain revisions have been made to correct the prior year presentation Year Ended August 31, 2013 Parent Guarantors Non-Guarantors Eliminations Consolidated Net sales $ 196,531 $ 293,884 $ 789,327 $ — $ 1,279,742 Cost of products sold 65,178 201,704 505,910 — 772,792 Gross profit 131,353 92,180 283,417 — 506,950 Selling, administrative and engineering expenses 69,734 59,358 164,774 — 293,866 Amortization of intangible assets 1,276 10,481 11,182 — 22,939 Operating profit 60,343 22,341 107,461 — 190,145 Financing costs, net 25,270 9 (442 ) — 24,837 Intercompany expense (income), net (21,041 ) 1,082 19,959 — — Other expense (income), net (2,105 ) (571 ) 5,035 — 2,359 Earnings from continuing operations before income tax expense 58,219 21,821 82,909 — 162,949 Income tax expense (benefit) (798 ) 2,009 14,161 — 15,372 Net earnings before equity in earnings (loss) of subsidiaries 59,017 19,812 68,748 — 147,577 Equity in earnings (loss) of subsidiaries (26,527 ) 7,822 2,173 16,532 — Earnings from continuing operations 32,490 27,634 70,921 16,532 147,577 Loss from discontinued operations (2,442 ) (76,634 ) (38,453 ) — (117,529 ) Net earnings (loss) $ 30,048 $ (49,000 ) $ 32,468 $ 16,532 $ 30,048 Comprehensive income (loss) $ 30,860 $ (48,416 ) $ 31,099 $ 17,317 $ 30,860 (In thousands) Year Ended August 31, 2010 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 143,783 $ 456,961 $ 559,764 $ — $ 1,160,508 47,370 333,829 352,057 — 733,256 96,413 123,132 207,707 — 427,252 75,814 87,987 104,065 — 267,866 2,054 7,418 6,125 — 15,597 — 14,463 7,554 — 22,017 18,545 13,264 89,963 — 121,772 31,589 17 253 — 31,859 (21,388 ) 2,610 18,778 — — (55 ) 1,613 (847 ) — 711 8,399 9,024 71,779 — 89,202 2,930 2,355 13,561 — 18,846 5,469 6,669 58,218 — 70,356 18,562 2,011 (3,920 ) (16,653 ) — 24,031 8,680 54,298 (16,653 ) 70,356 — — (46,325 ) — (46,325 ) $ 24,031 $ 8,680 $ 7,973 $ (16,653 ) $ 24,031 Year Ended August 31, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated Net sales $ 206,894 $ 328,295 $ 741,332 $ — $ 1,276,521 Cost of products sold 69,902 220,271 474,888 — 765,061 Gross profit 136,992 108,024 266,444 — 511,460 Selling, administrative and engineering expenses 79,742 61,113 144,065 — 284,920 Amortization of intangible assets 1,341 10,515 10,170 — 22,026 Operating profit 55,909 36,396 112,209 — 204,514 Financing costs, net 29,983 (14 ) (408 ) — 29,561 Debt refinancing costs 16,830 — — — 16,830 Intercompany expense (income), net (32,185 ) 6,281 25,904 — — Other expense, net 1,351 1,992 150 — 3,493 Earnings from continuing operations before income tax expense 39,930 28,137 86,563 — 154,630 Income tax expense 6,700 4,677 17,977 — 29,354 Net earnings before equity in earnings of subsidiaries 33,230 23,460 68,586 — 125,276 Equity in earnings of subsidiaries 56,407 14,373 1,649 (72,429 ) — Earnings from continuing operations 89,637 37,833 70,235 (72,429 ) 125,276 (Loss) earnings from discontinued operations (2,347 ) 11,373 (47,012 ) — (37,986 ) Net earnings $ 87,290 $ 49,206 $ 23,223 $ (72,429 ) $ 87,290 Comprehensive income $ 35,497 $ 24,934 $ 6,064 $ (30,998 ) $ 35,497 (In thousands) Year Ended August 31, 2009 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 139,389 $ 466,415 $ 511,821 $ — $ 1,117,625 52,949 337,903 338,546 — 729,398 86,440 128,512 173,275 — 388,227 54,189 90,944 104,871 — 250,004 2,408 10,026 7,096 — 19,530 — 28,543 2,778 31,321 — 13,881 5,763 — 19,644 29,843 (14,882 ) 52,767 — 67,728 41,025 141 683 — 41,849 (15,797 ) (1,942 ) 17,739 — — (194 ) (435 ) (85 ) — (714 ) 4,809 (12,646 ) 34,430 — 26,593 4,117 (8,872 ) 5,366 — 611 692 (3,774 ) 29,064 — 25,982 398 26,286 (7,678 ) (19,006 ) — 1,090 22,512 21,386 (19,006 ) 25,982 12,633 1,643 (26,535 ) — (12,259 ) $ 13,723 $ 24,155 $ (5,149 ) $ (19,006 ) $ 13,723 Year Ended August 31, 2011 Parent Guarantors Non-Guarantors Eliminations Consolidated Net sales $ 170,094 $ 302,911 $ 686,305 $ — $ 1,159,310 Cost of products sold 55,256 200,332 438,920 — 694,508 Gross profit 114,838 102,579 247,385 — 464,802 Selling, administrative and engineering expenses 87,333 57,288 125,771 — 270,392 Amortization of intangible assets 335 12,060 9,128 — 21,523 Operating profit 27,170 33,231 112,486 — 172,887 Financing costs, net 31,912 (1 ) 208 — 32,119 Intercompany expense (income), net (16,924 ) 14,670 2,254 — — Other expense (income), net (4,519 ) 112 7,154 — 2,747 Earnings from continuing operations before income tax expense 16,701 18,450 102,870 — 138,021 Income tax expense 4,148 2,680 21,005 — 27,833 Net earnings before equity in earnings of subsidiaries 12,553 15,770 81,865 — 110,188 Equity in earnings of subsidiaries 112,364 77,395 6,261 (196,020 ) — Earnings from continuing operations 124,917 93,165 88,126 (196,020 ) 110,188 (Loss) earnings from discontinuing operations (13,358 ) 8,881 5,848 — 1,371 Net earnings $ 111,559 $ 102,046 $ 93,974 $ (196,020 ) $ 111,559 Comprehensive income $ 160,985 $ 130,503 $ 106,875 $ (237,378 ) $ 160,985 (In thousands) Year Ended August 31, 2008 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 180,212 $ 574,022 $ 691,906 $ — $ 1,446,140 66,589 416,013 434,425 — 917,027 113,623 158,009 257,481 — 529,113 73,574 105,586 119,372 — 298,532 — 10,167 3,774 — 13,941 40,049 42,256 134,335 — 216,640 33,806 244 2,359 — 36,409 (29,581 ) 20,690 8,891 — — 501 8,663 (11,213 ) — (2,049 ) 35,323 12,659 134,298 — 182,280 10,668 3,869 41,952 — 56,489 24,655 8,790 92,346 — 125,791 97,889 97,165 5,882 (200,936 ) — 122,544 105,955 98,228 (200,936 ) 125,791 — 1,855 (5,102 ) — (3,247 ) $ 122,544 $ 107,810 $ 93,126 $ (200,936 ) $ 122,544 August 31, 2013 Parent Guarantors Non-Guarantors Eliminations Consolidated ASSETS Cash and cash equivalents $ 16,122 $ — $ 87,864 $ — $ 103,986 Accounts receivable, net 20,471 40,343 158,261 — 219,075 Inventories, net 27,343 38,948 76,258 — 142,549 Deferred income taxes 13,002 — 5,794 — 18,796 Prepaid expenses and other current assets 7,454 963 19,811 — 28,228 Assets of discontinued operations — 192,129 80,477 — 272,606 Total current assets 84,392 272,383 428,465 — 785,240 Property, plant & equipment, net 7,050 22,801 171,645 — 201,496 Goodwill 62,543 264,502 407,907 — 734,952 Other intangibles, net 13,247 141,258 222,187 — 376,692 Intercompany receivable — 480,633 360,620 (841,253 ) — Investment in subsidiaries 2,086,534 201,779 96,333 (2,384,646 ) — Other long-term assets 12,654 22 8,276 — 20,952 Total assets $ 2,266,420 $ 1,383,378 $ 1,695,433 $ (3,225,899 ) $ 2,119,332 LIABILITIES & SHAREHOLDERS’ EQUITY Trade accounts payable $ 22,194 $ 30,637 $ 101,218 $ — $ 154,049 Accrued compensation and benefits 13,835 2,716 27,249 — 43,800 Income taxes payable 8,135 — 5,879 — 14,014 Other current liabilities 21,268 4,630 31,001 — 56,899 Liabilities of discontinued operations — 23,466 29,614 — 