What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2020-10-26 compared with 2019-10-29 · 548 added, 609 removed, 706 unchanged (62% of the section changed)

3 unchanged sentences

Consolidated Statements of Operations for the years ended August 31, 2020, 2019 and 2018

Consolidated Statements of Comprehensive (Loss) Income for the years ended August 31, 2019, 2018 and 2017

Consolidated Balance Sheets as of August 31, 2019 and 2018

Consolidated Statements of Comprehensive Income (Loss) for the years ended August 31, 20 20 , 201 9 and 201 8

Consolidated Balance Sheets as of August 31, 20 20 a nd 201 9

Consolidated Statements of Cash Flows for the years ended August 31, 20 20 , 201 9 and 201 8

5 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Actuant Corporation

To the Board of Directors and Shareholders of Enerpac Tool Group Corp.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Actuant Corporation and its subsidiaries (the “Company”) as of August 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive (loss) income, changes in shareholders’ equity and cash flows for each of the three years in the period ended August 31, 2019, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Enerpac Tool Group Corp.

and its subsidiaries (the “Company”) as of August 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity and of cash flows for each of the three years in the period ended August 31, 2020, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of August 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated statements, the Company changed the manner in which it accounts for leases in 2020.

Basis for Opinions

11 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded HTL Group from its assessment of internal control over financial reporting as of August 31, 2020 because it was acquired by the Company in a purchase business combination during 2020.

We have also excluded HTL Group from our audit of internal control over financial reporting.

HTL Group is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 2% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended August 31, 2020.

Definition and Limitations of Internal Control over Financial Reporting

8 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment - Cortland U.S.

Reporting Unit

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $260.4 million as of August 31, 2019, and the goodwill associated with the Other segment was $17.5 million, which includes the Cortland U.S.

reporting unit.

Goodwill Impairment Assessment – Certain Reporting Unit within the Other Segment

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $281.2 million as of August 31, 2020.

Goodwill associated with the Other segment was $17.6 million.

Management tests goodwill for impairment annually, during the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.

If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded.

In estimating fair value, management utilizes a discounted cash flow model, which is dependent on a number of assumptions including forecasted revenues, operating profit margins, and the weighted average costs of capital.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Cortland U.S.

reporting unit is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the reporting unit.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions, including the forecasted revenues, operating profit margins, and weighted average costs of capital.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained from these procedures.

In estimating fair value, management utilizes a discounted cash flow model, which is dependent on a number of assumptions, most significantly forecasted revenues and operating profit margins, and the weighted average cost of capital.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of a certain reporting unit within the Other segment is a critical audit matter are the significant judgment by management when developing the fair value measurement of the reporting unit;

this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating evidence related to the forecasted revenues and operating profit margins assumptions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting unit.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the reporting unit.

These procedures also included, among others, testing management’s process for developing the fair value estimate;

evaluating the appropriateness of the discounted cash flow model;

testing the completeness, accuracy, and relevance of underlying data used in the model;

and evaluating the reasonableness of significant assumptions used by management, including the forecasted revenues, operating profit margins, and weighted average costs of capital.

testing the completeness and accuracy of underlying data used in the model;

and evaluating the reasonableness of significant assumptions used by management related to the forecasted revenues and operating profit margins.

Evaluating management’s assumptions related to the forecasted revenues and operating profit margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model, and certain significant assumptions, including the weighted average cost of capital.

/s/ PricewaterhouseCoopers LLP

2 unchanged sentences

We have served as the Company’s auditor since 1997.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

1 unchanged sentence

Year Ended August 31,

2020 2019 2018

Product $ 379,899 $ 478,946 $ 489,623

Service & rental 113,393 175,812 151,680

1 unchanged sentence

Cost of products sold

Product 204,524 247,771 264,878

Service & rental 71,575 114,335 93,141

Total cost of products sold 276,099 362,106 358,019

Gross profit 217,193 292,652 283,284

Selling, administrative and engineering expenses 180,513 209,231 210,256

Amortization of intangible assets 8,323 8,922 9,280

Director & officer transition charges

Restructuring charges 7,335 4,156 10,555

Impairment & divestiture charges

Operating profit (loss)

Impairment & divestiture (benefit) charges ( 3,159 ) 22,827 2,987

Operating profit 24,181 47,516 50,206

Financing costs, net 19,218 28,163 30,872

Other expense, net

Earnings (loss) before income tax expense (benefit)

Income tax expense (benefit)

Net earnings (loss) from continuing operations

(Loss) earnings from discontinued operations, net of income taxes

Earnings (loss) per share from continuing operations

(Loss) earnings per share from discontinued operations

Loss per share

Other (income) expense, net ( 2,886 ) 629 138

Earnings before income tax expense 7,849 18,724 19,196

Income tax expense 2,292 10,657 14,450

Net earnings from continuing operations 5,557 8,067 4,746

Loss from discontinued operations, net of income taxes ( 4,834 ) ( 257,212 ) ( 26,394 )

Net earnings (loss) $ 723 $ ( 249,145 ) $ ( 21,648 )

Earnings per share from continuing operations

Basic $ 0.09 $ 0.13 $ 0.08

Diluted $ 0.09 $ 0.13 $ 0.08

Loss per share from discontinued operations

Basic ( 0.08 ) ( 4.21 ) ( 0.44 )

Diluted ( 0.08 ) ( 4.18 ) ( 0.43 )

Earnings (loss) per share

Basic 0.01 ( 4.07 ) ( 0.36 )

Diluted 0.01 ( 4.04 ) ( 0.35 )

Weighted average common shares outstanding

Basic 59,952 61,151 60,441

Diluted 60,269 61,607 61,028

The accompanying notes are an integral part of these consolidated financial statements.

ACTUANT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

ENERPAC TOOL GROUP CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Twelve Months Ended August 31,

Twelve Months Ended

2020 2019 2018

Net income (loss) $ 723 $ ( 249,145 ) $ ( 21,648 )

Other comprehensive income, net of tax

Foreign currency translation adjustments 23,224 ( 27,527 ) 49,307

Foreign currency translation due to divested business

Pension and other postretirement benefit plans

Recognition of foreign currency translation losses from divested businesses 51,994 34,909 —

Pension, other postretirement benefit plans, and cash flow hedges ( 603 ) ( 4,809 ) 3,709

Total other comprehensive income, net of tax 74,615 2,573 53,016

Comprehensive (loss) income

Comprehensive income (loss) $ 75,338 $ ( 246,572 ) $ 31,368

The accompanying notes are an integral part of these consolidated financial statements.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

CONSOLIDATED BALANCE SHEETS

8 unchanged sentences

Property, plant and equipment, net 61,405 56,729

Goodwill 281,154 260,415

Other intangible assets, net 62,382 52,375

Other long-term assets 78,221 24,430

Total assets $ 824,294 $ 1,124,274

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

24 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

1 unchanged sentence

Year Ended August 31,

2020 2019 2018

Operating Activities

Net (loss) earnings from discontinued operations

Net earnings (loss) from continuing operations

Net earnings (loss) $ 723 $ ( 249,145 ) $ ( 21,648 )

Net loss from discontinued operations ( 4,834 ) ( 257,212 ) ( 26,394 )

Net earnings from continuing operations 5,557 8,067 4,746

Adjustments to reconcile net earnings to net cash provided by operating activities - continuing operations:

Impairment & divestiture charges, net of tax effect

Impairment & divestiture (benefit) charges, net of tax effect ( 2,506 ) 20,930 12,385

Depreciation and amortization 20,720 20,217 20,405

Stock-based compensation expense 9,624 10,882 11,333

Provision (benefit) for deferred income taxes

(Benefit) provision for deferred income taxes ( 7,819 ) 3,955 5,588

Amortization of debt issuance costs 2,549 1,200 2,399

Other non-cash adjustments

Other non-cash charges 1,204 405 285

Changes in components of working capital and other, excluding acquisitions and divestitures:

Accounts receivable 44,749 ( 4,993 ) ( 7,462 )

Inventories 8,960 ( 7,760 ) ( 1,142 )

Trade accounts payable ( 32,081 ) 6,858 ( 1,872 )

4 unchanged sentences

Cash provided by operating activities - continuing operations 17,999 40,903 71,916

Cash provided by operating activities - discontinued operations

Cash provided by operating activities

Cash (used in) provided by operating activities - discontinued operations ( 21,158 ) 12,942 34,177

Cash (used in) provided by operating activities ( 3,159 ) 53,845 106,093

Investing Activities

2 unchanged sentences

Rental asset buyout for Viking divestiture — — ( 27,718 )

Proceeds from sale of business, net of transaction costs

Proceeds from sale of business/product line 10,226 — 8,902

Cash paid for business acquisitions, net of cash acquired ( 33,298 ) — ( 23,218 )

Other investing activities ( 710 ) — —

Cash used in investing activities - continuing operations ( 35,127 ) ( 13,461 ) ( 52,951 )

2 unchanged sentences

Financing Activities

Borrowings on revolving credit facility 395,000 — —

Principal payments on revolving credit facility ( 140,000 ) — —

Redemption of 5.625% Senior Notes ( 287,559 ) — —

Principal repayment on term loan ( 175,000 ) ( 72,500 ) ( 30,000 )

Payment for redemption of term loan — ( 200,000 ) —

Proceeds from issuance of term loan — 200,000 —

Principal repayments on term loan

Redemption of 5.625% senior notes

Purchase of treasury shares ( 27,520 ) ( 22,481 ) —

11 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

Common Stock Additional

Capital Treasury

Stock Retained

Earnings Accumulated

Comprehensive

Trust Deferred

Liability Total

Shareholders’

Shares Amount

Balance at August 31, 2017 80,200 $ 16,040 $ 138,449 $ ( 617,731 ) $ 1,191,042 $ ( 227,261 ) $ ( 2,696 ) $ 2,696 $ 500,539

Net loss — — — — ( 21,648 ) — — — ( 21,648 )

Other comprehensive income, net of tax — — — — — 53,016 — — 53,016

4 unchanged sentences

Stock option exercises 780 156 14,984 — — — — — 15,140

Tax effect of stock option exercises and restricted stock vesting

Tax effect related to net share settlement of equity awards — — ( 1,281 ) — — — — — ( 1,281 )

Stock issued to, acquired for and distributed from rabbi trust 25 5 384 — — — 246 ( 246 ) 389

Balance at August 31, 2018 81,424 16,285 167,448 ( 617,731 ) 1,166,955 ( 174,245 ) ( 2,450 ) 2,450 558,712

Net loss — — — — ( 249,145 ) — — — ( 249,145 )

Other comprehensive income, net of tax — — — — — 2,573 — — 2,573

2 unchanged sentences

Cash dividend ($0.04 per share) — — — — ( 2,419 ) — — — ( 2,419 )

Treasury stock repurchases — — — ( 22,481 ) — — — — ( 22,481 )

Stock based compensation expense — — 13,318 — — — — — 13,318

2 unchanged sentences

Stock issued to, acquired for and distributed from rabbi trust 35 7 511 — — — ( 620 ) 620 518

Adoption of accounting standards — — — — 75 — — — 75

Balance at August 31, 2019 81,919 16,384 181,213 ( 640,212 ) 915,466 ( 171,672 ) ( 3,070 ) 3,070 301,179

Net income — — — — 723 — — — 723

Other comprehensive income, net of tax — — — — — 74,615 — — 74,615

7 unchanged sentences

Stock issued to, acquired for and distributed from rabbi trust 23 5 294 — — — 508 ( 508 ) 299

Adoption of accounting standard (Note 1)

Adoption of accounting standards (Note 1) — — — — 3,873 ( 3,667 ) — — 206

Balance at August 31, 2020 82,594 $ 16,519 $ 193,492 $ ( 667,732 ) $ 917,671 $ ( 100,724 ) $ ( 2,562 ) $ 2,562 $ 359,226

The accompanying notes are an integral part of these consolidated financial statements.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Nature of Operations:

Actuant Corporation, doing business as Enerpac Tool Group (“Actuant” or the “Company”), is a global manufacturer of a broad range of industrial products and solutions, organized into three operating segments.

Enerpac Tool Group Corp.

(the “Company”), formerly known as Actuant Corporation, is a global manufacturer of a broad range of industrial products and solutions, organized into two operating segments.

The Industrial Tools & Services segment ("IT&S"), the Company's only reportable segment, is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the industrial, maintenance, infrastructure, oil & gas, energy and other markets.

3 unchanged sentences

All intercompany balances, transactions and profits have been eliminated in consolidation.

Certain prior year amounts have been reclassified to conform to current year presentation, as discussed in the New Accounting Pronouncements section.

During the fourth quarter of fiscal 2019, the Company’s financial reporting segments were modified to reflect changes in our reporting structure as a result of entering into a Securities Purchase Agreement ("SPA") to sell the remaining businesses within our legacy Engineered Components & Systems segment exclusive of Cortland U.S.

The Company now has three operating segments;

Industrial Tools & Services ("IT&S"), Other, and Engineered Components and Systems ("EC&S").

The IT&S segment remains unchanged from our previous segment structure and represents the only reportable segment.

All prior period disclosures have been adjusted to reflect the one reportable segment.

The IT&S reportable segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools as well as providing services and tool rentals to the industrial, maintenance, infrastructure, oil & gas, energy and other markets.

The Other operating segment is comprised of Cortland U.S., along with the Viking business which was divested on the first day of the second quarter of fiscal 2018.

These two operating segments represent continuing operations within our consolidated financial statements.

The EC&S segment, after the change in reporting structure, represents the businesses currently subject to the SPA with an anticipated closure date in the fourth calendar quarter of 2019, as well as the Cortland Fibron and Precision Hayes International ("PHI") businesses which were divested in fiscal 2019.

As the pending divestiture of the remaining businesses within the EC&S segment in combination with the divestiture of Cortland Fibron and PHI represent a strategic shift in our operations, the results of operations for the EC&S segment are classified in "(Loss) earnings from discontinued operations" within the Consolidated Statements of Operations for all periods presented.

