FALSE000009338900000933892024-11-012024-11-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 2024
STANDARD MOTOR PRODUCTS, INC.
(Exact Name of Registrant as Specified in its Charter)
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New York | 001-04743 | 11-1362020 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employee Identification Number) |
37-18 Northern Boulevard, Long Island City, New York 11101
(Address of Principal Executive Offices, including Zip Code)
Registrant’s Telephone Number, including Area Code: 718-392-0200
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $2.00 per share | SMP | New York Stock Exchange LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Explanatory Note
On November 1, 2024, Standard Motor Products, Inc. (the “Company”) filed with the U.S. Securities and Exchange Commission a Current Report on Form 8-K (the “Original Form 8-K”) reporting the completion of the Company’s previously-disclosed acquisition (the “Acquisition”) of 100% of SMP Nissens III ApS (formerly known as AX V Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”).
The Company is filing this Current Report on Form 8-K/A (this “Amendment”) for the sole purpose of amending the Original Form 8-K to include the audited consolidated financial statements of Nissens Automotive and the unaudited pro forma combined financial information of the Company and Nissens Automotive required by Items 9.01(a) and 9.01(b) of Form 8-K. In reliance of the instructions to such items, the Company had previously indicated in the Original Form 8-K that such financial statements and pro forma financial information would be provided no later than 71 days from the date on which the Original Form 8-K was required to be filed.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The audited consolidated financial statements of Nissens Automotive for the fiscal years ended April 30, 2024 and 2023 are attached to this Amendment as Exhibit 99.1 and incorporated herein by reference.
(b) Pro Forma Financial Information.
The unaudited pro forma combined balance sheet as of September 30, 2024, and the unaudited pro forma combined statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023, and the accompanying notes thereto, which give effect to the Acquisition, are attached to this Amendment as Exhibit 99.2 and incorporated herein by reference.
(d) Exhibits.
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| 23.1 | Consent of EY Godkendt Revisionspartnerselskab, Independent Auditors. | |
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| 99.1 | Audited consolidated financial statements of Nissens Automotive for the fiscal years ended April 30, 2024 and 2023. | |
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| 99.2 | Unaudited pro forma combined balance sheet as of September 30, 2024, and unaudited pro forma combined statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023, and the accompanying notes thereto. | |
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| 104 | Cover Page Interactive Data File--the cover page XBRL tags are embedded within the Inline XBRL document. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| STANDARD MOTOR PRODUCTS, INC. |
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| By: | /s/ Nathan R. Iles | |
| | Nathan R. Iles | |
| | Chief Financial Officer | |
Date: January 17, 2025
Exhibit Index
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| Exhibit No. | | Description |
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| | Consent of EY Godkendt Revisionspartnerselskab, Independent Auditors. |
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| | Audited consolidated financial statements of Nissens Automotive for the fiscal years ended April 30, 2024 and 2023. |
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| | Unaudited pro forma combined balance sheet as of September 30, 2024, and unaudited pro forma combined statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023, and the accompanying notes thereto. |
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| 104 | | Cover Page Interactive Data File--the cover page XBRL tags are embedded within the Inline XBRL document. |
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-256362, No. 333-211461, No. 333-174330, and No. 333-134239) of Standard Motor Products, Inc. of our report dated January 17, 2025, relating to the consolidated financial statements of SMP Nissens III ApS as of and for the years ended April 30, 2024 and 2023 appearing in this Current Report on Form 8-K/A of Standard Motor Products, Inc.