53,080 Total current liabilities 65,432 61,449 194,961 — 321,842 Long-term debt 515,000 — — — 515,000 Deferred income taxes 64,358 — 51,507 — 115,865 Pension and post-retirement benefit liabilities 16,267 — 4,431 — 20,698 Other long-term liabilities 51,479 390 13,791 — 65,660 Intercompany payable 473,617 — 367,636 (841,253 ) — Shareholders’ equity 1,080,267 1,321,539 1,063,107 (2,384,646 ) 1,080,267 Total liabilities and shareholders’ equity $ 2,266,420 $ 1,383,378 $ 1,695,433 $ (3,225,899 ) $ 2,119,332 (In thousands) August 31, 2010 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 5,055 $ — $ 35,167 $ — $ 40,222 16,467 61,675 107,551 — 185,693 23,680 69,172 53,302 — 146,154 30,701 — — — 30,701 2,645 3,705 6,228 — 12,578 — — 44,802 — 44,802 78,548 134,562 247,050 — 460,150 5,166 41,226 61,990 — 108,382 68,969 417,914 218,006 — 704,889 — 242,310 94,668 — 336,978 — 227,792 212,847 (440,639 ) — 1,511,103 319,196 115,846 (1,946,145 ) — 8,421 130 2,753 — 11,304 $ 1,672,207 $ 1,383,120 $ 953,160 $ (2,386,784 ) $ 1,621,703 $ 16,055 $ 35,546 $ 78,450 $ — $ 130,051 22,057 11,083 20,072 — 53,212 43,822 — 6,496 — 50,318 20,898 14,354 39,309 — 74,561 — — 37,695 — 37,695 102,832 60,983 182,022 — 345,837 367,380 — — — 367,380 84,694 — 25,536 — 110,230 27,144 972 (44 ) — 28,072 20,257 766 9,440 — 30,463 330,179 — 110,460 (440,639 ) — 739,721 1,320,399 625,746 (1,946,145 ) 739,721 $ 1,672,207 $ 1,383,120 $ 953,160 $ (2,386,784 ) $ 1,621,703 August 31, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated ASSETS Cash and cash equivalents $ 12,401 $ 91 $ 55,692 $ — $ 68,184 Accounts receivable, net 20,401 74,006 140,349 — 234,756 Inventories, net 29,658 75,905 106,127 — 211,690 Deferred income taxes 17,942 — 4,641 — 22,583 Prepaid expenses and other current assets 8,157 1,166 14,745 — 24,068 Total current assets 88,559 151,168 321,554 — 561,281 Property, plant & equipment, net 6,944 31,818 77,122 — 115,884 Goodwill 62,543 433,193 370,676 — 866,412 Other intangibles, net 14,522 206,194 225,168 — 445,884 Intercompany receivable — 418,253 307,282 (725,535 ) — Investment in subsidiaries 1,886,478 250,738 90,770 (2,227,986 ) — Other long-term assets 12,297 22 5,339 — 17,658 Total assets $ 2,071,343 $ 1,491,386 $ 1,397,911 $ (2,953,521 ) $ 2,007,119 LIABILITIES & SHAREHOLDERS’ EQUITY Trade accounts payable $ 21,722 $ 44,893 $ 108,131 $ — $ 174,746 Accrued compensation and benefits 23,459 6,646 28,712 — 58,817 Income taxes payable 3,129 — 2,649 — 5,778 Current maturities of debt 7,500 — — — 7,500 Other current liabilities 20,876 11,566 39,723 — 72,165 Total current liabilities 76,686 63,105 179,215 — 319,006 Long-term debt 390,000 — — — 390,000 Deferred income taxes 91,604 — 41,049 — 132,653 Pension and post-retirement benefit liabilities 22,500 — 3,942 — 26,442 Other long-term liabilities 59,929 620 26,633 — 87,182 Intercompany payable 378,788 — 346,747 (725,535 ) — Shareholders’ equity 1,051,836 1,427,661 800,325 (2,227,986 ) 1,051,836 Total liabilities and shareholders’ equity $ 2,071,343 $ 1,491,386 $ 1,397,911 $ (2,953,521 ) $ 2,007,119 (In thousands) August 31, 2009 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 126 $ — $ 11,259 $ — $ 11,385 233 7,049 148,238 — 155,520 18,000 70,513 72,143 — 160,656 21,891 — (1,036 ) — 20,855 4,140 2,763 8,343 — 15,246 44,390 80,325 238,947 — 363,662 6,829 47,488 74,801 — 129,118 68,969 416,785 225,768 — 