In addition, the Consolidated Balance Sheets have been recast such that the assets and liabilities of the EC&S segment are classified as "Assets from discontinued operations" and "Liabilities from discontinued operations", respectively, for both periods presented.

Furthermore, all disclosures within these footnotes to the financial statements have also been recast to coincide with our updated segmentation.

The Company has two operating segments:

Industrial Tools & Services ("IT&S") and Other, with IT&S representing the only reportable segment.

At August 31, 2019, the Company's former Engineered Components & Systems ("EC&S") segment was considered held for sale and was subsequently divested on October 31, 2019.

As the divestiture represented a strategic shift in our operations, the results of the former segment through the date of divestiture and subsequent impacts to the financial results from retained liabilities are recorded in "Loss from discontinued operations, net of income taxes" within the Consolidated Statements of Operations.

Further, the assets and liabilities, respectively, of the former segment are reflected as "Assets from discontinued operations" and "Liabilities from discontinued operations" on the Consolidated Balance Sheets at August 31, 2019.

The results of the Cortland Fibron and Precision Hayes businesses which were a component of the EC&S segment prior to their divestiture in the year ended August 31, 2019, were also part of the strategic shift, as such, they are also reflected in "Loss from discontinued operations, net of income taxes" within the Consolidated Statements of Operations.

Cash Equivalents:

14 unchanged sentences

Equipment includes assets (joint integrity tools) which are rented to customers of our IT&S segment.

Leasehold improvements are amortized over the life of the related asset or the term of the lease, whichever is shorter.

Depreciation expense was $ 11.3 million , $11.1 million and $13.8 million for the years ended August

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

31, 2019 , 2018 and 2017 , respectively.

Leasehold improvements are amortized over the shorter of the life of the related asset or the term of the lease.

Depreciation expense was $ 12.4 million, $ 11.3 million and $ 11.1 million for the years ended August 31, 2020, 2019 and 2018, respectively.

The following is a summary of the Company's components of property, plant and equipment (in thousands):

August 31, 2019

August 31, 2018

August 31, 2020 August 31, 2019

Land, buildings and improvements $ 33,548 $ 29,661

5 unchanged sentences

Goodwill and other intangible assets with indefinite lives are not subject to amortization, but are subject to annual impairment testing.

Other intangible assets with definite lives, consisting primarily of purchased customer relationships, patents, trademarks and non-compete agreements, are amortized over periods from one to twenty-five years.

Other intangible assets with definite lives, consisting primarily of

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

purchased customer relationships, patents, trademarks and tradenames, are amortized over periods from one to twenty-five years.

The Company’s goodwill is tested for impairment annually, during the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.

13 unchanged sentences

Warranty payments and costs incurred ( 934 ) ( 1,077 )

Warranty activity for divested businesses ( 27 ) —

Impact of changes in foreign currency rates 31 ( 35 )

9 unchanged sentences

Customer sales are recorded net of allowances for returns and discounts, which are recognized as a deduction from sales at the time of sale.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

other security for receivables and provides for an allowance for doubtful accounts based on historical experience and a review of its existing receivables.

The Company commits to one-time or on-going trade discounts and promotions with customers that require the Company to estimate and accrue the ultimate costs of such 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 stated net of an allowance for doubtful accounts of $ 5.0 million and $ 5.1 million at August 31, 2020 and 2019, respectively.

8 unchanged sentences

The Company also incurs significant costs in connection with fulfilling custom orders and developing solutions for unique customer needs which are not included in these research and development expense totals.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Other Income/Expense:

Other income and expense primarily consists of net foreign currency exchange transaction losses of $0.2 million and $3.6 million in fiscal 2019 and 2017 , respectively, with a gain of less than $0.1 million in fiscal 2018 .

Other income and expense primarily consists of net foreign currency exchange transaction losses of $ 2.6 million an d $ 0.2 million in fiscal 2020 and 2019, respectively, with a gain of less than $ 0.1 million in fiscal 2018.

In addition, as a result of the EC&S divestiture and the transition services agreement entered into with the buyer, the Company recorded $ 4.9 million of other income from providing the agreed upon services in fiscal 2020 .

Financing Costs:

Financing costs represent interest expense, financing fees and amortization of debt issuance costs, net of interest income.

Interest income was $0.7 million for fiscal 2019 and $1.2 million for both fiscal 2018 and 2017 .

Interest income was $ 0.8 million, $ 0.7 million and $ 1.2 million for fiscal 2020, 2019 and 2018, respectively.

Income Taxes:

18 unchanged sentences

Foreign currency translation adjustments $ 75,896 $ 151,115

Pension and other postretirement benefit plans, net of tax

Pension and other postretirement benefit plans 24,750 20,557

Unrecognized losses on cash flow hedges 78 —

Accumulated other comprehensive loss $ 100,724 $ 171,672

1 unchanged sentence

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

The Company regularly evaluates the estimates and assumptions related to the allowance for doubtful accounts, inventory valuation, warranty reserves, fair value of stock-based awards, goodwill, intangible and long-lived asset valuations, employee benefit plan liabilities, over time revenue recognition, income tax liabilities, deferred tax assets and related valuation allowances, uncertain tax positions, restructuring reserves, and litigation and other loss contingencies.

The Company regularly evaluates the estimates and assumptions related to the allowance for doubtful accounts, inventory valuation, warranty reserves, goodwill, intangible and long-lived asset valuations, employee benefit plan liabilities, over-time revenue recognition, income tax liabilities, deferred tax assets and related valuation allowances, uncertain tax positions, restructuring reserves, and litigation and other loss contingencies.

The COVID-19 pandemic has caused additional uncertainty with respect to certain estimates.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning the COVID-19 pandemic and the additional actions taken to contain it or treat it, as well as the severity and duration of the economic impact on local, regional, national and international customers, suppliers and markets.

As such, there could be a material adverse impact on the Company's financial condition or results of operations.

Management has made estimates of the impact of the COVID-19 pandemic on our financial statements and there may be changes to those estimates in future periods as new information becomes available.

Actual results could differ materially and adversely from those estimates and assumptions, and such results could materially affect the Company’s consolidated net income, financial position, or cash flows.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

With the divestiture of the EC&S segment the Company now meets the threshold requirements of Regulation S-X 5-03(1) to breakout sales and cost of sales by various categories on the Statements of Operations.

The Company manages the profitability of its product and service & rental categories on a combined basis given the complexity of the business model.

This model includes providing integrated product and service solutions resulting in facilities that generate revenues from both product and service & rental categories, which also have significant indirect and facility overhead costs included in cost of sales.

As such, significant judgment and estimates are required to disaggregate product and service & rental cost of sales including allocating indirect and facility overhead costs between cost of product sales and the cost of service & rental sales.

As such, judgment and estimates are required to disaggregate product and service & rental cost of sales including allocating indirect and facility overhead costs between cost of product sales and the cost of service & rental sales.

Changes in these judgments and estimates could materially change the allocation of the indirect and facility overhead costs to the different sales categories and the resulting ratio of cost of sales to net sales by category.

Because the sales mix heavily favors the product category, a change in the mix of cost of sales between the sales categories would have a more significant impact on the ratio of cost of sales to net sales for the service & rental category.

In addition, due to the recent changes in our business model, which includes the integration of the Enerpac and Hydratight businesses within the IT&S segment, the decision to exit certain non-strategic businesses and product lines, and the restructuring actions taken by the Company, the historical ratios of cost of sales to net sales by category may not be indicative of future ratios of cost of sales to net sales by category.

Subsequent Events:

Subsequent to August 31, 2019, the Company divested certain assets and liabilities of two non-core product lines for cash proceeds of $8.5 million .

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers .

Under ASU 2014-09 and subsequent updates included in ASU 2016-10, ASU 2016-12, ASU 2017-13 and ASU 2017-14 (collectively referred to as Accounting Standards Codification 606 “ASC 606”), an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services.

It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

This guidance was adopted by the Company on September 1, 2018 using the modified retrospective method and was applied to contracts that were not completed or substantially complete as of September 1, 2018.

Results for the reporting period beginning after September 1, 2018 are presented under ASC 606, while prior year amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting policy in accordance with ASC 605 Revenue Recognition .

The Company reported a net increase to opening retained earnings of $0.1 million on September 1, 2018 as a result of the cumulative impact of adopting ASC 606.

See Note 2, “Revenue from Contracts with Customers,” for further discussion of the adoption of ASC 606.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715):

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement.

The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line items as other employee compensation costs arising from services rendered during the period.

Other components of the net periodic benefit cost are to be stated separately from service cost and outside of operating income.

This guidance was adopted by the Company on September 1, 2018.

Due to a majority of the Company's defined benefit pension and other postretirement benefit plans being frozen and the net periodic benefit pension cost not being significant, the adoption of this guidance did not have a material impact on the financial statements of the Company.

However, prior year amounts have been retrospectively adjusted to reflect this change in accounting principle.

In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments , to address how certain cash receipts and cash payments are presented and classified in the statement of cash flows.

This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice.

This guidance was adopted on September 1, 2018.

The adoption did not have an impact on the financial statements of the Company.

In February 2016, the FASB issued ASU 2016-02, Leases (and subsequently ASU 2018-01 and ASU 2019-01) , to increase transparency and comparability among organizations by recognizing all lease transactions on the balance sheet as a lease liability and a right-of-use asset.

This guidance is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years.

The Company will adopt this standard in the first quarter of fiscal year ending November 30, 2019 (fiscal 2020) using a modified retrospective approach and through implementing selected third-party lease software utilized as a central repository for all leases.

We will make certain elections including the package of practical expedients allowing us to not reassess whether any expired or existing contracts contain leases, the lease classification for any expired or

ACTUANT CORPORATION

In addition, due to the recent

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

existing leases, and initial direct costs for any existing leases.

In addition, we will elect not to recognize right of use (“ROU”) assets or lease liabilities for leases containing terms of 12 months or less, and the Company will elect to not separate lease components from non-lease components for all asset classes.

As of September 1, 2019, the Company anticipates additions to the balance sheet of right-of-use assets, offset by the associated liabilities, of approximately $55 million to $65 million .

We do not expect adoption to have a significant impact on our consolidated statements of operations or consolidated statements of cash flows.

The Company is finalizing its accounting policies, controls, processes, and disclosures that will change as a result of adopting the new standard.

In addition, as a result of sale leaseback transactions in previous years for which gains were deferred which under the new standard would have been recognized, the Company will record an increase to retained earnings of $0.2 million in the first quarter of fiscal 2020 which represents the recognition of these previously deferred gains.

changes in our business model, which includes the integration of the Enerpac and Hydratight businesses within the IT&S segment, the decision to exit certain non-strategic businesses and product lines, and the restructuring actions taken by the Company, the historical ratios of cost of sales to net sales by category may not be indicative of future ratios of cost of sales to net sales by category.

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (and subsequently ASU 2018-01 and ASU 2019-01), to increase transparency and comparability among organizations by recognizing all lease transactions on the balance sheet as a lease liability and a right-of-use (“ROU”) asset.

The amendments also expanded disclosure requirements for key information about leasing arrangements.

On September 1, 2019, the Company adopted the standard using a modified retrospective approach and elected the package of practical expedients allowing us to not reassess whether any expired or existing contracts contain leases, the lease classification for any expired or existing leases, and initial direct costs for leases that commenced prior to September 1, 2019.

In addition, we elected not to recognize ROU assets or lease liabilities for leases containing terms of 12 months or less and not separate lease components from non-lease components for all asset classes.

The Company updated its standard lease accounting policy to address the new standard, revised the Company’s business processes and controls to align to the updated policy and new standard and completed the implementation of and data input into the Company’s lease accounting software solution.

The most significant impact of the standard on the Company was the recognition of a $ 60.8 million ROU asset and operating lease liability on the Consolidated Balance Sheets at adoption.

The standard did not have a significant impact on our Consolidated Statements of Operations or Consolidated Statements of Cash Flows.

In addition, as a result of sale leaseback transactions in previous years for which gains were deferred and under the new standard would have been recognized, the Company recorded an increase to retained earnings of $ 0.2 million in the first quarter of fiscal 2020, which represents the recognition of these previously deferred gains.

See Note 1 0 , “Leases” for further discussion of the Company’s operating leases.

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows companies to reclassify stranded income tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings in their consolidated financial statements.

This guidance is effective for fiscal years beginning after December 15, 2018 (fiscal 2020 for the Company), including interim periods within those fiscal years.

The Company will adopt the guidance in the first quarter of fiscal 2020 which will result in an increase to retained earnings with an offsetting increase in accumulated other comprehensive loss of $3.5 million .

The Company adopted the guidance on September 1, 2019 and recorded an increase to retained earnings with an offsetting increase in accumulated other comprehensive loss of $ 3.7 million.

on the adoption date.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which adds an impairment model that is based on expected losses rather than incurred losses and is called the Current Expected Credit Losses (“CECL”) model.

This impairment model is applicable to loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables as well as any other financial asset with the contractual right to receive cash.

Under the new model, an allowance equal to the estimate of lifetime expected credit losses is recognized which will result in more timely loss recognition.

The guidance is intended to reduce complexity by decreasing the number of credit impairment models.

This guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings in the period of adoption.

The Company is required to adopt this new guidance in the first quarter of 2021.

The Company reviewed the impact of this ASU on its consolidated financial statements and concluded that any cumulative-effect adjustment would be immaterial.

Revenue from Contracts with Customers

2 unchanged sentences

Product Sales:

Sales of tools, heavy-lifting solutions, and rope and cable solutions are recorded when control is transferred to the customer (i.e.

performance obligation has been satisfied).

Sales of tools, heavy-lifting solutions, and rope and cable solutions are recorded when control is transferred to the customer (i.e., performance obligation has been satisfied).

For the majority of the Company’s product sales, revenue is recognized at a point in time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company to the customer.

Due to the highly customized nature and limited alternative use of certain products, for which the Company has an enforceable right of reimbursement for performance completed to date, revenue is recognized over time.

For certain other products that are highly customized and have a limited alternative use, and for which the Company has an enforceable right of reimbursement for performance completed to date, revenue is recognized over time.