/s/ EY Godkendt Revisionspartnerselskab
Copenhagen, Denmark
January 17, 2025
SMP Nissens III ApS
Ormhøjgårdvej 9, 8700 Horsens
Contents
Report of Independent Auditors1
Consolidated financial statements2
Income statement2
Statement of other comprehensive income3
Balance sheet4
Cash flow statement5
Statement of changes in equity6
Overview of notes to the consolidated financial statements8
Notes9
Report of Independent Auditors
To the Board of Directors of SMP Nissens III ApS
Opinion
We have audited the consolidated financial statements of SMP Nissens III ApS and subsidiaries (the Group), which comprise the consolidated
balance sheets as of 30 April 2024 and 2023, and the related consolidated statements of income, other comprehensive income, changes in equity
and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Group at 30 April 2024
and 2023, and the results of its operations and its cash flows for the years then ended in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We
are required to be independent of the Group and to meet our other ethical responsibilities in accordance with the relevant ethical requirements
relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Restatement of Financial Statements
As discussed in notes 1, 2, and 34 to these consolidated financial statements, the previously issued local Danish consolidated financial statements
have been restated. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS as issued by the IASB,
and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements
that are free of material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Group’s ability to continue as a going concern for one year after the date that the financial statements are
available to be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not
absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement
when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if
there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the
financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform
audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Accordingly, no
such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluate the overall presentation of the financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the
Group’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit,
significant audit findings, and certain internal control-related matters that we identified during the audit.
/s/ EY Godkendt Revisionspartnerselskab
Copenhagen, Denmark
17 January 2025
Consolidated financial statements
Income statement
For the year 1 May - 30 April
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| Cost of raw materials and consumables | | |
| Changes in inventories of finished goods and work in progress | | |
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| Operating profit before depreciation and amortisation | | |
| Depreciation and amortisation | | |
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| Operating profit before interest | | |
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| Equity holders of the parent | | |
| Non-controlling interests | | |
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Consolidated financial statements
Statement of other comprehensive income
For the year 1 May - 30 April
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| Other comprehensive income | | |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: | | |
| Exchange differences on translation of foreign operations | | |
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| Other comprehensive income/(loss) for the year, net of tax | | |
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| Total comprehensive income | | |
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| Equity holders of the parent | | |
| Non-controlling interests | | |
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Consolidated financial statements
Balance sheet
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| Property, plant and equipment | | |
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| Trade and other receivables and prepayments | | |
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| Cash and cash equivalents | | |
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| Foreign currency translation reserve | | |
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| Equity attributable to equity holders of the parent | | |
| Non-controlling interests | | |
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| Total non-current liabilities | | |
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| Total current liabilities | | |
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| TOTAL EQUITY AND LIABILITIES | | |
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Consolidated financial statements
Cash flow statement
For the year 1 May - 30 April
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| Changes in working capital | | |
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| Net cash flows from operating activities before interest | | |
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| Net cash flows from operating activities | | |
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| Purchase of intangible assets | | |
| Development expenditures capitalized | | |
| Purchase of property, plant and equipment | | |
| Proceeds from sale of property, plant and equipment | | |
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| Investments in other financial assets | | |
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| Net cash flows used in investing activities | | |
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| Repayment of loan from related party | | |
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| Change in short term bank facilities | | |
| Net interest paid, borrowings | | |
| Payment of principal portion of lease liabilities | | |
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| Net cash flows from financing activities | | |
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| Cash and cash equivalents at 1 May | | |
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| Cash and cash equivalents at 30 April | | |
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Consolidated financial statements
Statement of changes in equity
For the year 1 May 2023 - 30 April 2024
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Equity 1 May 2023 (restated) | | | | | | |
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Comprehensive income 2023/24 | | | | | | |
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Other comprehensive income | | | | | | |