711,522 — 256,494 93,755 — 350,249 1,551,852 287,991 122,569 (1,962,412 ) — 2,115,530 2,386,859 2,472,569 (6,974,958 ) — 13,014 24 842 — 13,880 $ 3,800,584 $ 3,475,966 $ 3,229,251 $ (8,937,370 ) $ 1,568,431 $ 3,291 $ — $ 1,673 $ — $ 4,964 11,528 28,697 68,108 — 108,333 7,488 5,318 17,273 — 30,079 15,691 — 4,887 — 20,578 20,672 20,311 30,157 — 71,140 58,670 54,326 122,098 — 235,094 400,135 — — — 400,135 80,972 — 36,363 — 117,335 19,093 1,091 17,478 — 37,662 21,775 944 8,116 — 30,835 2,472,569 2,115,530 2,386,859 (6,974,958 ) — 747,370 1,304,075 658,337 (1,962,412 ) 747,370 $ 3,800,584 $ 3,475,966 $ 3,229,251 $ (8,937,370 ) $ 1,568,431 Year Ended August 31, 2013 Parent Guarantors Non-Guarantors Eliminations Consolidated Operating Activities Net cash provided by operating activities $ 81,597 $ 26,095 $ 86,097 $ — $ 193,789 Investing Activities Proceeds from sale of property, plant & equipment 563 206 852 — 1,621 Proceeds from sale of business — — 4,854 — 4,854 Capital expenditures (2,022 ) (4,021 ) (17,625 ) — (23,668 ) Business acquisitions, net of cash acquired — — (235,489 ) — (235,489 ) Cash used in investing activities (1,459 ) (3,815 ) (247,408 ) — (252,682 ) Financing Activities Net borrowings on revolving credit facilities 125,000 — — — 125,000 Intercompany loan activity (179,050 ) (22,371 ) 201,421 — — Principal repayment on term loans (7,500 ) — — — (7,500 ) Payment of deferred acquisition consideration (1,350 ) — (4,028 ) — (5,378 ) Debt issuance costs (2,035 ) — — — (2,035 ) Purchase of treasury shares (41,832 ) — — — (41,832 ) Stock option exercises and related tax benefits 33,261 — — — 33,261 Cash dividend (2,911 ) — — — (2,911 ) Cash provided (used in) financing activities (76,417 ) (22,371 ) 197,393 — 98,605 Effect of exchange rate changes on cash — — (3,910 ) — (3,910 ) Net increase (decrease) in cash and cash equivalents 3,721 (91 ) 32,172 — 35,802 Cash and cash equivalents—beginning of year 12,401 91 55,692 — 68,184 Cash and cash equivalents—end of year $ 16,122 $ — $ 87,864 $ — $ 103,986 (In thousands) Year Ended August 31, 2010 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 137,143 $ (6,739 ) $ 42,827 $ (52,145 ) $ 121,086 1 439 796 — 1,236 — — 7,516 — 7,516 (1,219 ) (8,309 ) (10,438 ) — (19,966 ) — (9,374 ) (36,492 ) — (45,866 ) (1,218 ) (17,244 ) (38,618 ) — (57,080 ) (12,608 ) — (1,705 ) — (14,313 ) (22,894 ) — — — (22,894 ) (96,107 ) 55,378 40,729 — — 3,315 — — — 3,315 (2,702 ) (31,395 ) (20,750 ) 52,145 (2,702 ) (130,996 ) 23,983 18,274 52,145 (36,594 ) — — 1,425 — 1,425 4,929 — 23,908 — 28,837 126 — 11,259 11,385 $ 5,055 $ — $ 35,167 $ — $ 40,222 Year Ended August 31, 2012 Parent Guarantors Non-Guarantors Eliminations Consolidated Operating Activities Net cash provided by operating activities $ 97,454 $ 20,363 $ 64,512 $ — $ 182,329 Investing Activities Proceeds from sale of property, plant & equipment 1,909 353 6,239 — 8,501 Capital expenditures (5,062 ) (4,069 ) (13,609 ) — (22,740 ) Business acquisitions, net of cash acquired — — (69,309 ) — (69,309 ) Cash used in investing activities (3,153 ) (3,716 ) (76,679 ) — (83,548 ) Financing Activities Net repayments on revolving credit facilities (57,990 ) — (177 ) — (58,167 ) Intercompany loan activity (11,482 ) (16,556 ) 28,038 — — Principal repayment on term loans (2,500 ) — — — (2,500 ) Repurchases of 2% Convertible Notes (102 ) — — — (102 ) Proceeds from