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SEC Filings

10-Q
NEXEO SOLUTIONS, INC. filed this Form 10-Q on 05/10/2018
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Deferred Taxes

Deferred tax assets and liabilities are attributable to the difference between the estimated fair values allocated to inventory, property and equipment and identified intangibles acquired for financial reporting purposes and the amounts determined for tax reporting purposes and give rise to temporary differences.  The deferred tax assets and liabilities will reverse in future periods or have reversed as the related tangible and intangible assets are amortized, acquired inventory is sold, or if goodwill is impaired.

Impact of the Ultra Chem Acquisition on the Company’s Condensed Consolidated Financial Information

For the three and six months ended March 31, 2018, the Company’s consolidated sales and operating revenues include $19.8 million and $40.4 million, respectively, related to the operations of the acquired business. For the three and six months ended March 31, 2018, the Company’s consolidated net income includes less than $0.1 million and $0.3 million, respectively, related to the operations of the acquired business.

Unaudited Consolidated Pro Forma Financial Information
 
The unaudited consolidated pro forma results presented below include the effects of the Ultra Chem Acquisition as if it had occurred as of October 1, 2015, the beginning of the fiscal year prior to the date the Ultra Chem Acquisition occurred.  The unaudited consolidated pro forma results reflect certain adjustments related to this acquisition, primarily reflecting a full period of Ultra Chem Group’s results of operations for each period presented, amortization expense associated with estimates for the acquired intangible assets, the effects of inventory step up from the acquisition, transaction costs, interest expense and income taxes.

The unaudited consolidated pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the Ultra Chem Acquisition occurred on October 1, 2015.
 
Three Months Ended March 31,
 
Six Months Ended March 31,
 
2018
 
2017
 
2018
 
2017
Sales and operating revenues
$
1,041.0

 
$
936.0

 
$
1,970.6

 
$
1,747.8

Operating income
$
17.0

 
$
12.9

 
57.7

 
12.3

Net income (loss) from continuing operations
$
0.4

 
$
(0.7
)
 
26.9

 
(8.6
)
Net income (loss)
$
0.4

 
$
(0.7
)
 
26.9

 
(8.6
)
Basic net income (loss) per share
$
0.01

 
$
(0.01
)
 
0.35

 
(0.11
)
Diluted net income (loss) per share
$
0.01

 
$
(0.01
)
 
0.35

 
(0.11
)
 
 
 
 
 
 
 
 
Pro forma weighted average number of common shares outstanding
 
 
 
 
 
 
 
Basic
76,795,742

 
76,746,168

 
76,794,618

 
76,746,168

Diluted
77,281,397

 
76,746,168

 
77,209,536

 
76,746,168


Asset Acquisitions

In December 2016, the Company acquired customer contracts and a customer list. Additionally, in connection with this transaction, the Company entered into a supply agreement and a licensing agreement granting the Company the non-exclusive use of a certain trademark. The total consideration associated with this transaction was $8.5 million, of which $5.1 million was paid at closing. Of the remaining consideration, the Company paid $1.7 million in January 2018 and the remaining $1.7 million will be paid in January 2019. At March 31, 2018, this amount is included in Accrued expenses and other liabilities on the Company’s condensed consolidated balance sheets. In connection with this transaction, the Company recognized intangible assets totaling $8.5 million which are included in Other intangible assets, net of amortization on the Company’s condensed consolidated balance sheets. The acquired intangible assets will be fully amortized over estimated useful lives ranging between 10 and 13 years.


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