Exchange differences on translation of foreign operations | | | | | | |
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Total other comprehensive income | | | | | | |
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Total comprehensive income for the year | | | | | | |
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Total transactions with owners | | | | | | |
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Consolidated financial statements
Statement of changes in equity
For the year 1 May 2022 - 30 April 2023
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| | Foreign currency translation reserve | | | | |
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Equity 1 May 2022 (restated) | | | | | | |
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Comprehensive income 2022/23 | | | | | | |
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Other comprehensive income | | | | | | |
Exchange differences on translation of foreign operations | | | | | | |
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Total other comprehensive income | | | | | | |
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Total comprehensive income for the year | | | | | | |
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Equity-settled share-based payments | | | | | | |
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Total transactions with owners | | | | | | |
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Equity 30 April 2023 (restated) | | | | | | |
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Consolidated financial statements
Overview of notes to the consolidated financial statements
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| Material accounting policies |
| Significant accounting judgements, estimates and assumptions |
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| Amortisation and depreciation |
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| Property, plant and equipment |
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| Investments in subsidiaries |
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| Trade and other receivables |
| Contract assets and liabilities |
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| Loans from related parties |
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| Change in working capital |
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| Pledges, collateral and contingencies etc. |
| Financial risk and financial instruments |
| Changes in liabilities arising from financing activities |
| Other contingent liabilities |
| Related party disclosures |
| Events after the reporting period |
| Standards issued but not yet effective |
| Restatements to the previously reported Consolidated Financial Statements |
Consolidated financial statements
Notes
1Business information
SMP Nissens III ApS (until 1 November 2024 known as AX V Nissens III ApS) is a private limited company
registered in Denmark and is headquartered at Ormhøjgårdvej 9, 8700 Horsens. The SMP Nissens Group
(or “Nissens” or “the Group” or “the company”) are specialized in production and supply of products within
engine cooling, climate systems and engine efficiency within the European, Asian and American
automotive aftermarket. Nissens are marketed under the Nissens, AVA and Highway brands.
Nissens has 27 subsidiaries across three continents with activities within sales, production and distribution.
At 30 April 2024, Nissens employs 529 FTE’s, of which 178 are located in Slovakia, 158 are located in
Denmark, 31 are located in China and 162 are employed in other countries.
The company has since 2018 issued consolidated financial statements which have been prepared in
accordance with IFRS Accounting Standards as adopted by the EU and additional Danish disclosures.
The latest Annual Accounts were issued for the accounting year 1 May 2023 to 30 April 2024 on 24 June
2024 and audited in accordance with International Standards of Audit (ISA). The Annual Report was
presented and approved at the Annual General Meeting on the 28 June 2024.
Subsequently, on 1 November 2024, Standard Motor Products, Inc., (SMP), completed its acquisition of
100% of Nissens. The acquisition was completed pursuant to a Share Sale and Purchase Agreement,
dated as of 5 July 2024.
As a consequence of the acquisition, consolidated financial statements as of and for the years ended 30
April 2024 and 2023 have to be prepared in accordance with International Financial Reporting Standards
(IFRS)as issued by the International Accounting Standards Board (IASB) and audited in accordance with
auditing standards generally accepted in the United States of America.
Please refer to note 34 for a description of differences between previous issued local Danish consolidated
financial statements and these consolidated financial statements and note 32 for a description of
subsequent events.
These consolidated financial statements as of and for the years ended 30 April 2024 and 2023, prepared in
accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board, were approved by the Board of Directors on 17 January 2025.
Consolidated financial statements
Notes
2Material accounting policies
The consolidated financial statements for SMP Nissens III ApS as of and for the years ended 30 April 2024
and 2023 are prepared for the purpose of Standard Motor Products, Inc.’s Current Report on Form 8-K/A in
relation to Standard Motor Products, Inc. purchasing SMP Nissens III Aps.
Compliance with IFRS
The consolidated financial statements are prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
These consolidated financial statements for the years ended 30 April 2024 and 2023 are the first set of
consolidated financial statements prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by International Accounting Standards Board (IASB). There are no differences in the
accounting principles applied to the previous reported consolidated financial statement in accordance with
IFRS Accounting Standards as adopted by the EU.
Refer to note 34, for a description of restatements between the previous issued local Danish consolidated
financial statements as described in note 1 and these consolidated financial statements.
A third statement of financial position as at 1 May 2022 has been omitted as the only effect on the
statement of position as at 1 May 2023 is a reclassification of DKK 64,6 million from Equity (Non-controlling
interests) to non-current financial liability as explained in note 34.
The consolidated financial statements have been presented in Danish kroner (DKK), rounded to the
nearest thousand.