issuance of 5.625% Senior Notes 300,000 — — — 300,000 Redemption of 6.875% Senior Notes (250,000 ) — — — (250,000 ) Payment of deferred acquisition consideration (290 ) — (668 ) — (958 ) Debt issuance costs (5,490 ) — — — (5,490 ) Purchase of treasury shares (63,083 ) — — — (63,083 ) Stock option exercises and related tax benefits 10,913 — — — 10,913 Cash dividend (2,748 ) — — — (2,748 ) Cash provided (used in) financing activities (82,772 ) (16,556 ) 27,193 — (72,135 ) Effect of exchange rate changes on cash — — (2,683 ) — (2,683 ) Net increase in cash and cash equivalents 11,529 91 12,343 — 23,963 Cash and cash equivalents—beginning of year 872 — 43,349 — 44,221 Cash and cash equivalents—end of year $ 12,401 $ 91 $ 55,692 $ — $ 68,184 (In thousands) Year Ended August 31, 2009 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 82,428 $ 22,960 $ 85,163 $ (43,836 ) $ 146,715 — 512 1,350 — 1,862 38,455 — — — 38,455 (489 ) (5,275 ) (15,690 ) — (21,454 ) (234,600 ) (3,066 ) (1,756 ) — (239,422 ) (196,634 ) (7,829 ) (16,096 ) — (220,559 ) 15,325 — 1,332 — 16,657 102,579 15,357 (117,936 ) — — (279,100 ) — — — (279,100 ) 115,000 — — — 115,000 (9,158 ) — — — (9,158 ) 124,781 — — — 124,781 4,024 — — — 4,024 (2,251 ) (30,701 ) (13,135 ) 43,836 (2,251 ) 71,200 (15,344 ) (129,739 ) 43,836 (30,047 ) — — (7,273 ) — (7,273 ) (43,006 ) (213 ) (67,945 ) — (111,164 ) 43,132 213 79,204 — 122,549 $ 126 $ — $ 11,259 $ — $ 11,385 Year Ended August 31, 2011 Parent Guarantors Non-Guarantors Eliminations Consolidated Operating Activities Net cash provided by operating activities $ 92,573 $ 3,122 $ 77,404 $ (1,533 ) $ 171,566 Investing Activities Proceeds from sale of property, plant & equipment 103 313 1,363 — 1,779 Proceeds from sale of business — — 3,463 — 3,463 Capital expenditures (5,284 ) (4,740 ) (13,072 ) — (23,096 ) Business acquisitions, net of cash acquired (153,409 ) — (159,697 ) — (313,106 ) Cash used in investing activities (158,590 ) (4,427 ) (167,943 ) — (330,960 ) Financing Activities Net borrowings on revolving credit facilities 58,000 — 204 — 58,204 Proceeds from issuance of term loans 100,000 — — — 100,000 Repurchases of 2% Convertible Notes (34 ) — — — (34 ) Intercompany loan activity (96,454 ) 1,655 94,799 — — Payment of deferred acquisition consideration — (350 ) — — (350 ) Debt issuance costs (5,197 ) — — — (5,197 ) Stock option exercises and related tax benefits 8,235 — — — 8,235 Cash dividend (2,716 ) — (1,533 ) 1,533 (2,716 ) Cash provided by financing activities 61,834 1,305 93,470 1,533 158,142 Effect of exchange rate changes on cash — — 5,251 — 5,251 Net increase (decrease) in cash and cash equivalents (4,183 ) — 8,182 — 3,999 Cash and cash equivalents—beginning of year 5,055 — 35,167 — 40,222 Cash and cash equivalents—end of year $ 872 $ — $ 43,349 $ — $ 44,221 (In thousands) Year Ended August 31, 2008 Parent Guarantors Non-Guarantors Eliminations Consolidated $ 62,962 $ 121,996 $ 95,750 $ (110,611 ) $ 170,097 1,491 8,328 4,246 — 14,065 (2,602 ) (8,385 ) (33,420 ) — (44,407 ) (47,390 ) (210 ) (62,509 ) — (110,109 ) (48,501 ) (267 ) (91,683 ) — (140,451 ) (1,909 ) — 2,155 — 246 (833 ) (37,376 ) 38,209 — — — — (1,015 ) — (1,015 ) (2,221 ) (84,140 ) (26,471 ) 110,611 (2,221 ) 8,029 — — — 8,029 3,066 (121,516 ) 12,878 110,611 5,039 — — 1,184 — 1,184 17,527 213 18,129 — 35,869 25,605 — 61,075 — 86,680 $ 43,132 $ 213 $ 79,204 $ — $ 122,549 