We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with these custom products.

3 unchanged sentences

These revenues are recognized over time as our customers simultaneously receive and consume the benefits provided by the Company.

We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over time revenue associated with service contracts.

We consider the input measure (efforts-expended

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with service contracts.

For a majority of the Company’s service contracts, labor hours (efforts-expended measurement) is used as the measure of progress when it is determined to be a better depiction of the transfer of control to the customer due to the timing and pattern of labor hours incurred.

3 unchanged sentences

See Note 15, "Business Segment, Geographic and Customer Information" for information regarding our revenue disaggregation by reportable segment and product line.

The following table presents information regarding revenues disaggregated by the timing of when goods and services are transferred for the fiscal year ended August 31, 2019 (in thousands):

The following table presents information regarding revenues disaggregated by the timing of when goods and services are transferred (in thousands):

Year Ended August 31,

Revenues recognized at point in time $ 361,359 $ 453,427

Revenues recognized over time 131,933 201,331

Total $ 493,292 $ 654,758

Contract Balances

9 unchanged sentences

The Company has contract assets on contracts that are generally long-term and have revenues that are recognized over time.

The decrease in this balance from August 31, 2018 to August 31, 2019 is a result of our strategic exit of certain low profit margin, heavy lifting solution work that was still in progress as of August 31, 2018.

The increase in this balance from August 31, 2019 to August 31, 2020 is a result of the contractual timing of billings on certain large contracts.

Contract Liabilities:

2 unchanged sentences

The Company estimates that the $ 2.1 million will be recognized in net sales from satisfying those performance obligations within the next twelve months with an immaterial amount recognized in periods thereafter.

The decrease in the balance from August 31, 2018 to August 31, 2019 was a result of several large contracts that were in their early stages at August 31, 2018 where similar volumes of orders with prepayment terms were not in our backlog at August 31, 2019.

Significant Judgments

Timing of Performance Obligations Satisfied at a Point in Time:

9 unchanged sentences

The Company elected to expense the incremental cost to obtaining a contract when the amortization period for such contracts would be one year or less.

The Company does not disclose the value of unperformed obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company does not disclose the value of unperformed

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

Restructuring Charges

7 unchanged sentences

During fiscal 2019, the Company announced a new restructuring plan focused on i) the integration of the Enerpac and Hydratight businesses (IT&S segment), ii) the strategic exit of certain commodity type services in our North America Services operations (IT&S segment) and iii) driving efficiencies within the overall corporate structure.

Total restructuring charges associated with this new restructuring plan were $4.2 million for the year ended August 31, 2019 , with no additional charges associated with the previously announced restructuring initiatives.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Total restructuring charges associated with previously announced restructuring initiatives were $11.4 million for the year-ended August 31, 2018 with approximately $0.9 million of the restructuring charges recognized for the year ended August 31, 2018 being reported in the Consolidated Statements of Operations in "Cost of products sold," with the balance of the charges reported in "Restructuring charges." The year ended August 31, 2018 included $2.6 million of restructuring expenses related to Cortland U.S.

Restructuring reserves for Cortland U.S.

and Viking (Other Segment) were $0.9 million and $1.9 million for the year ended August 31, 2019 and 2018 , respectively.

In the third quarter of fiscal 2020, the Company announced the expansion and revision of this plan, which further simplifies and flattens the Corporate structure through elimination of redundancies between the segment and corporate functions, while enhancing our commercial and marketing processes to become even closer to our customers.

Restructuring charges associated with this plan were $ 6.6 million for the year ended August 31, 2020 .

The Company recorded total restructuring charges of $ 4.2 million for the year ended August 31, 2019.

The following rollforwards summarize restructuring reserve activity for the IT&S reportable segment and corporate (in thousands):

Year Ended August 31, 2019

Industrial Tools & Services

Industrial Tools & Services Corporate Total

Balance as of August 31, 2018 $ 1,687 $ 46 $ 1,733

1 unchanged sentence

Cash payments ( 2,954 ) ( 46 ) ( 3,000 )

Other non-cash uses of reserve (1)

Other non-cash uses/reclasses of reserve 54 — 54

Impact of changes in foreign currency rates ( 36 ) — ( 36 )

Balance as of August 31, 2019 $ 2,912 $ — $ 2,912

(1) Majority of non-cash uses of reserve represents accelerated equity vesting with employee severance agreements.

Year Ended August 31, 2020

Industrial Tools & Services

Industrial Tools & Services Corporate Total

Balance as of August 31, 2019 $ 2,912 $ — $ 2,912

1 unchanged sentence

Cash payments ( 5,458 ) ( 1,286 ) ( 6,744 )

Other non-cash uses/reclasses of reserve

Other non-cash uses of reserve (1)

( 554 ) ( 521 ) ( 1,075 )

Impact of changes in foreign currency rates 23 1 24

Balance as of August 31, 2020 $ 1,443 $ 267 $ 1,710

During fiscal 2018, the Company completed two acquisitions which resulted in the recognition of goodwill in the Company’s consolidated financial statements because their purchase prices reflected the future earnings and cash flow potential of the acquired companies, as well as the complementary strategic fit and resulting synergies.

The Company makes an initial allocation of the purchase price, at the date of acquisition, based upon 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 measurement period (not to exceed one year from the date of acquisition), the Company will refine its estimates of fair value and adjust the purchase price allocation as appropriate.

(1) Majority of non-cash uses of reserve represents accelerated equity vesting with employee severance agreements.

In the year ended August 31, 2020, the Company recorded $ 1.6 million of restructuring expenses related to Cortland U.S.

(Other segment) of which $ 0.8 million was reported in the Consolidated Statements of Operations in "Cost of products sold".

Restructuring reserves for Cortland U.S.

were $ 0.4 million and $ 0.9 million for the year ended August 31, 2020 and 2019, respectively.

There were inconsequential restructuring charges recorded within the Other segment associated with the legacy restructuring initiatives in the year ended August 31, 2019.

Total restructuring charges (inclusive of the Other segment) were $ 8.1 million for the year ended August 31, 2020, with approximately $ 0.8 million of the restructuring charges being reported in the Consolidated Statements of Operations in "Cost of products sold," with the balance of the charges reported in "Restructuring charges."

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Fiscal 2020 Acquisition

On January 7, 2020 , the Company acquired 100% of the stock of HTL Group ("HTL"), a provider of controlled bolting products, calibration and repair services, and tool rental services.

The tuck-in acquisition of HTL provides the Company with a complete line of bolting products and enhances our European rental capabilities.

The Company acquired all of the assets and assumed certain liabilities of HTL for a final purchase price of $ 33.3 million (inclusive of the settlement of working capital adjustments).

The final purchase price allocation resulted in $ 11.3 million of goodwill (which is not deductible for tax purposes), $ 16.1 million of intangible assets, and $ 6.7 million of property, plant and equipment.

The intangible assets were comprised of $ 3.3 million of indefinite-lived tradenames, $ 12.1 million of amortizable customer relationships and $ 0.7 million of amortizable patents.

The impact on the remaining balance sheet line items was not material.

This acquisition generated net sales of $ 6.3 million for the year ended August 31, 2020 which are reported within the IT&S reportable segment.

This acquisition does not meet the significance tests to require pro forma financial information otherwise required for acquisitions.

Fiscal 2018 Acquisitions

The Company acquired the stock and certain assets of Mirage Machines, Ltd.

6 unchanged sentences

The final purchase price allocation resulted in $ 2.4 million of goodwill (a portion of which is not deductible for tax purposes) and $ 2.1 million of intangible assets.

The intangible assests were comprised of $0.8 million of indefinite lived tradenames and $1.3 million of amortizable customer relationships and patents.

The intangible assets were comprised of $ 0.8 million of indefinite lived tradenames and $ 1.3 million of amortizable customer relationships and patents.

The Company incurred acquisition transaction costs of $ 1.1 million for the year ended August 31, 2018 (included in "Selling, administrative and engineering expenses" in the Consolidated Statements of Operations) related to these acquisitions.

The acquired businesses generated combined net sales of $14.1 million and $9.4 million for the year ended August 31, 2019 and 2018 , respectively.

The acquired businesses generated combined net sales of $ 5.1 million, $ 14.1 million and $ 9.4 million for the year ended August 31, 2020, 2019 and 2018, respectively.

The acquisitions individually and in the aggregate do not meet the significance tests to require pro forma financial information otherwise required for acquisitions.

Divestiture Activities

On July 9, 2019, as part of our overall strategy to become a pure-play industrial tools and services company, the Company entered into a SPA to divest the remaining businesses within the EC&S segment at a purchase price of approximately $214.5 million (which includes approximately $3.0 million to be paid in four quarterly installments after closing).

Discontinued Operations and Other Divestiture Activities

Discontinued Operations

On October 31, 2019 , as part of our overall strategy to become a pure-play industrial tools and services company, the Company completed the sale of the businesses comprising its former Engineered Components & Systems ("EC&S") segment to wholly owned subsidiaries of BRWS Parent LLC, a Delaware limited liability company and affiliate of One Rock Capital Partners II, LP, for a sales price of approximately $ 215.8 million (inclusive of the settlement of working capital adjustments).

Approximately $ 3.0 million of the purchase price was to be paid in four equal quarterly installments after closing, of which $ 0.7 million is outstanding as of August 31, 2020.

In connection with the completion of the sale, the Company recorded a net loss of $ 4.7 million compr ised of a loss of $ 23.0 million representing the excess of the net assets (exclusive of deferred tax assets and liabilities associated with subsidiaries of the Company whose stock was sold as part of the transaction) as compared to the purchase price less costs to sell and the recognition in earnings of the cumulative effect of foreign currency exchange gains and losses during the year largely offset by an income tax benefit of $ 18.3 million associated with the write off of the net deferred tax liability on subsidiaries of the EC&S segment for which the stock was divested.

The Company also recognized an additional $ 3.3 million of impairment & divestiture costs associated with the accelerated vesting of restricted stock awards associated with employees terminated as part of the transaction and $ 2.7 million of additional divestiture charges which were necessary to complete the transaction.

At August 31, 2019, the EC&S segment met the criteria for assets held-for-sale treatment.

As a result, the Company recognized impairment & divestiture charges in fiscal 2019 of $ 264.5 million which consisted of $ 210.0 million representing the excess net book value of the net assets over the anticipated sales proceeds less costs to sell and $ 54.5 million representing the recognition in earnings of the cumulative effect of foreign currency exchange losses previously recorded in equity since acquisition.

On December 31, 2018 , the Company completed the sale of the PHI business for $23.6 million cash, net of final transaction costs, working capital adjustments, accelerated vesting of equity compensation, retention bonuses and other adjustments.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

On December 31, 2018 , the Company completed the sale of the Precision Hayes International business for $ 23.6 million cash, net of final transaction costs, working capital adjustments, accelerated vesting of equity compensation, retention bonuses and other adjustments.

The Company recorded $ 9.5 million of impairment & divestiture charges during the fiscal year representing the excess of the net book value of the assets held for sale less the anticipated proceeds, less costs to sell.

4 unchanged sentences

ii) $ 10.5 million representing the excess of the net book value of assets held for sale to the anticipated proceeds and iii) $ 0.5 million of other divestiture charges.

As the aforementioned divestitures were a part of our strategic shift to become a pure-play industrial tools and services company, the results of their operations (including the stated impairment & divestiture charges) are recorded as a component of "(Loss) earnings from discontinued operations" in the Consolidated Statements of Operations for all periods presented.

In addition, their assets and liabilities are recorded as "Assets from discontinued operations" and "Liabilities from discontinued operations", respectively, within the Consolidated Balance Sheets for each period presented.

As the aforementioned divestitures were a part of our strategic shift to become a pure-play industrial tools and services company, the results of their operations (including the stated impairment & divestiture charges) are recorded as a component of "Loss from discontinued operations" in the Consolidated Statements of Operations for all periods presented.

The following is a summary of the assets and liabilities of discontinued operations (in thousands):

August 31, 2019

Accounts receivable, net $ 52,802

2 unchanged sentences

Property, plant & equipment, net 32,172

Goodwill 16,862

Other intangible assets, net 93,314

9 unchanged sentences

Liabilities of discontinued operations $ 143,763

The following represents the detail of "(Loss) earnings from discontinued operations, net of income taxes" within the Consolidated Statements of Operations (in thousands):

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following represents the detail of "Loss from discontinued operations, net of income taxes" within the Consolidated Statements of Operations (in thousands):

Year Ended August 31,

2020 * 2019 2018

Net sales $ 67,010 $ 459,144 $ 541,308

Cost of products sold 49,749 344,563 409,332

Gross profit 17,261 114,581 131,976

Selling, administrative and engineering expenses 11,561 68,339 81,188

Amortization of intangible assets — 5,666 11,285

Restructuring charges

Restructuring (benefit) charges ( 11 ) 1,779 1,440

Impairment & divestiture charges **

Operating (loss) profit

28,972 286,175 70,071

Operating loss ( 23,261 ) ( 247,378 ) ( 32,008 )

Financing costs, net 14 124 619

Other expense (income), net

Loss (earnings) before income tax expense (benefit)

Income tax expense (benefit)

Net (loss) earnings from discontinued operations

*In addition to the impairment & divestiture charges discussed above, the Company also incurred approximately $10.5 million of divestiture charges in fiscal 2019 related to the anticipated divestiture of EC&S.

Other (income) expense, net ( 104 ) 1,922 ( 759 )

Loss before income tax (benefit) expense ( 23,171 ) ( 249,424 ) ( 31,868 )

Income tax (benefit) expense ( 18,337 ) 7,788 ( 5,474 )

Net loss from discontinued operations $ ( 4,834 ) $ ( 257,212 ) $ ( 26,394 )

* "Loss from discontinued operations, net of income taxes" for the year ended August 31, 2020 includes the results of the EC&S segment for the two months ended October 31, 2019 (the divestiture date) as well as the ancillary impacts from certain retained liabilities subsequent to the divestiture.