The accounting policies have been applied consistently in the financial year and for the comparative
figures.
Impact of new accounting standards
Effective 1 May 2023, the Group has implemented the following amended standards and interpretations:
► IFRS 17 Insurance Contracts including amendments to IFRS 17 Amendments to IFRS 17: initial
application of IFRS 17 Insurance Contracts and IFRS 9 Financial instruments – Comparative information.
► Amendments to 1 Presentation of Financial Statements and IFRS practice Statement 2: Disclosure of
accounting policies.
► Amendments to IAS 8 Accounting Policies, changes in Accounting Estimates and Errors: Definition of
Accounting Estimates
► Amendments to IAS 12 Income Taxes: Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction.
► Amendments to IAS 12 Income taxes: International Tax Reform – Pillar Two Model Rules
The changes have not had any impact on recognition and measurement in the consolidated financial
statements.
Consolidated financial statements
The consolidated financial statements comprise of SMP Nissens III ApS (the parent) and the subsidiaries
controlled by the parent. The Group controls an entity if the Group directly or indirectly owns more than
50% of the voting rights, or when the Group in one way or another has the ability to have a controlling
influence. Please refer to the overview of the Nissens Group in Note 14.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Business combinations and goodwill
The acquisition method is applied to acquisitions of new businesses over which SMP Nissens III ApS
obtains control. The acquired businesses’ identifiable assets and liabilities are measured at fair value at the
acquisition date. Deferred tax related to the fair value adjustments that have been identified are
recognised.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred
and the amount recognised for non-controlling interests and any previous interest held over the net
identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost,
less any accumulated impairment losses.
Foreign currency translation
On initial recognition, foreign currency transactions are translated at the exchange rate at the transaction
date. Foreign exchange differences arising between the rate at the transaction date and the rate at the
date of payment are recognised in profit or loss as financial income or financial expenses.
When companies with a functional currency other than Danish kroner are included in the consolidated
financial statements, the income statement and other comprehensive income are translated at the
exchange rate valid on the transaction date and the balance sheet items are translated at the exchange
rates valid on the balance sheet date. The average rate for the individual months is used as the rate for the
transaction date to the extent that this does not result in a significant difference.
Exchange differences, arising from the translation of these companies’ equity at the start of the year to
exchange rates at the balance sheet date and on translation comprehensive income from the exchange
rate at the date of transaction to exchange rates at the balance sheet date, are recognised in other
comprehensive income in a separate currency translation reserve under equity.
Revenue
Revenue is measured at fair value of the agreed consideration excluding value-added taxes (VAT) and
taxes charged on behalf of third parties. All discounts granted are recognised in revenue.
The variable part of the total consideration is not recognised in revenue until it is highly probable that it will
not be reversed in subsequent periods.
Sale of finished goods is recognised when control over the individual identifiable performance obligation in
the sales agreement is transferred to the customer. In general, this is considered to occur at the time of
physical delivery.
The buyer has, in some cases, a right to return. The Group recognises revenue for this at the time of the
physical delivery to the buyer to the extent that it can be reliably measured how much of the delivery, after
the balance sheet date, that is expected to be returned. The portion of the delivery that is expected to be
returned is not recognised as revenue but is recognised as a contract liability in the balance sheet.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Payment terms in the Group's sales agreements
The payment terms in the Group's sales agreements with customers are dependent partly on the
underlying customer relationship and partly on the market segment.
The Group’s standard terms of payments are normally between 30-90 days.
The Group receives prepayments for some sales agreements. The prepayments do not necessarily reflect
the work performed and do not affect the time of the recognition of revenue. Prepayments are recognised
as contract liabilities until delivery of the goods.
Other operating income
Other operating income comprises income that is not product-related. This includes income from
government grants, sale of assets and other income of a secondary nature in relation to the main activities
of the Group.
Other external costs
Other external costs include expenses related to the Company’s principal activities arising during the year.
This includes expenses for sales, advertisement, administration, office buildings, expected credit losses,
etc.
