POWL » Topics » Switchgear & Instrumentation Limited (S&I)

This excerpt taken from the POWL 10-K filed Dec 7, 2007.
Switchgear & Instrumentation Limited (“S&I”)
 
On July 4, 2005, we acquired selected assets and assumed certain operating liabilities and contracts of S&I. S&I’s primary manufacturing facility is located in the United Kingdom. This acquisition is part of our overall strategy to increase our international presence. S&I affords us the opportunity to serve our customers with products covering a wider range of electrical standards and opens new geographic markets previously closed due to a lack of product portfolio. The fit, culture and market position of Powell and S&I compare favorably as both have similar reputations in engineered-to-order solutions. S&I is a supplier of medium- and low-voltage switchgear, intelligent motor control systems and power distribution solutions to a wide range of process industries, with a focus on oil and gas, petrochemical and other process-related industries. Total consideration paid for S&I was approximately $18.0 million (excluding expenses of approximately $1.2 million). Approximately $10.3 million was funded from


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Table of Contents

 
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
existing cash and investments, with the balance provided from the UK Term Loan (as defined in Note H herein). The results of operations of S&I are included in the Company’s consolidated financial statements beginning July 4, 2005. The consolidated balance sheet of Powell includes an allocation of the purchase price to the assets acquired and liabilities assumed based on estimates of fair value.
 
The purchase price allocation was as follows (in thousands):
 
             
          Estimated
    Amount     Life
 
Accounts receivable
  $ 4,730     N/A
Costs and estimated earnings in excess of billings
    4,492     N/A
Inventories
    3,745     N/A
Prepaid expenses and other current assets
    379     N/A
Property, plant and equipment
    9,542     3 to 25 years
Unpatented technology
    2,175     7 years
Tradenames
    1,025     10 years
Backlog
    646     6 months
Accounts payable
    (5,793 )   N/A
Billings in excess of costs and estimated earnings
    (1,440 )   N/A
Other accrued expenses
    (334 )   N/A
             
Total purchase price
  $ 19,167      
             
 
The amounts assigned to property, plant and equipment were based on management’s estimate of the property and plant, as well as the more significant pieces of machinery and equipment, using various factors including comparisons to similar assets and market valuations. The amounts assigned to intangible assets were estimated by management based on comparisons of replacement costs, industry data and the anticipated future benefits of the assets.
 
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