As a result of the classification of the segment as assets and liabilities held for sale for the two months ended October 31, 2019, the Company did not record amortization or depreciation expense in the results of operations in accordance with GAAP.

** In addition to the impairment & divestiture charges discussed above, the Company also incurred approximately $ 10.5 million of divestiture charges in fiscal 2019 related to the, at the time, anticipated divestiture of EC&S.

Other Divestiture Activities

On September 20, 2019 , the Company completed the sale of the UNI-LIFT product line, a component of our Milwaukee Cylinder business (IT&S segment) for net cash proceeds of $ 7.5 million (inclusive of the settlement of working capital adjustments and the buyer achieving certain criteria which met the requirement for payment of $ 1.5 million of contingent proceeds).

The transaction resulted in an impairment & divestiture benefit of $ 6.3 million for the year ended August 31, 2020 recorded as an "Impairment & divestiture benefit" within the Consolidated Statements of Operations.

After the sale of the UNI-LIFT product line, the Company determined that the remaining Milwaukee Cylinder business was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business.

The Company completed the divestiture of the Milwaukee Cylinder business on December 2,

2019 for a negligible amount.

The Company recorded impairment & divestiture charges of $ 4.5 million for the year ended August 31, 2020 predominately comprised of impairment charges of $ 2.5 million representing the excess of net assets held for sale compared to the net proceeds and $ 1.7 million associated with our requirement to withdraw from the multi-employer pension plan associated with that business and $ 0.3 million of other divestiture related charges and true-ups of retained liabilities.

The historical results of the Milwaukee Cylinder business, inclusive of the UNI-LIFT product line, (which had net sales of $ 2.9 million, $ 13.2 million and $ 11.1 million in the year ended August 31, 2020, 2019 and 2018, respectively) are not material to the consolidated financial results.

On October 22, 2019 , the Company completed the sale of the Connectors product lin e (IT&S segment) for ne t cash proceeds of $ 2.7 million, which resulted in an impairment & divestiture benefit of $ 1.0 million in the year ended August 31, 2020.

The historical results of the Connectors product line (which had net sales of $ 0.2 million, $ 5.0 million and $ 0.2 million for the year ended August 31, 2020, 2019 and 2018, respectively) are not material to the consolidated financial results.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

During the year ended August 31, 2020, the Company modified estimates on outstanding legal matters associated with previously divested businesses, as such, recorded a net impairment & divestiture benefit of $ 0.5 million in the year ended August 31, 2020.

On December 1, 2017 , the Company completed the sale of the Viking business (Other Segment) for net cash proceeds of $ 8.8 million, which resulted in an after-tax impairment & divestiture charge of $ 12.4 million in fiscal 2018, comprised of real estate lease exit charges of $ 3.0 million related to retained facilities that became vacant as a result of the Viking divestiture and approximately $ 9.4 million of associated discrete income tax expense.

In the fourth quarter of fiscal 2017, related to the then pending sale of our Viking business, we recognized impairment & divestiture charges of $117.0 million which consisted of (i) a $16.1 million charge representing the excess of the net book value of assets held for sale to the anticipated proceeds;

(ii) a non-cash impairment charge of $69.0 million related to the recognition in earnings of the cumulative effect of foreign currency rate changes since acquisition;

(iii) a $28.6 million cash charge related to the operating lease buyout of certain rental assets and (iv) a $3.3 million of other divestiture charges.

The historical results of the Viking business (which had net sales of $ 2.7 million in the year ended August 31, 2018) are not material to the consolidated financial results.

1 unchanged sentence

Changes in the gross carrying value of goodwill and intangible assets result from changes in foreign currency exchange rates, business acquisitions, divestitures and impairment charges.

The changes in the carrying amount of goodwill for the years ended August 31, 2019 and 2018 by operating segment are as follows (in thousands):

Industrial Tools & Services

Balance as of August 31, 2017

Business acquisitions

Impact of changes in foreign currency rates

T he changes in the carrying amount of goodwill for the years ended August 31, 2020 and 2019 by operating segment are as follows (in thousands):

Industrial Tools & Services Other Total

Balance as of August 31, 2018 $ 248,705 $ 31,427 $ 280,132

3 unchanged sentences

Balance as of August 31, 2019 242,873 17,542 260,415

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The changes in the carrying amount of goodwill included within "Assets from discontinued operations" on the Consolidated Balance Sheets for the years ended August 31, 2019 and 2018 are as follows (in thousands):

Balance as of August 31, 2017

Impairment charge

Impact of changes in foreign currency rates

Balance as of August 31, 2018

Acquisition of HTL Group (Note 4) 11,261 — 11,261

Impairment charge — — —

2 unchanged sentences

The gross carrying value and accumulated amortization of the Company’s intangible assets are as follows (in thousands):

Weighted Average Amortization Period (Year)

August 31, 2019

August 31, 2018

Accumulated Amortization

Net Book Value

Accumulated Amortization

Net Book Value

Weighted Average Amortization Period (Year) August 31, 2020 August 31, 2019

Gross Accumulated Amortization Net Book Value Gross Accumulated Amortization Net Book Value

Amortizable intangible assets:

Customer relationships 14 $ 141,853 $ 106,491 $ 35,362 $ 126,229 $ 96,817 $ 29,412

Patents 12 14,365 13,228 1,137 13,227 12,276 951

Trademarks and tradenames* 12 3,277 2,257 1,020 4,513 2,921 1,592

Non-compete agreements & other

Indefinite lived intangible assets:

The Company estimates that amortization expense for future years is estimated to be $7.6 million in fiscal year 2020 , $6.7 million in fiscal 2021 , $5.9 million in fiscal 2022 , $4.4 million in fiscal 2023 , $2.7 million in fiscal 2024 and $4.7 million in aggregate thereafter.

Tradenames N/A 24,863 — 24,863 20,420 — 20,420

$ 184,358 $ 121,976 $ 62,382 $ 164,389 $ 112,014 $ 52,375

*The decrease in the Gross Carrying Value and Accumulated Amortization of Trademarks and tradenames is a result of the Milwaukee Cylinder divestiture on December 2, 2019 as discussed in Note 5, "Discontinued Operations and Other Divestiture Activities." The Company recorded a full impairment of the tradename in the first quarter in order to write the net assets of the business down to the expected sales proceeds in advance of the divestiture.

The Company estimates that amortization expense for future years is estimated to be $ 8.2 million in fiscal year 2021, $ 7.4 million in fiscal year 2022, $ 5.8 million in fiscal 2023, $ 4.2 million in fiscal 2024, $ 3.4 million in fiscal 2025 and $ 8.5 million in aggregate thereafter.

The future amortization expense amounts represent estimates and may be impacted by future acquisitions, divestitures or changes in foreign currency exchange rates, among other causes.

Fiscal 2019 Impairment Charges

During fiscal 2019, within the Other segment, the Company recognized a $13.7 million Goodwill impairment charge related to Cortland U.S.

Within the Other segment, the Company recognized a $ 13.7 million Goodwill impairment charge related to Cortland U.S.

in conjunction with triggering events identified during the fiscal year.

In the fourth quarter of fiscal 2019, the Company's branding strategy was revised such that two secondary tradenames previously considered to have indefinite lives are to be phased out and re-branded within 12-15 months.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

In the fourth quarter of fiscal 2019, the Company's branding strategy was revised such that two secondary tradenames previously considered to have indefinite lives were to be phased out and re-branded over the course of fiscal 2020.

As such, the Company recorded an impairment & divestiture charge of $ 2.6 million based on the estimated remaining fair value of the respective tradenames.

In addition, based on restructuring actions taken in the fourth quarter related to the North America Services operations, the Company concluded that the fair value of a customer relationship intangible was less than the current net book value, and therefore, a $6.2 million impairment & divestiture charge was recorded.

In addition, based on restructuring actions taken in the fourth quarter of fiscal 2019 related to the North America Services operations, the Company concluded that the fair value of a customer relationship intangible was less than the current net book value, and therefore, a $ 6.2 million impairment & divestiture charge was recorded.

The tradename and customer relationships impairments both related to assets within the IT&S segment.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following is a summary of the Company’s long-term indebtedness (in thousands):

Previous Senior Credit Facility

Total Previous Senior Credit Facility

New Senior Credit Facility

Total New Senior Credit Facility

Senior Credit Facility

Revolver $ 255,000 $ —

Term Loan — 175,000

Total Senior Credit Facility 255,000 175,000

5.625% Senior Notes — 287,559

4 unchanged sentences

Senior Credit Facility

Prior to the refinancing of the Company's Senior Credit Facility on March 29, 2019, the Company’s previous Senior Credit Facility matured on May 8, 2020 , and provided a $300 million revolver, a $300 million term loan and a $450 million expansion option, subject to certain conditions.

Borrowings were subject to a pricing grid, which could result in increases or decreases to the borrowing spread, depending on the Company’s leverage ratio, ranging from a spread of 1.00% to 2.25% in the case of loans bearing interest at LIBOR and from 0.00% to 1.25% in the case of loans bearing interest at the base rate.

In addition, a non-use fee was payable quarterly on the average unused credit line under the revolver ranging from 0.15% to 0.35% per annum.

On March 29, 2019, the Company refinanced its Senior Credit Facility resulting in a new $600 million Senior Credit Facility, comprised of a $400 million revolving line of credit and a $200 million term loan.

The new facility, which matures in March 2024, includes a reduction in pricing and expands the revolving credit facility from $300 million to $400 million .

Borrowings under the new Senior Credit Facility bear interest based on LIBOR or a base rate, with interest rate spreads above LIBOR or the base rate being subject to adjustments based on the Company's net leverage ratio, ranging from 1.125% to 2.00% in the case of loans bearing interest at LIBOR and from 1.25% to 1.00% in the case of loans bearing interest at the base rate.

In addition, a non-use fee is payable quarterly in the average unused revolving credit facility ranging from 0.15% to 0.30% per annum, based on the Company's net leverage ratio.

Quarterly term loan principal payments of $1.25 million began on August 31, 2019 , will escalate to $5.0 million by May 31, 2022 , with the remaining principal due at maturity.

During fiscal 2019 and in line with its capital allocation strategy, the Company electively prepaid $23.8 million against the remaining principal balance of the term loan subsequent to the refinancing.

The new Senior Credit Facility contains financial covenants that are consistent with the prior facility, with enhancements that improve overall liquidity, and provides the option for future expansion through a $300 million accordion on the revolver.

The two financial covenants included are a maximum leverage ratio of 3.75 :1 and a minimum interest coverage ratio of 3.50 :1.

For each covenant, certain transactions lead to adjustments to the underlying ratio, including a reduction of the minimum interest coverage ratio from 3.5 to 3.0 for any fiscal quarter ending within twelve months after the sale of the EC&S segment and an increase to the leverage ratio from 3.75 to 4.25 during the four fiscal quarters after a significant acquisition.

Borrowings under the credit agreement are secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors and certain equity interests owned by the foreign law pledgors.

In preparation for the divestiture of the EC&S segment, the Company needed to transfer certain assets between guarantor and non-guarantor entities.

While this action was contemplated in the new Senior Credit Facility, the Company did not timely notify the lendors of these transactions, and as such, the Company was not in technical compliance with this restrictive covenant at August 31, 2019.

However, the Company subsequently obtained the necessary waivers from the lendors to be in compliance as of the date of this report.

In March 2019, the Company entered into a Senior Credit Facility with a syndicate of banks, to among other things, i) expand the multi-currency revolving line of credit from $ 300 million to $ 400 million, ii) extend the maturity of the Company's Senior Credit Facility from May 2020 to March 2024 and iii) modify certain other provisions of the credit agreement including a reduction in pricing.

The Senior Credit Facility was initially comprised of a $ 400 million revolving line of credit and a $ 200 million term loan.

At August 31, 2020, there were $ 255 million borrowings under the revolving line of credit and no borrowings under the term loan.

As of that date, $ 139.9 million was available for borrowing under the revolving line of credit.

The Senior Credit Facility also provides the option for future expansion, subject to certain conditions, through a $ 300 million accordion and/or a $ 200 million incremental term loan.

Borrowings under the Senior Credit Facility bear interest at a variable rate based on LIBOR or a base rate, ranging from 1.125 % to 2.00 % in the case of loans bearing interest at LIBOR and from 0.125 % to 1.00 % in the case of loans bearing interest at the base rate.

In addition, a non-use fee was payable quarterly on the average unused amount of the revolving line of credit ranging from 0.15 % to 0.3 % per annum, based on the Company's net leverage.

In November 2019, the Company used the proceeds from the sale of the EC&S segment to pay off the outstanding principal balance on the term loan.

In conjunction with the repayment, the Company expensed, within "Financing costs, net" in the Consolidated Statements of Operations, the remaining $ 0.6 million of associated capitalized debt issuance costs.

In order to reduce interest costs, in June 2020, the Company borrowed $ 295 million under the Senior Credit Facility revolving line of credit, which was used by the Company to redeem all of the outstanding Senior Notes plus accrued interest.

In conjunction with the redemption of the Senior Notes, the Company expensed, within "Financing costs, net" in the Consolidated Statements of Operations, the remaining $ 1.0 million of associated capitalized debt issuance costs.

The Senior Credit Facility contains two financial covenants which are a maximum leverage ratio of 3.75 :1 and a minimum interest coverage ratio of 3.5 :1.

Certain transactions lead to adjustments to the underlying ratio, including an increase to the leverage ratio from 3.75 to 4.25 during the four fiscal quarters after a significant acquisition.

The sale of the EC&S segment triggered a reduction of the minimum interest coverage ratio from 3.5 to 3.0 for any fiscal quarter ending within twelve months after the sale of the EC&S segment.

In April 2020, the Company proactively amended its Senior Credit Facility to extend the interest coverage ratio at 3.0 for an additional 12 months through October 2021 to mitigate risks associated with the potential impact of the COVID-19 pandemic.

The Company was in compliance with all financial covenants at August 31, 2020.