Staff costs
Staff costs include wages and salaries, including holiday pay and retirement benefits, as well as other
expenses for social security, etc. for the Group’s employees.
Share-based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based
payments.
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the grant date using an
appropriate valuation model.
The cost is recognised in staff costs together with a corresponding increase in equity (other capital
reserves) over the year in which the service, and, where applicable, the performance conditions, are
fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting period has expired and the
Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or income
in the statement of profit or loss for a year represents the movement in cumulative expense recognised at
the beginning and end of that year.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Depreciation and amortisation
Depreciation and amortisation are provided on a straight-line basis over the expected useful lives of the
assets/components. The expected useful lives are as follows:
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Rights and acquired intangible assets | | |
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Other fixtures and fittings, tools and equipment | | |
| | Over the term of the lease contract |
Land is not depreciated.
Depreciation is calculated on the basis of the cost price of the asset/component less the residual value, if
any. The depreciation period and the residual value are determined at the acquisition date and are
reassessed annually. If the residual value exceeds the carrying amount, depreciation is discontinued.
Gains and losses on sale of property, plant and equipment are calculated as the difference between the
sales price less the sales expenses and the carrying amount at the date of sale. Gains or losses are
recognised in the income statement within other operating income and other operating expenses,
respectively.
Finance income and expenses
Finance income and expenses are recognised in the income statement in the period for which they are
related to. Finance income and expenses comprise interest income and expenses, exchange gains and
losses on transactions denominated in foreign currencies etc., as well as surcharges, gain/loss on foreign
exchange instruments and allowances under the on-account tax scheme, etc.
Income tax
Current income tax
SMP Nissens III ApS is jointly taxed with all its Danish affiliated companies and subsidiaries. The
subsidiaries are included in the joint taxation from the date which they are included in the consolidation
until the date which they are excluded from the consolidation.
The Company is the ultimate parent company and administrative company for the joint taxation and settles
the payments of the joint taxation with the taxation authorities.
The actual corporation tax is distributed by settling joint taxation contributions between the jointly taxed
companies relative to their income. The companies with a tax deficit receive a joint tax contribution from
the companies which have been able to apply the deficit for reducing their own taxable surplus.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted at the reporting date in the countries where the Group operates and
generates taxable income.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Deferred tax
Deferred tax is measured using the balance sheet liability method on all temporary differences between the
carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on
temporary differences relating to assets and liabilities without affecting either the profit or loss for the year
or the taxable income.
Adjustments are made to deferred tax resulting from the elimination of unrealized intra-group profits and
losses.
Deferred tax is measured according to the tax rules and at the tax rates applicable in the respective
countries at the balance sheet date when the deferred tax is expected to crystallise as current tax.
Deferred tax assets are recognised at the expected value of their utilisation; either as a set-off against tax
on future income or as a set-off against deferred tax liabilities in the same legal tax entity and jurisdiction.
Balance sheet
Goodwill
Goodwill is measured in the balance sheet at cost in connection with initial recognition. Subsequently,
goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to the cash-
generating units as defined by management. The determination of cash-generating units complies with the
managerial structure and the internal control and reporting in the Group.
Other intangible assets
The useful lives of intangible assets are assessed as either finite or indefinite.
Only assets, for which the Group exercise control, are capitalised. Assets where in substance the Group
does not exercise control, i.e., cloud arrangements, where the Group does not possess a right to transfer
the software from the supplier, is expensed in the income statement under Other external costs.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The useful lives and
amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting year.
Rights and development projects
Development projects that are clearly defined and identifiable, where the technical feasibility, sufficient
resources and a potential future market or development opportunities are demonstrated, and where the
Group intends to complete and use the individual project, are recognised as intangible assets provided that
the cost can be measured reliably and that there is sufficient assurance that future earnings or the net
selling price can cover production costs, selling and administrative expenses and development costs.
Other development costs are recognised under Other External Costs in the income statement as incurred.
Rights and development projects are measured at cost less accumulated amortisation and impairment.