19.16. Quarterly Financial Data (Unaudited)20102013 and fiscal 20092012 is as follows: Year Ended August 31, 2010 First Second Third Fourth Total $ 272,640 $ 267,438 $ 310,068 $ 310,362 $ 1,160,508 100,123 96,363 116,186 114,580 427,252 2,831 9,968 1,448 2,447 16,694 13,260 7,895 28,293 20,909 70,356 (1,406 ) (738 ) (6,458 ) (37,723 ) (46,325 ) 11,854 7,157 21,835 (16,814 ) 24,031 $ 0.20 $ 0.12 $ 0.42 $ 0.31 $ 1.04 0.19 0.11 0.39 0.29 0.97 (0.02 ) (0.01 ) (0.10 ) (0.56 ) (0.68 ) (0.02 ) (0.01 ) (0.09 ) (0.51 ) (0.62 ) 0.18 0.11 0.32 (0.25 ) 0.36 0.17 0.10 0.30 (0.22 ) 0.35 Year Ended August 31, 2009 First Second Third Fourth Total $ 335,274 $ 263,709 $ 257,620 $ 261,022 $ 1,117,625 121,934 88,304 89,759 88,230 388,227 674 2,564 8,494 9,111 20,843 11,628 5,108 5,310 3,936 25,982 (30 ) (1,864 ) (22,945 ) 12,580 (12,259 ) 11,598 3,244 (17,635 ) 16,516 13,723 $ 0.21 $ 0.09 $ 0.09 $ 0.06 $ 0.45 0.19 0.09 0.09 0.06 0.43 0.00 (0.03 ) (0.40 ) 0.20 (0.21 ) 0.00 (0.03 ) (0.36 ) 0.18 (0.19 ) 0.21 0.06 (0.31 ) 0.26 0.24 0.19 0.06 (0.27 ) 0.24 0.24 Year Ended August 31, 2013 First Second Third Fourth Total Net sales $ 307,809 $ 300,468 $ 344,205 $ 327,260 $ 1,279,742 Gross profit 124,368 116,178 136,904 129,500 506,950 Earnings from continuing operations 30,551 25,834 46,077 45,115 147,577 Earnings (loss) from discontinued operations 5,792 2,601 (139,060 ) 13,138 (117,529 ) Net earnings (loss) 36,343 28,435 (92,983 ) 58,253 30,048 Earnings from continuing operations per share: Basic $ 0.42 $ 0.35 $ 0.63 $ 0.62 $ 2.02 Diluted 0.41 0.35 0.62 0.60 1.98 Earnings (loss) from discontinued operations per share: Basic $ 0.08 $ 0.04 $ (1.90 ) $ 0.18 $ (1.61 ) Diluted 0.08 0.03 (1.86 ) 0.18 (1.58 ) Net earnings (loss) per share: Basic $ 0.50 $ 0.39 $ (1.27 ) $ 0.80 $ 0.41 Diluted 0.49 0.38 (1.24 ) 0.78 0.40 Year Ended August 31, 2012 First Second Third Fourth Total Net sales $ 309,966 $ 300,919 $ 343,268 $ 322,368 $ 1,276,521 Gross profit 127,015 116,083 138,754 129,608 511,460 Earnings from continuing operations 33,970 27,653 27,737 35,916 125,276 Earnings (loss) from discontinued operations 3,204 4,522 6,664 (52,376 ) (37,986 ) Net earnings (loss) 37,174 32,175 34,401 (16,460 ) 87,290 Earnings from continuing operations per share: Basic $ 0.50 $ 0.41 $ 0.39 $ 0.49 $ 1.79 Diluted 0.46 0.37 0.36 0.48 1.68 Earnings (loss) from discontinued operations per share: Basic $ 0.04 $ 0.06 $ 0.09 $ (0.72 ) $ (0.54 ) Diluted 0.04 0.06 0.09 (0.70 ) (0.51 ) Net earnings (loss) per share: Basic $ 0.54 $ 0.47 $ 0.48 $ (0.23 ) $ 1.25 Diluted 0.50 0.43 0.45 (0.22 ) 1.17 Additions Deductions Balance at
Beginning
of Period Charged to
Costs and
Expenses Acquired/
(Divested)/
(Discontinued) Accounts
Written
Off Less
Recoveries Other Balance
at End of
Period $ 8,633 $ 2,437 $ (644 ) $ (2,452 ) $ (294 ) $ 7,680 6,830 4,030 117 (2,332 ) (12 ) 8,633 7,856 1,100 80 (2,224 ) 18 6,830 $ 24,297 $ 6,536 $ (92 ) $ (8,076 ) $ (683 ) $ 21,982 17,603 10,070 1,529 (4,366 ) (539 ) 24,297 15,765 6,478 385 (5,339 ) (314 ) 17,603 $ 20,238 $ 3,670 $ (8,633 ) $ (6,601 ) $ (132 ) $ 8,542 21,952 11,350 — (12,950 ) (115 ) 20,238 17,993 4,466 — (645 ) 138 21,952 Note: valuation accounts are deducted from the related assets to which they apply in the consolidated balance sheets. Additions Deductions Description Balance at
Beginning of
Period Charged to
Costs and
Expenses Acquired/
(Divested)/
