Quarterly report pursuant to Section 13 or 15(d)

Asset Swap Transaction

v3.20.1
Asset Swap Transaction
3 Months Ended
Mar. 31, 2020
Business Combinations [Abstract]  
Asset Swap Transaction
6. Asset Swap Transaction:
On February 19, 2020, the Company entered into a long-term agreement with a leading global thermoplastic producer to supply glass beads, and to meet that supply, exchanged inventory and production equipment related to the Company’s ThermoDrop® product line for inventory, production equipment and two glass bead manufacturing facilities (the “beads business”) of the thermoplastic producer (the “asset swap”) in a non-cash transaction. The acquisition of the beads business qualified for recognition as a business combination, which has been recorded using the acquisition method of accounting. Under the acquisition method, the purchase price is
allocated to the identifiable net assets acquired based on the fair value as of the acquisition date. The excess of the purchase price over the fair value of the identifiable net assets acquired is recorded to goodwill.
The fair value of the assets exchanged related to the Company’s ThermoDrop® product line represents the purchase price consideration for the beads business. Based on the preliminary estimate of the fair value of the assets disposed, the Company recognized a loss on disposal of $9,907 during the three months ended March 31, 2020, which is included in other operating expense, net in the Company’s condensed consolidated statement of income. The following table sets forth the preliminary estimate of the consideration given and the identifiable net assets acquired with respect to the asset swap:
Provisional Purchase Price Allocation
Total consideration $ 25,166   
Recognized amounts of identifiable assets acquired and liabilities assumed:
Inventories $ 9,912   
Property, plant and equipment 9,490   
Right-of-use lease assets 378   
Fair value of assets acquired 19,780   
Operating lease liabilities, current (203)  
Operating lease liabilities, non-current (175)  
(378)  
Fair value of net assets acquired 19,402   
Goodwill 5,764   
$ 25,166   
The valuation of the identifiable net assets acquired is preliminary and subject to change, as the Company is in the process of evaluating the information required to determine both the fair values of the assets disposed as well as the net assets acquired, including those related to inventory and property, plant and equipment. Adjustments to the provisional amounts during the measurement period that result in changes to depreciation or other income effects will be recognized in the reporting period(s) in which the adjustments are determined. Results of the beads business since the date of the asset swap are included in the Company’s condensed consolidated statement of income and are not material for disclosure.
The Company believes that the asset swap will expand its geographic footprint, enabling it to better serve its current and future customers. Combined with anticipated synergies within its existing business, this contributed to a total purchase price that resulted in the recognition of goodwill. All of the goodwill was assigned to the Company’s Performance Materials segment. The goodwill associated with the asset swap is still under evaluation for tax purposes.