Following the completion of development projects, development costs are amortized on a straight-line
basis over the estimated useful life from the date when the asset is available for use.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Property, plant and equipment
Land and buildings, plant and machinery and other fixtures and fittings are measured at cost less
accumulated depreciation and impairment losses. Cost comprises the purchase price and any costs
directly attributable to the acquisition until the date when the asset is available for use.
The cost for a total asset is split into separate components, which are depreciated separately, if the useful
life of each of the components differ.
Leases
The right-of-use asset and corresponding lease liability are recognised at the commencement date, i.e.,
the date the underlying asset is ready for use and when the Group obtains the right to obtain the economic
benefits from the use of it.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liabilities
adjusted for any lease payments made at or before the commencement date, plus any initial costs
incurred.
The lease liabilities are initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, an incremental borrowing rate.
Lease payments included in the measurement of the lease liabilities comprise the following:
•Fixed payments from commencement date
•Variable lease payments that depend on an index or a rate, initially measured using the index or
rate at the commencement date
•The exercise price of a purchase option if it is reasonably certain to exercise the options
•Amount expected to be payable under residual value guarantees
The lease liabilities are subsequently measured at amortised cost using the effective interest method. The
lease liabilities are adjusted when there is a change in future lease payments, typically due to a change in
index or rate on property leases, or if there is a reassessment of whether an extension or termination
option will be exercised.
When the lease liabilities are adjusted in this way, a corresponding adjustment is made to the carrying
amount of the right-of-use assets, or is recorded in profit or loss if the carrying amount of the right-of-use
assets has been reduced to zero.
Subsequently, the asset is measured at cost less accumulated depreciation and impairment losses. The
right-of-use assets are depreciated from the commencement date over the shorter period of the lease term
and useful life of the underlying asset. When it is reasonably certain that the Group will obtain ownership of
the leased asset after the lease period, the asset is depreciated over the useful life.
Depreciation is provided on a straight-line basis over the expected lease period.
The Group has chosen not to recognize low value lease assets and short-term leasing contracts in the
balance sheet. Lease payments on short-term leases and low-value assets are recognised as expenses on
a straight-line basis according to the lease contract.
The right-of-use assets are presented in property, plant and equipment and the lease liabilities in
borrowings.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Other financial assets
Other financial assets, which comprise non-listed equity investments, are classified upon initial recognition
as equity instruments designated at fair value through other comprehensive income (OCI) when they meet
the definition of equity under International Accounting Standard (IAS) 32, Financial Instruments:
Presentation and are not held for trading.
Gains and losses on these financial assets are never reclassified to the income statement. Dividends are
recognised as other income in the income statement when the right of payment has been established,
except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset,
in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are
not subject to impairment assessment.
Impairment of non-current assets
Goodwill is tested annually for impairment, initially before the end of the year of acquisition.
The carrying amount of goodwill is tested for impairment, along with the other non-current assets in the
cash-generating unit or group of cash-generating units to which goodwill and brands are allocated and
written down to recoverable amount through the income statement if the carrying amount is higher. The
recoverable amount is generally measured as the present value of expected future net cash flow from the
business or activity (cash-generating unit) to which goodwill and brands relate.
For other non-current assets, if there is an indication of impairment, the carrying amount of intangible
assets and property, plant and equipment is tested for evidence of impairment.
When there is evidence that assets may be impaired, an impairment test is performed for each of the
assets/group of assets. An impairment is recognised at the recoverable amount, if this is lower than the
carrying amount.
The recoverable amount is the higher of the value in use or fair value less costs of disposal.
During the period of development, development costs are tested annually for impairment.
Inventory
Inventory is measured at cost according to the FIFO method. If the net realisable value is lower than the
cost, then they are impaired to the lower value.
Cost of goods for resale as well as raw materials and consumables include the purchase price plus the
delivery cost, as well as direct wages and indirect production expenses in terms of leaflets and packaging
of goods for resale.