ACTUANT CORPORATION

Borrowings under the Senior Credit Facility are secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors and certain equity interests owned by the foreign law pledgors.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

As of August 31, 2019 , the variable borrowing rate on the outstanding term loan balance was 3.50% and the unused credit line and amount available for borrowing under the revolver was $398.8 million .

On April 16, 2012 , the Company issued $300 million of 5.625% Senior Notes due 2022 (the “Senior Notes”) of which $287.6 million remain outstanding.

The Senior Notes require no principal installments prior to their June 15, 2022 maturity, require semiannual interest payments in December and June of each year and contain certain financial and non-financial covenants.

The Senior Notes include a call feature that allows the Company to repurchase them anytime on or after June 15, 2017 at stated redemption prices currently at 100.9% and reducing to 100.0% on June 15, 2020, plus accrued and unpaid interest.

The Company repurchased $0.5 million of the Senior Notes during fiscal 2017.

On April 16, 2012, the Company issued $ 300 million of 5.625 % Senior Notes due 2022 (the “Senior Notes”), none of which remain outstanding.

The Senior Notes included a call feature that allowed the Company to redeem them anytime on or after June 15, 2017 at stated redemption prices that reduced to 100 % on June 15, 2020, plus accrued and unpaid interest.

In order to reduce interest costs, in June 2020, the Company redeemed all of the outstanding Senior Notes at a price equal to 100 % of the principal amount thereof, plus the settlement of accrued and unpaid interest.

Cash Paid for Interest

The Company made cash interest payments of $ 18.7 million, $ 26.3 million and $ 28.8 million in fiscal 2020, 2019 and 2018, respectively.

As of August 31, 2019 , future debt maturities for each of the next five fiscal years were as follows (in thousands):

Fair Value Measurements

4 unchanged sentences

The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and variable rate long-term debt approximated book value at both August 31, 2020 and 2019 due to their short-term nature and the fact that the interest rates approximated market rates.

Foreign currency exchange contracts are recorded at fair value.

The fair value of the Company's foreign currency exchange contracts was a net asset of less than $0.1 million at August 31, 2019 and a net asset of $0.4 million at August 31, 2018 .

The fair value of the foreign currency exchange contracts was based on quoted inactive market prices and is therefore classified as Level 2 within the valuation hierarchy.

The fair value of the Company’s outstanding Senior Notes was $291.5 million and $293.5 million at August 31, 2019 and 2018 , respectively.

Foreign currency exchange contracts and interest rate swaps are recorded at fair value.

The fair value of the Company's foreign currency exchange contracts was a net asset of $ 0.2 million at August 31, 2020 and a net asset of less than $ 0.1 million at August 31, 2019.

The fair value of the Company's interest rate swap (see Note 9, "Derivatives", for further information on the Company's interest rate swap) was a net liability of $ 0.1 million at August 31, 2020.

The fair value of the foreign currency exchange and interest rate swaps contracts were based on quoted inactive market prices and therefore classified as Level 2 within the valuation hierarchy.

The fair value of the Company’s outstanding Senior Notes was $ 291.5 million at August 31, 2019.

The fair value of the Senior Notes was based on quoted inactive market prices and are therefore classified as Level 2 within the valuation hierarchy.

As discussed in Note 4, "Acquisitions" , the Company acquired HTL Group and recorded the assets acquired and liabilities assumed at fair value, of which the most significant judgments were associated with intangible assets (including tradenames, customer relationships and patents) and property, plant and equipment.

As discussed in Note 6, “Goodwill, Intangible Assets and Long-Lived Assets” , the Company recorded impairment on indefinite-lived tradenames and customer relationships in the fourth quarter of fiscal 2019.

The fair value of the tradenames and customer relationships were determined utilizing generally accepted valuation techniques, specifically, forecasting future revenues and/or using a market royalty rate.

The fair value of the tradenames, customer relationships and patents acquired and/or impaired were determined utilizing generally accepted valuation techniques, specifically, forecasting future revenues and/or using a market royalty rate.

The fair value of property, plant and equipment were also determined utilizing generally accepted valuation techniques, specifically utilizing an approach of assessing the replacement/reproduction cost of a new asset and adjusting for the asset's current physical deterioration.

These valuations represent Level 3 assets measured at fair value on a nonrecurring basis.

1 unchanged sentence

The Company does not enter into derivatives for speculative purposes.

Changes in the value of derivatives (not designated as hedges) are recorded in earnings along with the gain or loss on the hedged asset or liability, while changes in the value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss, until earnings are affected by the variability of cash flows.

Changes in the fair value of derivatives (not designated as hedges) are recorded in earnings along with the gain or loss on the hedged asset or liability.

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations.

1 unchanged sentence

The effects of changes in exchange rates are reflected concurrently in earnings for both the fair value of the foreign currency exchange contracts and the related non-functional currency asset or liability.

These derivative gains and losses offset foreign currency gains and losses from the related

revaluation of non-functional currency assets and liabilities (amounts included in "Other expense" in the Consolidated Statements of Operations).

dollar equivalent notional value of these short duration foreign currency exchange contracts (cash flow hedges or non-designated hedges) was $13.3 million and $11.9 million at August 31, 2019 and 2018 , respectively.

The fair value of outstanding foreign currency exchange contracts was an asset of less than $0.1 million at August 31, 2019 and an asset of $0.4 million at August 31, 2018 .

Net foreign currency (losses) gains (included in "Other expense" in the Consolidated Statements of Operations) related to these derivative instruments are as follows (in thousands):

These derivative gains and losses offset foreign currency gains and losses from the related revaluation of non-functional currency assets and liabilities (amounts included in "Other (income) expense" in the Consolidated Statements of Operations).

dollar equivalent notional value of these short duration foreign currency exchange contracts was $ 16.7 million and $ 13.3 million at August 31, 2020 and 2019, respectively.

The fair value of outstanding foreign currency exchange contracts was an asset of $ 0.2 million at August 31, 2020 and an asset of less than $ 0.1 million at August 31,

Net foreign currency (losses) gains (included in "Other (income) expense" in the Consolidated Statements of Operations) related to these derivative instruments are as follows (in thousands):

Year Ended August 31,

2020 2019 2018

Foreign Currency (losses) gains $ ( 594 ) $ ( 292 ) $ 249

The Company leases certain facilities, computers, equipment and vehicles under various lease agreements generally over periods of one to twenty years .

Under most arrangements, the Company pays the property taxes, insurance, maintenance and expenses related to the leased property.

Many of the leases include provisions that enable the Company to renew the lease based upon fair value rental rates on the date of expiration of the initial lease.

As of August 31, 2019 , future obligations under non-cancelable operating leases associated with continuing operations were as follows:

$15.8 million in fiscal 2020 ;

$12.3 million in fiscal 2021 ;

$10.1 million in fiscal 2022 ;

$6.9 million in fiscal 2023 ;

$5.2 million in fiscal 2024 ;

and $21.6 million in aggregate thereafter.

Total rental expense under operating leases was $26.5 million , $24.3 million and $27.6 million in fiscal 2019 , 2018 and 2017 , respectively.

As discussed in Note 16, “Commitments and Contingencies” the Company remains contingently liable for lease payments under leases of businesses that it previously divested or spun off.

Further, the Company continues to work with the buyer in the pending divestiture of the EC&S segment and the respective lessors of certain assets leased within those businesses (but in the name of Actuant Corporation or a retained subsidiary) to either transfer the lease to the name of the buyer or buyout existing leases.

The Company also used foreign currency forward exchange contracts to hedge portions of our net investments in non-U.S.

subsidiaries (net investment hedge) against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S.

dollar in the year ended August 31, 2020.

The change in the value of foreign currency forward exchange contracts designated as net investment hedges are recorded in accumulated other comprehensive loss where they offset gains and losses recorded on our net investments where the entity has a non-U.S.

dollar functional curren cy.

As of August 31, 2020, the Company had no outstanding foreign currency forward exchange contracts designated as net investment hedges.

The Company recorded through accumulated other comprehensive income (loss) a loss of $ 0.5 million for the year ended August 31, 2020 related to net investment hedges.

The Company is the fixed-rate payor on an interest rate swap contract that fixes the LIBOR-based index used to determine the interest rates charged on a total of $ 100.0 million of the Company's LIBOR-based variable rate borrowings on the revolving line of credit.

The contract carries a fixed rate of 0.259 % and expires in August 2021.

The swap agreement qualifies as a hedging instrument and has been designated as a cash flow hedge of forecasted LIBOR-based interest payments.

The change in the fair value of the interest rate swap, a loss of $ 0.1 million, is recorded in accumulated other comprehensive loss ("AOCL") and recorded through accumulated other comprehensive income (loss).

The Company expects to reclassify the loss of $ 0.1 million out of AOCL and into earnings during the next 12 months.

The Company’s LIBOR-based variable rate borrowings outstanding with terms matching the pay-fixed interest rate swap as of August 31, 2020 were $ 180.0 million.

The Company adopted ASC 842 on September 1, 2019 using a modified retrospective approach and as a result did not adjust prior per iods.

See Note 1 , “Summary of Significant Accounting Policies” for further discussion of the adoption.

As of August 31, 2020, the Company ha d operating leases for real estate, vehicles, manufacturing equipment, IT equipment and office equipment.

The Company did not have any financing leases during the year ended August 31, 2020.

Our real estate leases are generally for offic e, warehouse and manufacturing facilities typically ranging in term from 3 to 15 years and may contain renewal options for periods up to 5 years at our discretion.

Our equipment leases are generally for vehicles, manufacturing and IT equipment typically ranging in term from 3 to 7 years and may contain renewal options for periods up to one year at our discretion.

Our leases generally contain payments that are primarily fixed;

however, certain lease arrangements contain variable payments, which are expensed as incurred and not included in the measurement of ROU assets and lease liabilities.

These amounts include payments affected by changes in the Consumer Price Index and executory costs (such as real estate taxes, utilities and common-area maintenance), which are based on usage or performance.

In addition, our leases generally do not include material residual value guarantees or material restrictive covenants.

We determine if an arrangement contains a lease in whole or in part at the inception of the contract and identify classification of the lease as financing or operating.

ROU assets represent our right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease.

We account for the underlying operating lease asset at the individual lease level.

Operating leases are recorded as operating lease ROU assets in “Other long-term assets” and operating lease liabilities in “Other current liabilities” and “Other long-term liabilities” on the Consolidated Balance Sheets.

All leases greater than 12 months result in recognition of a ROU asset and a liability at the lease commencement date and are recorded at the present value of the future minimum lease payments over the lease term.

The lease term is equal to the initial term at commencement plus any renewal or extension options that the Company is reasonably certain will be exercised.

ROU assets at the date of commencement are equal to the amount of the initial lease liability, the initial direct costs incurred by the Company and any prepaid lease payments less any incentives received.

Lease expense for operating leases is recognized on a straight-line basis over the lease term or remaining useful life.

As most of our leases do not provide the information required to determine the implicit rate, we utilize a consolidated group incremental borrowing rate for all leases as the Company has centralized treasury operations.

The incremental borrowing rate is derived through a combination of inputs such as the Company's credit rating, impact of collaborated borrowing capabilities and lease term.

The Company considers contract modifications when there is a change to the contractual terms, scope of the lease or the consideration given.

In the event the right to use an additional asset is granted and the lease payments associated with the additional asset are commensurate with the ROU asset’s standalone price, the modification is accounted for as a separate

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

contract and the original contract remains unchanged.

In the event that a single lease is modified, the Company reassesses the classification of the modified lease as of the effective date of the modification based on the modified terms and accounts for initial direct costs, lease incentives and any other payments made to or by the Company in connection with the modification in the same manner that items would be accounted for in connection with a new lease.

If there is an additional ROU asset included, the lease term is extended or reduced, or the consideration is the only change in the contract, the Company reallocates the remaining consideration in the contract and remeasures the lease liability using a discount rate determined at the effective date of the modification.

The remeasured lease liability for the modified lease is an adjustment to the corresponding ROU asset and does not impact the Consolidated Statements of Operations.

In the event of a full or partial termination, the carrying value of the ROU asset decreases on a basis proportionate to the full or partial termination and any difference between the reduction in the lease liability and the proportionate reduction of the ROU asset is recognized as a gain or loss at the effective date of the modification.

The Company elected not to recognize leases with the duration of less than one-year on its balance sheet and continues to expense such leases on a straight-line basis over the lease term.

The components of lease expense for the year ended August 31, 2020 were as follows (in thousands):

Year Ended August 31, 2020

Operating lease cost $ 15,713

Short-term lease cost 1,508

Variable lease cost 2,244

Supplemental cash flow and other information related to leases were as follows (in thousands):

Year Ended August 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 15,768

Right-of-use assets obtained in exchange for new lease liabilities:

Operating leases 5,727

Supplemental balance sheet information related to leases were as follows (in thousands):

August 31, 2020

Operating leases:

Other long-term assets $ 48,733

Other current liabilities 11,870

Other long-term liabilities 38,079

Total operating lease liabilities $ 49,949

Weighted Average Remaining Lease Term (in years):

Operating leases 7.6 years

Weighted Average Discount Rate:

Operating leases 4.4 %

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

A summary of the future minimum lease payments due under operating leases with terms of more than one year at August 31, 2020 is as follows (in thousands):

Operating Leases

2021 $ 13,640

Thereafter 17,290

Total minimum lease payments 59,210

Less imputed interest ( 9,261 )

Present value of net minimum lease payments $ 49,949

As of August 31, 2020, we have an additional operating lease of $ 1.6 million, for real estate, that has not yet commenced and therefore is not reflected on the consolidated balance sheet nor in the tables above.

This operating lease commences in the year ending August 31, 2021 with a lease term of 5 years.