(Discontinued) Accounts
Written Off
Less
Recoveries Other Balance at
End of
Period Allowance for losses—Trade accounts receivable August 31, 2013 $ 4,375 $ 584 $ (437 ) $ (787 ) $ (34 ) $ 3,701 August 31, 2012 7,173 107 96 (2,740 ) (261 ) 4,375 August 31, 2011 7,680 1,021 939 (3,048 ) 581 7,173 Valuation allowance—Income taxes August 31, 2013 $ 8,153 $ 4,527 $ 11,281 $ (1,184 ) $ — $ 22,777 August 31, 2012 7,260 2,954 — (2,061 ) — 8,153 August 31, 2011 8,542 4,498 — (5,831 ) 51 7,260 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A.Controls and Procedures2010,2013, the Company’s internal control over financial reporting was effective.Selantic, Biach Industries, Hydrospex and Team HydrotecViking SeaTech ("Viking") from its assessment of internal control over financial reporting as of August 31, 20102013 because they werethe business was acquired by the Company in a purchase business combination during fiscal 2010.on August 27, 2013. Subsequent to the acquisition, certain elements of the acquired businesses’Viking's internal control over financial reporting and related processes were integrated into the Company’s existing systems and internal control over financial reporting. Those controls that were not integrated have been excluded from management’s assessment of the effectiveness of internal control over financial reporting as of August 31, 2010. All2013. Viking is a wholly-owned subsidiary of the fiscal 2010 acquisitions are wholly-owned subsidiariesCompany whose total assets and total revenues excluding integrated elements, represent 5%13% and 1%less than1%, respectively, of the related consolidated financial statement amounts as of and for the year ended August 31, 2010.consolidated financial statements and the effectiveness of internal controls over financial reporting as of August 31, 2010,2013, as stated in their report which is included herein.20102013 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.Item 9B.Other InformationDirectors; Executive Officers and Corporate Governance Directors; Executive Officers and Corporate Governance20112014 (the “2011“2014 Annual Meeting Proxy Statement”). Information about compliance with Section 16(a) of the Exchange Act is incorporated by reference from the “Other Information—Section 16(a) Beneficial Ownership Reporting Compliance” section in the Company’s 20112014 Annual Meeting Proxy Statement. Information about the Company’s Audit Committee, including the members of the committee, and the Company’s Audit Committee financial experts, is incorporated by reference from the “Election of Directors” and “Corporate Governance Matters” sections of the Company’s 20112014 Annual Meeting Proxy Statement. Information about the Company’s executive officers required by this item is contained in the discussion entitled “Executive Officers of the Registrant” in Part I hereof.any amendments to, or waivers from, provisions of its code of ethics that apply to the chief executive officer, chief financial officer or corporate controller by posting such information on the Company’s website.Executive Compensation2011Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters2011
Item 13. Certain Relationships and Related Transactions, and Director Independence |
The information required by this item is incorporated by reference from the “Certain Relationships and Related Party Transactions” section of the 2011