The net realisable value of inventories is determined as the selling price less costs of completion and costs
incurred to effectuate the sale, and taking into account marketability, obsolescence and developments in
the expected selling price.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Trade and other receivables
Receivables are measured at amortised cost. Write-down for bad and doubtful debts is made in
accordance with the simplified expected credit loss model according to which the total loss is recognised
immediately in the income statement at the same time as the receivable is recognised in the balance sheet
based on the expected loss in the useful life of the receivable.
Trade receivables are monitored continuously according to the Group's risk management until realisation.
Write-downs are calculated based on the expected loss ratio, which is estimated based on historical data,
adjusted for estimates of the effect of expected changes in relevant parameters such as financial
development, political risks, etc., in the relevant market.
Factoring arrangements
For factoring arrangements, where the Group’s involvement in receivables sold under these programs is
limited to administration and financial costs related to delayed payments, and thus only carries an
immaterial risk on these receivables, the receivables are derecognised upon receipt of payment from the
third party finance provider.
Equity
Non-controlling interests
On initial recognition, non-controlling interests are measured at the fair value of the non-controlling
interests' ownership share or at the non-controlling interests' proportionate share of the fair value of the
acquired business' identifiable assets, liabilities, contingent liabilities and with full recognition of non-
controlling share of goodwill.
Other provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event and it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
Warranty provisions
Provisions for warranty-related costs are recognised when the product is sold to the customer. Initial
recognition is based on historical experience. The initial estimate of warranty-related costs is revised
annually.
The standard terms is a 12-month warranty period.
Trade and other payables
The Group’s financial liabilities include trade and other payables. Trade payables are non-interest bearing
and are settled on normal market terms. Other payables are non-interest bearing.
Contract liabilities
Contract liabilities include prepayments from customers and other liabilities where the Group has a future
commitment to deliver goods or to accept a return commitment. Contractual liabilities are reduced when
the related goods or service items are invoiced, either fully or partially.
Consolidated financial statements
Notes
2Material accounting policies (continued)
Liabilities
Financial liabilities, including preference shares with contingent settlement provisions which are regarded
as outside the control of the issuing entity, are recognised at the date of borrowing at fair value less directly
attributable transaction costs paid. On subsequent recognition, financial liabilities are measured at
amortized cost, corresponding to the capitalized value using the effective interest rate. Accordingly, the
difference between the proceeds and the nominal value is recognised in the income statement over the
term of the loan. Non-financial liabilities are measured at net realisable value.
Derivatives
The Group uses derivative financial instruments in the form of forward currency contracts and interest rate
swaps to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered into
and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair
value is positive and as financial liabilities when the fair value is negative.
Subsequently, fair value adjustments are accounted for as follows:
Forward currency contracts: Not designated as a hedge for accounting. Any gains or losses arising from
changes in the fair value of forward currency contracts are recognised in the profit or loss statement.
Interest rate swaps: Designated as an effective hedge for accounting. Any gains or losses arising from
changes in the fair value of interest rate swaps are recognised directly in other comprehensive income.
Fair value
Fair value measurements are based on the principal market. If no principal market exists, the
measurement is based on the most advantageous market, i.e. the market that maximises the price of the
asset or liability less transaction and/or transport costs.
All assets and liabilities which are measured at fair value, or whose fair value is disclosed, are classified
based on the fair value hierarchy, see below:
Level 1:Value in an active market for similar assets/liabilities
Level 2:Value based on recognised valuation methods on the basis of observable market
information
Level 3:Value based on recognised valuation methods and reasonable estimates (non-observable
market information)
Consolidated financial statements
Notes
2Material accounting policies (continued)
Cash flow statement
The cash flow statement shows the Group's cash flows from operating, investing and financing activities for
the year, the year’s changes in cash and cash equivalents as well as the Group's cash and cash
equivalents at the beginning and end of the year.
The cash flow effect of acquisitions and disposals of entities is shown separately in cash flows from
investing activities. Cash flows from corporate acquisitions are recognised in the cash flow statement from
the date of acquisition. Cash flows from disposals of entities are recognised up until the date of disposal.