A summary of the future minimum lease payments due under operating leases with terms of more than one year at August 31, 2019 is as follows (in thousands):

Operating Leases

2020 $ 15,792

Thereafter 21,620

Present value of net minimum lease payments $ 71,831

Employee Benefit Plans

7 unchanged sentences

Interest cost 1,331 1,694

Actuarial loss/(gain)

Actuarial loss 4,131 5,339

Benefits paid ( 3,222 ) ( 2,913 )

7 unchanged sentences

Funded status of the plans (underfunded) $ ( 9,705 ) $ ( 6,988 )

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following table provides detail on the Company’s domestic net periodic benefit expense (income) (in thousands):

The following table provides detail on the Company’s domestic net periodic benefit expense (in thousands):

Year ended August 31,

2020 2019 2018

Interest cost $ 1,331 $ 1,694 $ 1,633

1 unchanged sentence

Amortization of actuarial loss 1,212 990 1,127

Net periodic benefit expense (income)

Net periodic benefit expense $ 773 $ 476 $ 92

As of August 31, 2020 and 2019, $ 21.4 million and $ 16.1 million, respectively, of pension plan actuarial losses, which have not yet been recognized in net periodic benefit cost, were included in accumulated other comprehensive loss, net of income taxes.

During fiscal 2020 , $1.2 million of these actuarial losses, net of tax, are expected to be recognized in net periodic benefit cost.

During fiscal 2021, $ 1.3 million of these actuarial losses are expected to be recognized in net periodic benefit cost.

Weighted-average assumptions used to determine U.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:

2020 2019 2018

Assumptions for benefit obligations:

13 unchanged sentences

The target return is based on historical returns adjusted to reflect the current view of the long-term investment market.

The fair value of all U.S.

pension plan assets is determined based on quoted market prices and therefore all plan assets are determined based on Level 1 inputs, except for fixed income securities which are valued based on Level 2 inputs, as defined in Note 8, “Fair Value Measurements.” The U.S.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

pension plan investment allocations by asset category were as follows (in thousands):

Year Ended August 31,

2020 % 2019 %

Cash and cash equivalents $ — — % $ 304 0.8 %

Income receivable 55 0.1 — —

Fixed income securities:

Treasury Securities 5,206 13.0 — —

Corporate Bonds — — 5,127 12.7

Mutual funds 23,091 57.9 23,206 57.4

28,297 70.9 28,333 70.1

Equity securities:

Mutual funds 11,583 29.0 11,775 29.1

Total plan assets $ 39,935 100.0 % $ 40,412 100.0 %

The fair value of mutual funds are based on unadjusted quoted market prices and therefore are classified as Level 1 within the fair value hierarchy under GAAP.

Treasury Securities and Corporate Bonds are valued using Level 2 inputs, as defined in Note 8, “Fair Value Measurements.”

Projected benefit payments from plan assets to participants in the Company’s U.S.

pension plans are $3.0 million per year for each of the next five years and $14.5 million in aggregate for the following five years.

The Company does not anticipate making a material contribution to the U.S.

pension plans in fiscal 2020.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

pension plans are $ 2.9 million for fiscal 2021 and $ 3.0 million per year for each of the next four years and $ 14.7 million in aggregate for the following five years.

The Company made a contribution of $ 0.6 million to the U.S.

pension plans in September of fiscal 2021.

Foreign Defined Benefit Pension Plans

6 unchanged sentences

Interest cost 171 257

Actuarial loss/(gain)

Actuarial (gain)/loss ( 495 ) 2,594

Benefits paid ( 300 ) ( 421 )

Plan amendments — 89

Curtailments ( 1,687 ) ( 107 )

Currency impact 1,221 ( 815 )

8 unchanged sentences

Funded status of the plans (underfunded) $ ( 5,317 ) $ ( 6,985 )

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following table provides detail on the Company’s foreign net periodic benefit expense (in thousands):

Year ended August 31,

2020 2019 2018

Employer service costs $ 284 $ 450 $ 440

4 unchanged sentences

(Income) or cost of special events ( 728 ) ( 56 ) 18

Net periodic benefit expense

Net periodic benefit (income) expense $ ( 443 ) $ 504 $ 607

The weighted average discount rate utilized for determining the benefit obligation at August 31, 2020 and 2019 was 1.4 % and 1.1 %, respectively.

2 unchanged sentences

During fiscal 2021, the Company anticipates contributing $ 0.2 million to these pension plans.

Projected benefit payments to participants in the these foreign plans are $0.2 million for fiscal 2020 , $0.3 million for fiscal 2021 , $0.4 million for fiscal 2022 , $0.3 million for both fiscal 2023 and fiscal 2024 and $1.9 million in aggregate for the following five years.

In fiscal 2020, the Company moved certain employees in a foreign pension plan into a multi-employer pension plan which triggered a curtailment.

The curtailment resulted in a reduction to the projected benefit obligation of that plan of $ 1.7 million, of which $ 0.7 million was recorded as a component of Other (income) expense, net within the Consolidated Statements of Operations and the remaining $ 1.0 million was recorded through Other comprehensive income (loss) on the Consolidated Statements of Comprehensive Income (Loss).

Projected benefit payments to participants in the these foreign plans are $ 0.4 million for fiscal 2021, $ 0.3 million in each of the following four fiscal years and $ 1.9 million in aggregate for the following five years.

Other Postretirement Health Benefit Plans

1 unchanged sentence

These unfunded plans had a benefit obligation of $ 2.4 million and $ 3.1 million at August 31, 2020 and 2019, respectively.

These obligations are determined

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

utilizing assumptions consistent with those used for our U.S.

These obligations are determined utilizing assumptions consistent with those used for our U.S.

pension plans and a health care cost trend rate of 6.5 %, trending downward to 5.0 % by the year 2026, and remaining level thereafter.

Net periodic benefit costs for other postretirement benefits was income of $0.1 million for the year-ended August 31, 2019 and expense of $0.1 million and $0.2 million for the year-ended August 31, 2018 and 2017 , respectively.

Benefit payments from the plan are funded through participant contributions and Company contributions, which are projected to be $0.2 million in fiscal 2020 .

Net periodic benefit costs for other postretirement benefits was income of $ 0.3 million and $ 0.1 million for the year ended August 31, 2020 and 2019, respectively and expense of $ 0.1 million for the year-ended August 31, 2018.

Benefit payments from the plan are funded through participant contributions and Company contributions.

Benefit payments are projected to be $ 0.2 million in fiscal 2021.

Defined Contribution Benefit Plans

4 unchanged sentences

Employees generally may contribute up to 50% of their compensation to individual accounts within the 401(k) Plan.

While contributions vary, prior to fiscal 2019, the Company generally made core contributions to employee accounts equal to 3% of each employee’s eligible annual cash compensation, subject to IRS limitations.

In addition, the Company matched approximately 25% of each employee’s contribution up to 6% of the employee’s eligible compensation.

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 were made in the form of its Class A common stock and contributed into each eligible participant’s deferred compensation plan account.

Effective September 1, 2018, the Company changed the method of employer contributions.

The Company's match contribution is $0.50 for every $1 contributed by employees, up to 8% of the employees' eligible pay.

While contributions vary, the Company's match contribution is $ 0.50 for every $ 1 contributed by employees, up to 8 % of the employees' eligible pay.

These match contributions are made on every payroll run, meaning the contribution is immediately 100% vested.

In addition, the Company may make an annual, discretionary contribution of up to 3% of employees' eligible pay to employees employed as of end of the plan year.

In response to the COVID-19 pandemic, the Company temporarily suspended its 401(k) match starting in May 2020, which has remained suspended.

In addition, the Company may make an annual, discretionary contribution of up to 3 % of employees' eligible pay to employees employed as of the end of the plan year.

The discretionary contribution has a three-year vesting period.

The Company elected not to provide a discretionary contribution for the year ended August 31, 2020.

Company contributions to the Restoration Plan are made in the form of its Class A common stock and contributed into each eligible participant’s deferred compensation plan.

In both fiscal 2019 and 2018 the Company contributed $ 0.1 million to eligible participants;

no contributions were made in fiscal 2020.

Expense recognized related to the 401(k) plan totaled $ 1.4 million, $ 2.7 million and $ 3.1 million for the year ended August 31, 2020, 2019 and 2018, respectively.

1 unchanged sentence

The SERP Plan is an unfunded defined contribution plan that covers certain current and former executive employees and has an annual contribution formula based on age and years of service (with Company contributions ranging from 3 % to 6 % of eligible wages).

This unfunded plan had a $1.6 million and $1.7 million obligation at August 31, 2019 and 2018 , respectively.

Expense recognized for the SERP Plan was $0.4 million for fiscal 2019 and $0.3 million for both 2018 and 2017 .

Deferred Compensation Plan

This unfunded plan had a $ 1.3 million and $ 1.6 million obligation at August 31, 2020 and 2019,

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

respective ly.

Expense recognized for the SERP Plan was $ 0.3 million, $ 0.4 million and $ 0.3 million for fiscal 2020, 2019 and 2018, respectively.

Deferred Compensatio n Plan

The Company maintains a deferred compensation plan to allow eligible U.S.

employees to defer receipt of current cash compensation in order to provide future savings benefits.

employees to defer receipt of current cash compensation and restricted stock units vesting in order to provide future savings benefits.

Eligibility is limited to employees that earn compensation that exceeds certain pre-defined levels.

Participants have the option to invest their deferrals in a fixed income investment, in Company common stock, or a combination of the two.

The fixed income portion of the plan is unfunded, and therefore all compensation deferred under the plan is held by the Company and commingled with its general assets.

Participants have the option to invest their deferrals in a fixed income investment, a defined set of mutual funds, and/or, with respect to deferrals of restricted stock units, in Company common stock.

The fixed income and mutual fund portion of the plan is unfunded, and therefore all compensation deferred under the plan is held by the Company and commingled with its general assets.

Liabilities of $ 15.7 million and $ 18.4 million are included in the consolidated balance sheets at August 31, 2020 and 2019, respectively, to reflect the unfunded portion of the deferred compensation liability.

The Company recorded expense in "Financing costs, net" of $1.4 million , $1.5 million and $1.6 million for the years ended August 31, 2019 , 2018 and 2017 , respectively, for non-funded interest on participant deferrals in the fixed income investment option.

The Company recorded expense in "Financing costs, net" of $ 1.1 million, $ 1.4 million and $ 1.5 million for the years ended August 31, 2020, 2019 and 2018, respectively, for the non-funded return on participant deferrals.

Company common stock contributions to fund the plan are held in a rabbi trust, accounted for in a manner similar to treasury stock and are recorded at cost in “Stock held in trust” within shareholders’ equity on the Consolidated Balance Sheets with the corresponding deferred compensation liability also recorded within shareholders’ equity on the Consolidated Balance Sheets.

Since no investment diversification is permitted within the trust, changes in fair value of Actuant common stock are not recognized.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Income tax expense (benefit) from continuing operations is summarized as follows (in thousands):

Since no investment diversification is permitted within the trust, changes in fair value of Enerpac Tool Group common stock are not recognized.

Income tax expense from continuing operations is summarized as follows (in thousands) :

Year ended August 31,

2020 2019 2018

Currently payable:

Income tax expense (benefit)

Income tax expense (benefit) from continuing operations recognized in the accompanying consolidated statements of operations differs from the amounts computed by applying the federal income tax rate to earnings (loss) from continuing operations before income tax expense.

Federal $ ( 35 ) $ ( 2,040 ) $ 291

Foreign 10,004 9,370 9,223

State 142 1,347 358

10,111 8,677 9,872

Federal ( 7,791 ) ( 400 ) ( 1,143 )

Foreign ( 1,632 ) 2,172 5,807

State 1,604 208 ( 86 )

( 7,819 ) 1,980 4,578

Income tax expense $ 2,292 $ 10,657 $ 14,450

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Income tax expense from continuing operations recognized in the accompanying consolidated statements of operations differs from the amounts computed by applying the federal income tax rate to earnings from continuing operations before income tax expense.

A reconciliation of income taxes at the federal statutory rate to the effective tax rate is summarized in the following table:

Year ended August 31,

2020 2019 2018

Federal statutory rate 21.0 % 21.0 % 25.7 %

1 unchanged sentence

Net effects of foreign tax rate differential and credits (1)

38.7 11.3 ( 12.2 )

Domestic manufacturing deduction — — ( 1.3 )

1 unchanged sentence

Compensation adjustment 6.6 4.4 7.0

Impairment and divestiture charges (2)

Impairment and other divestiture charges (2)

3.3 19.3 39.1

Valuation allowance additions and releases (3)

( 8.1 ) 3.9 20.3

Changes in liability for unrecognized tax benefits ( 5.3 ) 4.1 ( 34.1 )

tax reform, net impact (4)

Taxable liquidation of foreign subsidiaries (5)

( 32.5 ) ( 31.1 ) 2.4

Taxable liquidation of subsidiaries (5)

Foreign non-deductible expenses 7.4 16.2 12.0

1 unchanged sentence

R&D credit, audits and adjustments (6)

( 38.9 ) 4.8 15.3

Other items ( 5.6 ) 5.3 ( 2.6 )

Effective income tax rate 29.2 % 56.9 % 75.3 %

(1) The Company generated $0.7 million , $10.2 million and $4.2 million of foreign tax credits, excluding the impact of tax reform for fiscal 2019 , 2018 and 2017 , respectively.

(2) Fiscal 2019, 2018 and 2017 pretax earnings (loss) include $22.8 million , $3.0 million and $117.0 million , respectively, in impairment & divestiture charges related to goodwill, intangible assets, tangible assets and the cumulative effect of foreign currency rate changes of which $14.0 million , $0.7 million and $69.0 million , respectively, are not deductible for income tax purposes.

(3) Incremental valuation allowances of $1.7 million and $20.4 million were recorded in fiscal 2019 and 2018, respectively, due to uncertainty regarding utilization of foreign operating loss carryforwards, which were partially offset by a reduction of $2.9 million and $11.8 million of valuation allowances for fiscal 2019 and 2018, respectively.

These amounts exclude valuation allowances related to foreign tax credits that are categorized with tax reform.

(4) During fiscal 2019, legislative changes and additional guidance related to the Act resulted in tax benefit of $5.8 million related to the fiscal 2018 tax year.

(5) During fiscal 2018 and 2017, the Company generated a net expense of $1.5 million and a net benefit of $14.9 million , the result of taxable liquidations of foreign subsidiaries.

