Registration Statement No. 333-196235


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Based upon the above indicators, MacDermid evaluated these customer list intangible assets for potential impairment.  In accordance with ASC 360, a long-lived asset (asset group) shall be tested for recoverability whenever

 

 

42

 

events or changes in circumstances indicate that a long-lived asset (asset group) may not be recoverable.  Under ASC 360, impairment is defined as the condition that exists when the carrying amounts of a long-lived asset (asset group) exceeds its fair value.  MacDermid utilized an “income approach ” method to test the Performance Materials Asia customer list intangible assets for impairment.  In step one of the testing, MacDermid compared the carrying amounts of the Performance Materials Asia customer list intangible assets to the undiscounted cash flows expected to be generated from the use and eventual disposition of the customer list intangible assets over their remaining useful lives.  Four of the customer lists passed the first step of the testing procedures, with significant headroom.  Two of the customer lists failed the first step of the testing procedures; therefore, MacDermid performed the second step of impairment testing.  In the second step of the testing procedures, the estimated fair value of the Performance Materials Asia customer list intangible assets was determined by estimating the after-tax cash flows attributable to the assets and then discounting these cash flows to a present value using a risk-adjusted discount rate.  The cash flow model utilized in the customer list intangible asset impairment test involves significant judgments related to future growth rates, discount rates and tax rates, among other considerations.  The step-two testing procedures indicated that the two customer lists that failed the first step of the testing were impaired because the carrying value of these assets exceeded their estimated fair value by $46.4 million.

 

Interest Expense, net

 

Interest expense for the Predecessor 2012 Period decreased by $4.9 million, or 9.0%, compared to the Predecessor 2011 Period due to lower outstanding debt balances.

 

Other (Expense) Income, net

 

Other income, net for the Predecessor 2012 Period was $5.0 million compared to the $9.4 million of other income, net recorded during the Predecessor 2011 Period.  For the Predecessor 2012 Period, MacDermid recorded a net remeasurement gain of $5.7 million on foreign currency denominated debt partially offset by foreign exchange losses of $1.1 million.  For the Predecessor 2011 Period, MacDermid recorded a net remeasurement gain of $9.2 million on foreign currency denominated debt and a gain of $0.6 million on settled foreign currency hedges partially offset by foreign exchange of $0.2 million.

 

Income Tax Expense

 

Income tax expense was $24.7 million in the Predecessor 2012 Period compared to $10 million for the Predecessor 2011 Period.  For the Predecessor 2012 Period, MacDermid’s effective tax rate was 34.8% compared to 88.0% for the Predecessor 2011 Period.  MacDermid is a U.S. based company with a statutory income tax rate of 35%.  MacDermid operates in various foreign countries, which have tax rates that are different from the U.S. statutory tax rate.  The effective tax rate for the Predecessor 2012 Period was impacted by the imposition of foreign taxes at different tax rates of ($11.6 million), an increase in uncertain tax positions of $5.7 million and an increase in the valuation allowance for federal, state and foreign net operating losses and tax credits of $6.9 million.  The effective tax rate for the Predecessor 2011 Period was impacted an increase in the valuation allowance for federal, state and foreign net operating losses and tax credits of $6.7 million.

 

Segment Reporting

 

The following discussion breaks down MacDermid’s net sales and operating profit by operating segment for the Predecessor 2012 Period compared to the Predecessor 2011 Period.

 

Performance Materials—Net sales decreased by $9.1 million, or 1.6%, for the Predecessor 2012 Period as compared to the Predecessor 2011 Period, and were negatively impacted by $14.8 million due to the increase in value of the U.S. Dollar during the Predecessor 2012 Period compared to the Predecessor 2011 Period.  Our Americas operations experienced the highest net sales growth among the geographic regions in our Performance Materials segment for the Predecessor 2012 Period of $14.1 million, or 8.6%, due to an increase in our sales of offshore industry products.  In Europe, our Performance Materials segment had lower sales of $11.1 million, or 5.5%, due to a stronger U.S. Dollar against the Euro and British Pound Sterling as discussed above.  Our Performance Materials segment in Asia had lower sales of $12.1 million, or 6.0%, for the Predecessor 2012 Period compared to the Predecessor 2011 Period due to lower sales in China as a result of our strategic decision in 2011 to cease selling low margin products in Asia which negatively impacted sales in 2012 and the sale of our Australian and New Zealand industrial operations in