ACTUANT CORPORATION

(1) The Company generated $ 5.4 million, $ 2.6 million and $ 1.5 million of withholding tax expense for fiscal 2020, 2019 and 2018, respectively, and $ 4.0 million, $ 3.5 million and $ 13.3 million of foreign-derived tax credits, excluding the impact of tax reform for fiscal 2020, 2019 and 2018, respectively.

(2) Fiscal 2020, 2019 and 2018 pretax earnings include $( 3.2 ) million, $ 22.8 million and $ 3.0 million, respectively, in impairment & divestiture (benefits) charges related to goodwill, intangible assets, tangible assets and the cumulative effect of foreign currency rate changes of which $ 0.3 million, $ 14.0 million and $ 0.7 million, respectively, are not deductible for income tax purposes.

(3) Incremental valuation allowances of $ 9.4 million and $ 1.7 million and $ 20.4 million were recorded in fiscal 2020, 2019 and 2018, respectively, due to uncertainty regarding realization of tax assets, which were offset by a reduction of $ 12.3 million, $ 2.9 million and $ 11.8 million of valuation allowances for fiscal 2020, 2019 and 2018, respectively.

These amounts exclude valuation allowances against tax assets related to the tax reform.

(4) During fiscal 2020, legislative changes and additional guidance related to proposed foreign tax credit regulations resulted in adjustments of $( 2.6 ) million related to the fiscal 2019 results.

(5) During fiscal 2020 and 2018, the Company generated a net expense of $ 4.1 million and $ 1.5 million, respectively, as a result of taxable liquidations of subsidiaries.

(6) During fiscal 2020, the Company generated $ 3.1 million of tax benefit related to R&D credits, audits and adjustments as compared to $ 0.9 million tax expense in fiscal 2019 and $ 2.9 million tax expense in fiscal 2018.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

4 unchanged sentences

Postretirement benefits 9,068 9,289

Inventory 1,793 629

Lease liabilities 10,526 —

Book reserves and other items 6,752 11,465

4 unchanged sentences

Depreciation and amortization ( 31,457 ) ( 26,248 )

Lease assets ( 10,526 ) —

Other items ( 702 ) ( 862 )

Deferred income tax liabilities ( 42,685 ) ( 27,110 )

Net deferred income tax asset (1)

$ 20,886 $ 16,968

(1) The net deferred income tax asset is reflected on the balance sheet in two categories:

an asset of $ 22.6 million and $ 18.4 million for fiscal 2020 and 2019, respectively, is included in "Other long-term assets" and a liability of $ 1.7 million and $ 1.6 million for fiscal 2020 and 2019, respectively, is included in "Deferred income taxes".

The Company has $68.8 million of state loss carryforwards, which are available to reduce future state tax liabilities.

The Company has $ 77.6 million of state net operating loss carryforwards, which are available to reduce future state tax liabilities.

These state net operating loss carryforwards expire at various times through 2040.

3 unchanged sentences

Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands):

2020 2019 2018

Beginning balance $ 24,167 $ 24,359 $ 31,446

17 unchanged sentences

If all undistributed earnings were remitted, an additional income tax provision of $ 2.4 million would have been necessary as of August 31, 2020.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Earnings (loss) before income taxes from continuing operations, are summarized as follows (in thousands):

E arnings (loss) before income taxes from continuing operations, are summarized as follows (in thousands):

Year Ended August 31,

2020 2019 2018

Domestic $ ( 9,058 ) $ ( 715 ) $ 5,337

Foreign 16,907 19,439 13,859

$ 7,849 $ 18,724 $ 19,196

Both domestic and foreign pre-tax earnings from continuing operations are impacted by changes in operating earnings, acquisition and divestiture activities, restructuring charges and the related benefits, growth investments, debt levels and the impact of changes in foreign currency exchange rates.

In fiscal 2020, domestic and foreign earnings included non-cash impairment and other divestiture benefits of $( 2.6 ) million and $( 0.6 ) million, respectively.

In fiscal 2019, domestic and foreign earnings included non-cash impairment and other divestiture costs of $ 9.0 million and $ 13.8 million, respectively.

In fiscal 2018, foreign earnings included $ 3.0 million of non-cash impairment & divestiture charges.

In fiscal 2017 , domestic earnings included $7.8 million of director and officer transition charges and foreign earnings included $117.0 million of non-cash impairment & divestiture charges.

Approximately 70% - 80% of pre-tax earnings from continuing operations (excluding impairment & divestiture charges) were generated in foreign jurisdictions with tax rates different than the U.S.

Over 75 % of pre-tax earnings from continuing operations (excluding impairment & other divestiture charges) were generated in foreign jurisdictions with tax rates different than the U.S.

federal income tax rate.

Cash paid for income taxes, net of refunds, totaled $15.4 million , $1.5 million (refund) and $11.8 million during the years ended August 31, 2019 , 2018 and 2017 , respectively.

Cash paid for income taxes, net of refunds, totaled $ 13.2 million, $ 15.4 million and $( 1.5 ) million (refund) during the years ended August 31, 2020, 2019 and 2018, respectively.

Capital Stock and Share Repurchases

7 unchanged sentences

At August 31, 2020, cumulative shares repurchased under these authorizations totaled 22,799,230 , leaving 5,200,770 shares authorized for future buy backs.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

2 unchanged sentences

Year Ended August 31,

Net earnings (loss) from continuing operations

Net (loss) earnings from discontinued operations

2020 2019 2018

Net earnings from continuing operations $ 5,557 $ 8,067 $ 4,746

Net loss from discontinued operations ( 4,834 ) ( 257,212 ) ( 26,394 )

Net earnings (loss) 723 ( 249,145 ) ( 21,648 )

Weighted average common shares outstanding - basic 59,952 61,151 60,441

1 unchanged sentence

Weighted average common shares outstanding - diluted 60,269 61,607 61,028

Earnings (loss) per common share from continuing operations:

(Loss) earnings per common share from discontinued operations:

Earnings per common share from continuing operations:

Basic $ 0.09 $ 0.13 $ 0.08

Diluted $ 0.09 $ 0.13 $ 0.08

Loss per common share from discontinued operations:

Basic $ ( 0.08 ) $ ( 4.21 ) $ ( 0.44 )

Diluted $ ( 0.08 ) $ ( 4.18 ) $ ( 0.43 )

Loss per common share:

Basic $ 0.01 $ ( 4.07 ) $ ( 0.36 )

Diluted $ 0.01 $ ( 4.04 ) $ ( 0.35 )

Anti-dilutive securities- stock based compensation plans (excluding from earnings per share calculation) 1,532 1,239 1,477

(1) As a result of the impairment and divestiture charges which caused a net loss from continuing operations in fiscal 2017, shares from stock based compensation plans are excluded from the calculation of diluted loss per share, as the result would be anti-dilutive.

Share based awards may be granted to key employees and directors under the Actuant Corporation 2017 Omnibus Incentive Plan (the “Plan”).

At August 31, 2019 , 4,325,000 shares of Class A common stock were authorized for issuance under the Plan plus an additional 1,800,000 shares being registered to cover shares, if any, that become issuable, pursuant to the terms of the Plan, upon the expiration, cancellation or forfeiture of existing awards under our previously registered stock plans, of which 3,212,656 shares were available for future award grants.

Share based awards may be granted to key employees and directors under the Enerpac Tool Group Corp.

2017 Omnibus Incentive Plan (the “Plan”).

At August 31, 2020, 4,325,000 shares of Class A c ommon stock were authorized for issuance under the Plan plus an additional 1,800,000 shares being registered to cover shares, if any, that become issuable, pursuant to the terms of the Plan, upon the expiration, cancellation or forfeiture of existing awards under our previously registered stock plans.

At August 31, 2020, 2,362,855 shares were available for future award grants.

The Plan permits the Company to grant share-based awards, including stock options, restricted stock, restricted stock units and performance shares (the "Performance Shares") to employees and directors.

3 unchanged sentences

The provisions of share-based awards may vary by individual grant with respect to vesting period, dividend and voting rights, performance conditions and forfeitures.

ACTUANT CORPORATION

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

A summary of restricted stock and performance shares activity during fiscal 2019 is as follows:

Weighted-Average Fair Value at Grant Date (Per Share)

A summary of restricted stock units and performance shares activity during fiscal 2020 is as follows:

Shares Weighted-Average Fair Value at Grant Date (Per Share)

Outstanding on August 31, 2019 1,280,826 $ 23.87

Granted 460,800 24.10

Forfeited ( 85,750 ) 23.29

Vested ( 669,755 ) 23.77

Outstanding on August 31, 2020 986,121 $ 24.10

A summary of stock option activity during fiscal 2020 is as follows:

Weighted-Average

Shares Weighted-Average

Exercise Price

Weighted-Average

(Per Share) Weighted-Average

Remaining Contractual

Term Aggregate

Intrinsic Value

Outstanding on September 1, 2019 1,606,543 $ 25.88

Exercised ( 145,113 ) 19.77

Forfeited — —

Expired ( 6,389 ) 35.68

Outstanding on August 31, 2020 1,455,041 $ 26.45 3.5 *

Exercisable on August 31, 2020 1,323,188 $ 26.55 3.3 *

*At August 31, 2020, all outstanding options had a strike price that was higher than the value of the Company's stock, therefore the aggregate intrinsic value was $ 0 .

Intrinsic value is the difference between the market value of the stock at August 31, 2020 and the exercise price which is aggregated for all options outstanding and exercisable.

A summary of the weighted-average grant-date fair value of options, total intrinsic value of options exercised, and cash receipts from options exercised is summarized below (in thousands, except per share amounts):

A summary of the total intrinsic value of options exercised and cash receipts from options exercised is summarized below (in thousands, except per share amounts) :

Year Ended August 31,

Weighted-average fair value of options granted (per share)

2020 2019 2018

Intrinsic value of options exercised $ 803 $ 429 5,284

Cash receipts from exercise of options 2,631 1,404 15,140

The Company generally records compensation expense over the vesting period for restricted stock awards based on the market value of the Company's Class A common stock on the grant date and utilized an expected forfeiture rate of 10% , 10% and 11% , for fiscal years ended August 31, 2019, 2018 and 2017, respectively.

The Company generally records compensation expense over the vesting period for restricted stock unit awards based on the market value of the Company's Class A common stock on the grant date and utilized an expected forfeiture rate of 8 % for the year ended August 31, 2020 and 10 % for both years ended August 31, 2019 and 2018.

The fair value of Performance Shares with market vesting conditions is determined utilizing a Monte Carlo simulation model.

Stock based compensation expense is determined using a binomial pricing model for options.

Assumptions used to determine the fair value of each option were based upon historical data and standard industry valuation practices and methodology.

There were no options granted in both fiscal 2019 and 2018.

The following weighted-average assumptions were used in fiscal year 2017:

Fiscal Year Ended August 31, 2017

Dividend yield

Expected volatility

Risk-free rate of return

Expected forfeiture rate

Expected life

Stock based compensation expense is determined using a binomial pricing model for options, however there were no options granted in fiscal 2020, 2019 or 2018.

As of August 31, 2020, there was $ 13.6 million of total unrecognized compensation cost related to share-based awards, including stock options, restricted stock, restricted stock units and performance shares, which will be recognized over a weighted average period of 1.8 years.

The total fair value of share-based awards that vested during the fiscal years ended August 31, 2020 and 2019 was $ 18.2 million and $ 11.9 million, respectively.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Business Segment, Geographic and Customer Information

2 unchanged sentences

The Other segment is included for purposes of reconciliation of the respective balances below to the consolidated financial statements.

All operations within the EC&S operating segment are considered discontinued operations and are therefore excluded from all disclosures herein.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following tables summarize financial information by reportable segment and product line (in thousands):

Year Ended August 31,

2020 2019 2018

Net Sales by Reportable Segment & Product Line

Industrial Tools & Services Segment

Product $ 341,470 $ 433,703 $ 439,405

Service & Rental 113,393 175,812 151,680

454,863 609,515 591,085

Other Operating Segment 38,429 45,243 50,218

$ 493,292 $ 654,758 $ 641,303

Operating Profit (Loss)

2 unchanged sentences

General Corporate ( 37,948 ) ( 42,076 ) ( 43,536 )

$ 24,181 $ 47,516 $ 50,206

Depreciation and Amortization:

2 unchanged sentences

General Corporate 2,246 2,047 1,982

$ 20,720 $ 20,217 $ 20,405

Capital Expenditures:

2 unchanged sentences

General Corporate 2,146 1,061 1,927

$ 12,053 $ 14,923 $ 11,021

Industrial Tools & Services $ 592,086 $ 553,615

1 unchanged sentence

General Corporate 171,103 230,597

*Excludes "Assets from discontinued operations" as of August 31, 2019 and 2018, respectively.

$ 824,294 $ 838,696

*Excludes "Assets from discontinued operations" as of August 31, 2019.

In addition to the impact of changes in foreign currency exchange rates, the comparability of segment and product line information is impacted by acquisition/divestiture activities, impairment and divestiture charges, restructuring costs and related benefits.

Corporate assets, which are not allocated, principally represent cash and cash equivalents, capitalized debt issuance costs and deferred income taxes.

ACTUANT CORPORATION

Corporate assets, which are not allocated, principally represent cash and cash equivalents, property, plant, and equipment, ROU assets (year ended August 31, 2020), capitalized debt issuance costs and deferred income taxes.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

1 unchanged sentence

Year Ended August 31,

2020 2019 2018

United States $ 185,279 $ 249,644 $ 236,036

Germany 24,401 26,445 30,643

United Kingdom 24,033 30,127 35,388

Saudi Arabia 19,787 21,625 20,749

Australia 19,332 25,749 30,796

Brazil 16,413 18,779 17,900

Canada 15,924 18,686 20,172

China 15,058 18,548 19,239

All other 173,065 245,155 230,380

$ 493,292 $ 654,758 $ 641,303

Property, Plant and Equipment, net:

United States $ 21,410 $ 21,047

China 12,248 12,179

United Kingdom 9,654 2,983

The Company’s largest customer accounted for less than 3% of sales in each of the last three fiscal years.

Export sales from domestic operations were 7.4% , 7.9% and 6.0% of total net sales from continuing operations in fiscal 2019 , 2018 and 2017 , respectively.

UAE 7,525 8,734

Netherlands 2,546 2,720

Kazakhstan 2,052 2,635

Brazil 1,784 2,851

Spain 1,705 1,244

All other 2,481 2,336

$ 61,405 $ 56,729

The Company’s largest customer accounted for approximately 3.0 % of sales in each of the last three fiscal years.

Export sales from domestic operatio ns were 7.3 %, 7.4 % and 7.9 % of total net sales from continuing operations in fiscal 2020, 2019 and 2018, respectively.

Commitments and Contingencies

6 unchanged sentences

Such reserves are recorded when it is probable a loss has been incurred and can be reasonably estimated.

The Company maintains a policy to exclude from such reserves an estimate of legal defense costs.

In the opinion of management, resolution of these contingencies is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The discounted present

ACTUANT CORPORATION

The Company remains contingently liable for lease payments under leases of businesses that it previously divested or spun-off in the event that such businesses are unable to fulfill their future lease payment obligations, however, the Company does not believe it is probable that it will be required to satisfy these obligations.

Future minimum lease payments for these leases at August 31, 2020 was $ 6.9 million associated with monthly payments extending to fiscal 2025.

ENERPAC TOOL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

value of future minimum lease payments for these leases at August 31, 2019 was $9.1 million using a weighted average discount rate of 1.9% .

The Company has facilities in numerous geographic locations that are subject to environmental laws and regulations.

3 unchanged sentences

Management believes that such costs will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

As previously disclosed, in October 2018, the Company filed a voluntary self-disclosure ("VSD") with the U.S.

Treasury Department’s Office of Foreign Assets Control (“OFAC”) regarding transactions related to otherwise authorized sales of tools and other products totaling approximately $0.5 million by certain of its foreign subsidiaries to two Iranian distributors.

It is possible that certain limited transactions relating to the authorized sales fell outside the scope of General License H under the Iranian Transaction and Sanctions Regulations, 31 C.F.R.

The VSD also included information about additional transactions by certain of the Company's Dutch subsidiaries with a counterparty in Estonia that may have been in violation of E.O.

13685, as certain sales of products and services may have been diverted to the Crimea region of Ukraine.

OFAC is currently reviewing the Company’s disclosures to determine whether any violations of U.S.

economic sanctions laws may have occurred and, if so, to determine the appropriate enforcement response.

At this time, the Company cannot predict when OFAC will conclude its review of the VSD or the nature of its enforcement response.

Additionally, the Company has self-disclosed the sales to its Estonian customer to relevant authorities in the Netherlands as potentially violating applicable sanctions laws in that country and the European Union.

Additionally, the Company self-disclosed in fiscal 2019 the sales to an Estonian customer to relevant authorities in the Netherlands as potentially violating applicable sanctions laws in that country and the European Union.

The investigation by authorities in the Netherlands is ongoing and also may result in penalties.

At this time, the Company cannot predict when the investigation will be completed or reasonably estimate what penalties, if any, will be assessed.

While there can be no assurance of the ultimate outcome of the above matters, the Company currently believes that there will be no material adverse effect on the Company's financial position, results of operations or cash flows.

Guarantor Subsidiaries

As discussed in Note 7, “Debt” on April 16, 2012 , Actuant Corporation (the “Parent”) issued $300.0 million of 5.625% Senior Notes, of which $287.6 million remains outstanding as of August 31, 2019 .

Certain material, domestic wholly owned subsidiaries (the “Guarantors”) fully and unconditionally guarantee the 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.

Certain assets, liabilities and expenses have not been allocated to the Guarantors and the subsidiaries that do not guarantee the 5.625% Senior Notes (the "non-Guarantors") and therefore are included in the Parent column in the accompanying consolidating financial statements.

These items are of a corporate or consolidated nature and include, but are not limited to, tax provisions and related assets and liabilities, certain employee benefit obligations, prepaid and accrued insurance and corporate indebtedness.

Intercompany activity primarily includes loan activity, purchases and sales of goods or services, investments and dividends.

Intercompany balances also reflect certain non-cash transactions including transfers of assets and liabilities between the Parent, Guarantor and non-Guarantor, allocation of non-cash expenses from the Parent to the Guarantors and non-Guarantors, non-cash intercompany dividends and the impact of foreign currency rate changes.

The following tables present the results of operations, financial position and cash flows of the Parent, the Guarantors and the non-Guarantors and the eliminations necessary to arrive at the information for the Company on a consolidated basis.

As a result of the refinancing of the Senior Credit Facility in March 2019, certain domestic subsidiaries that were previously Guarantors of the Senior Notes are now non-Guarantors.

As such, prior period financial information has been recast to reflect the current Parent, Guarantor, and non-Guarantor structure.

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)

Year Ended August 31, 2019

Non-Guarantors

Cost of products sold

Selling, administrative and engineering expenses

Amortization of intangible assets

Restructuring charges

Impairment & divestiture charges

Operating profit (loss)

Financing costs (income), net

Intercompany (income) expense, net

Intercompany dividends

Other (income) expense, net

Earnings (loss) before income tax (benefit) expense

Income tax (benefit) expense

Earnings (loss) from continuing operations

Loss from discontinued operations

Net earnings (loss) before equity in loss of subsidiaries

Equity in loss of subsidiaries

Comprehensive loss

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands)

Year Ended August 31, 2018

Non-Guarantors

Cost of products sold

Selling, administrative and engineering expenses

Amortization of intangible assets

Restructuring charges

Impairment & divestiture charges (benefit)

Operating profit (loss)

Financing costs (income), net

Intercompany (income) expense, net

Intercompany dividends

Other (income) expense, net

Earnings before income tax (benefit) expense

Income tax (benefit) expense

Earnings (loss) from continuing operations

(Loss) earnings from discontinued operations

Net earnings (loss) before equity in (loss) earnings of subsidiaries

Equity in (loss) earnings of subsidiaries

Comprehensive income (loss)

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE LOSS

(in thousands)

Year Ended August 31, 2017

Non-Guarantors

Cost of products sold

Selling, administrative and engineering expenses

Amortization of intangible assets

Director & officer transition charges

Restructuring charges

Impairment & divestiture charges

Operating profit (loss)

Financing costs (income), net

Intercompany (income) expense, net

Intercompany dividends

Other expense (income), net

Earnings (loss) before income tax (benefit) expense

Income tax (benefit) expense

Net earnings (loss) from continuing operations

Net (loss) earnings from discontinued operations

Net earnings (loss) before equity in (loss) earnings of subsidiaries

Equity in (loss) earnings of subsidiaries

Net (loss) earnings

Comprehensive (loss) income

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

August 31, 2019

Non-Guarantors

Current assets

Cash and cash equivalents

Accounts receivable, net

Inventories, net

Assets from discontinued operations

Other current assets

Total current assets

Property, plant & equipment, net

Other intangibles, net

Investment in subsidiaries

Intercompany receivable

Other long-term assets

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities

Trade accounts payable

Accrued compensation and benefits

Current maturities of debt

Income taxes payable

Liabilities from discontinued operations

Other current liabilities

Total current liabilities

Long-term debt

Deferred income taxes

Pension and post-retirement benefit liabilities

Other long-term liabilities

Intercompany payable

Shareholders’ equity

Total liabilities and shareholders’ equity

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

August 31, 2018

Non-Guarantors

Current assets

Cash and cash equivalents

Accounts receivable, net

Inventories, net

Assets from discontinued operations

Other current assets

Total current assets

Property, plant & equipment, net

Other intangible assets, net

Investment in subsidiaries

Intercompany receivables

Other long-term assets

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities

Trade accounts payable

Accrued compensation and benefits

Current maturities of debt

Income taxes payable

Liabilities from discontinued operations

Other current liabilities

Total current liabilities

Long-term debt

Deferred income taxes

Pension and post-retirement benefit liabilities

Other long-term liabilities

Intercompany payable

Shareholders’ equity

Total liabilities and shareholders’ equity

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended August 31, 2019

Non-Guarantors

Operating Activities

Cash provided by (used in) operating activities - continuing operations

Cash (used in) provided by operating activities - discontinued operations

Cash provided by operating activities

Investing Activities

Capital expenditures

Proceeds from sale of property, plant and equipment

Intercompany investment

Cash provided by (used in) investing activities - continuing operations

Cash provided by (used in) investing activities - discontinued operations

Cash provided by (used in) investing activities

Financing Activities

Payment for redemption of term loan

Proceeds from issuance of term loan

Principal Repayments on term loan

Purchase of treasury shares

Taxes paid related to the net share settlement of equity awards

Stock option exercises, related tax benefits and other

Cash dividends

Payment of debt issuance costs

Intercompany dividends paid

Intercompany loan activity

Intercompany capital contribution

Cash used in financing activities - continuing operations

Cash (used in) provided by financing activities - discontinued operations

Cash 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

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended August 31, 2018

Non-Guarantors

Operating Activities

Cash provided by operating activities - continuing operations

Cash provided by operating activities - discontinued operations

Cash provided by operating activities

Investing Activities

Capital expenditures

Proceeds from sale of property, plant and equipment

Intercompany investment

Rental asset buyout for Viking divestiture

Proceeds from sale of business, net of transaction costs

Cash paid for business acquisitions, net of cash acquired

Cash provided by (used in) investing activities - continuing operations

Cash provided by (used in) investing activities - discontinued operations

Cash used in investing activities

Financing Activities

Principal repayments on term loan

Taxes paid related to the net share settlement of equity awards

Stock option exercises, related tax benefits and other

Cash dividends

Intercompany dividends paid

Intercompany loan activity

Intercompany capital contribution

Cash used in financing activities - continuing operations

Cash used in financing activities - discontinued operations

Cash 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

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended August 31, 2017

Non-Guarantors

Operating Activities

Cash provided by operating activities - continuing operations

Cash provided by operating activities - discontinued operations

Cash provided by operating activities

Investing Activities

Capital expenditures

Proceeds from sale of property, plant and equipment

Intercompany investment

Cash provided by (used in) investing activities - continuing operations

Cash provided by (used in) investing activities - discontinued operations

Cash used in investing activities

Financing Activities

Principal Repayments on term loan

Redemption of 5.625% senior notes

Taxes paid related to the net share settlement of equity awards

Stock option exercises, related tax benefits and other

Cash dividends

Intercompany dividends paid

Intercompany loan activity

Intercompany capital contribution

Cash used in financing activities - continuing operations

Cash used in financing activities - discontinued operations

Cash 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

ACTUANT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Director & Officer Transition Charges

During the year-ended August 31, 2017 , the Company recorded separation and transition charges of $7.8 million in connection with the retirement of one director of the Company's Board of Directors and the transition of the Executive Vice President/Chief Financial Officer.

The charges were mainly comprised of compensation expense for accelerated equity vesting, severance, outplacement, legal, signing bonus and relocation costs.

While there can be no assurance of the ultimate outcome of the Netherlands investigation, the Company currently believes that there will be no material adverse effect on the Company's financial position, results of operations or cash flows.

Quarterly Financial Data (Unaudited)

1 unchanged sentence

Year to date August 31, 2020

Net (loss) earnings from continuing operations

Net (loss) earnings per share from continuing operations:

First Second Third Fourth Total

Net sales $ 146,674 $ 133,386 $ 101,879 $ 111,353 $ 493,292

Gross profit 68,688 62,093 41,947 44,465 217,193

Net earnings (loss) from continuing operations 6,372 3,918 ( 4,930 ) 197 5,557

Net earnings (loss) per share from continuing operations:

Basic $ 0.11 $ 0.07 $ ( 0.08 ) $ 0.00 $ 0.09

Diluted $ 0.11 $ 0.06 $ ( 0.08 ) $ 0.00 $ 0.09

Year to date August 31, 2019

First Second Third Fourth Total

Net sales $ 158,551 $ 159,788 $ 178,095 $ 158,324 $ 654,758

Gross profit 70,312 71,316 81,954 69,070 292,652

Net (loss) earnings from continuing operations ( 16,423 ) 765 26,858 ( 3,133 ) 8,067

Net (loss) earnings per share from continuing operations:

Basic $ ( 0.27 ) $ 0.01 $ 0.44 $ ( 0.05 ) $ 0.13

Diluted $ ( 0.27 ) $ 0.01 $ 0.43 $ ( 0.05 ) $ 0.13

The total of the individual quarters may not equal the annual or year-to-date total due to rounding.

During the year ended August 31, 2019, the Company recognized impairment and divestiture charges of $22.8 million of which $23.5 million was recorded in the first quarter, $6.1 million in the second quarter, a benefit of $13.0 million in the third quarter and a charge of $6.2 million in the fourth quarter (see Note 6, "Goodwill, Intangible Assets and Long-Lived Assets" ).

During the second quarter of fiscal 2018, the Company recognized impairment and divestiture charges of $3.0 million (see Note 5, "Divestiture Activities" ).

ACTUANT CORPORATION

During the year ended August 31, 2020, the Company recognized an impairment and divestiture benefit of $ 3.2 million of which $ 1.4 million was recorded in the first quarter, $ 0.8 million in the second quarter, $ 1.4 million in the third quarter and a charge of $ 0.4 million in the fourth quarter (see Note 5, "Discontinued Operations and Other Divestiture Activities" ).

During the year ended August 31, 2019, the Company recognized impairment and divestiture charges of $ 22.8 million of which $ 23.5 million was recorded in the first quarter, $ 6.1 million in the second quarter, a benefit of $ 13.0 million in the third quarter and a charge of $ 6.2 million in the fourth quarter (see Note 5, "Discontinued Operations and Other Divestiture Activities" ).

ENERPAC TOOL GROUP CORP.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Expenses (Income)

Acquisition/ (Divestiture)

Additions Deductions

Period Charged to

Expenses (Income) Acquisition/ (Divestiture) Accounts

Recoveries Other Balance at

Allowance for losses—Trade accounts receivable

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data