 

 

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2011, which negatively impacted 2012 sales by approximately $6.8 million.  Overall our sales of our offshore products increased by 25.5% from the Predecessor 2011 Period compared to the Predecessor 2012 Period within our Performance Materials segment while our sales of our industrial and electronics products decreased by 4.5% and 6.8%, respectively, from the Predecessor 2011 Period compared to the Predecessor 2012 Period within our Performance Materials segment.

 

Operating profit for the Performance Materials segment for the Predecessor 2012 Period increased by $51.8 million, or 170.7%, as compared to the Predecessor 2011 Period.  This increase is primarily attributable to the $46.4 million of impairment charges related to a write down of certain customer list intangible assets in the Performance Materials segment in Asia recorded during the Predecessor 2011 Period and the decision in 2011 to cease selling low margin products in Asia.  The Performance Materials segment operating profit was positively impacted by $2.3 million for the Predecessor 2012 Period due to the increase in value of the U.S. Dollar during the Predecessor 2012 Period compared to the Predecessor 2011 Period.

 

 

 

Year Ended

December 31,

 

 

 

 

 

 

2012

 

 

2011

 

 

Change

 

(amounts in thousands)

 

Predecessor

 

 

Predecessor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

559,520

 

 

$

568,578

 

 

 

-1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

82,101

 

 

 

30,331

 

 

 

170.7

%

Graphic Solutions—Net sales increased by $11.5 million, or 7.2%, for the Predecessor 2012 Period as compared to the Predecessor 2011 Period, and were negatively impacted by $3.8 million due to the increase in value of the U.S. Dollar.  The Graphic Solutions segment in the Americas reported higher net sales levels for the Predecessor 2012 Period of $9.0 million, or 10.2%, compared to the Predecessor 2011 Period due to stronger customer demand for digital printing sheets and the introduction of new products.  This increase primarily reflects a gain in market share as a result of customers switching to MacDermid’s LUX ® process.  The Graphic Solutions segment in Europe had higher net sales for the Predecessor 2012 Period of $2.6 million, or 4.6%, compared to the Predecessor 2011 Period due to market share gains from new product sales.

 

Operating profit for the Graphic Solutions segment for the Predecessor 2012 Period was $7.4 million, or 28.8%, higher than the Predecessor 2011 Period, an increase primarily due to the increase in net sales in the Graphic Solutions segment in the Americas and Europe, as discussed above, and the introduction of higher margin products in 2011 in those operations which carried into the full year of 2012.  The Graphic Solutions segment operating profit for the Predecessor 2012 Period was negatively impacted by $1.1 million due to the increase in value of the U.S. Dollar during the Predecessor 2012 Period compared to the Predecessor 2011 Period.

 


 

 

Year Ended

December 31,

 

 

 

 

 

 

2012

 

 

2011

 

 

Change

 

(amounts in thousands)

 

Predecessor

 

 

Predecessor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Graphic Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

171,700

 

 

$

160,195

 

 

 

7.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

32,996

 

 

 

25,617

 

 

 

28.8

%

 

44

 
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Registration Statement No. 333-196235 icon¨ registration statement pursuant to section 12(b) or (g) of the securities exchange act of 1934

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Registration Statement No. 333-196235 iconX registration statement pursuant to section 12(b) or (g) of the securities exchange act of 1934

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Registration Statement No. 333-196235 iconRegistration statement pursuant to section 12(b) or (g) of the securities exchange act of 1934

Registration Statement No. 333-196235 iconRegistration statement pursuant to section 12(b) or 12(g) of the securities exchange act of 1934

Registration Statement No. 333-196235 iconRegistration statement pursuant to section 12(b) or (g) of the securities exchange act of 1934

Registration Statement No. 333-196235 icon[ ] registration statement pursuant to section 12(b) or (g) of the...

Registration Statement No. 333-196235 iconRegistration statement pursuant to section 12(b) or (g) of the securities exchange act of 1934




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