Cash flows from operating activities
Cash flows from operating activities are calculated as the Group's profit/loss before taxes adjusted for non-
cash operating items, interest received, changes in working capital and income taxes paid.
Cash flows from investing activities
Cash flows from investing activities comprise payments in connection with acquisitions and disposals of
entities, activities and intangible assets, property, plant and equipment and financial assets.
Cash flows from financing activities
Cash flows from financing activities comprise changes in the size or composition of the Group's share
capital and related costs as well as the raising of loans, repayment of interest-bearing debt, paid interest
on interest-bearing debts, and payment of dividend to shareholders.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances.
Consolidated financial statements
Notes
3Significant accounting judgements, estimates and assumptions
Impairment tests for goodwill
Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that
the carrying amount of goodwill has been impaired, for example due to a changed business climate. In
order to determine if the value of goodwill has been impaired, the cash-generating unit to which goodwill
has been allocated must be valued using present value techniques. When applying this valuation
technique, the Company relies on a number of factors, including historical results, business plans,
forecasts and market data.
This is further described in note 11.
Receivables
Estimates are used in determining the level of receivables that cannot be collected according to
management. When evaluating the adequacy of the allowance for doubtful receivables, management
analyses trade receivables and examines changes in customer creditworthiness, reports from credit
insurance companies, customer payment patterns and current economic trends. Refer to note 17.
Inventory
Inventories are measured at the lower of cost and net realisable value. Uncertainty in estimation for
inventory relate to write-downs to net realisable value.
The valuation of inventory is according to the Group policy including assessment of provision for slow
moving and/or obsolete inventory.
For a specification of inventory, see note 16.
Estimating the incremental borrowing rate of leases
The Group cannot readily determine the interest rate implicit in the leases, therefore, the Group uses its
incremental borrowing rate to measure lease liabilities. The incremental borrowing rate is the rate of
interest which the Group would have to pay to borrow over a similar term and with a similar security, the
funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic
environment. The incremental borrowing rate therefore reflects what the Group ‘would have to pay’, which
requires estimation when no observable rates are available or when they need to be adjusted to reflect the
terms and conditions of the lease. The Group estimates the incremental borrowing rate using observable
inputs when available and is required to make certain entity-specific estimates.
Determining the lease term of contracts with renewal and termination options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has several lease contracts that include extension and termination options. The Group applies
judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or
terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to
exercise either the renewal or termination. After the commencement date, the Group reassesses the lease
term if there is a significant event or change in circumstances that is within its control and affects its ability
to exercise or not to exercise the option to renew or to terminate.
The Group included the renewal period for buildings as part of the lease term for leases of right-of-use
assets with shorter non-cancellable period unless there are specific plans to terminate the lease.
Consolidated financial statements
Notes
3Significant accounting judgements, estimates and assumptions (continued)
The renewal periods for leases of right-of-use assets with longer non-cancellable periods are not included
as part of the lease term as these are not assessed as reasonably certain to be exercised. Furthermore,
the periods covered by termination options are included as part of the lease term only when they are
reasonably certain not to be exercised. Refer to note 13 for information on potential future rental payments
relating to periods following the exercise date of extension and termination options that are not included in
the lease term.
Climate change
In preparing the consolidated financial statements, the Group has considered climate change, including
climate change scenarios and the Group’s goals, on the estimates and judgements used in preparing the
consolidated financial statements.
For the year end 30 April 2024, no material impact on financial reporting judgement and estimates arising
from climate change were identified, as a result the valuation of assets or liabilities have not been
significantly impacted by climate change risks.
Consolidated financial statements
Notes
4Revenue
Brands and product groups
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Revenue from external customers | | |
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Geographical Markets
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Revenue from external customers | | |
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Consolidated financial statements
Notes
5Staff costs
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Pensions, defined contribution plans | | |
Employee benefits/other remunerations | | |
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| | |
Total employee benefit expense | | |
| | |
Average number of full-time employees | | |
| | |
Remuneration to board of directors is paid out from SMP Nissens ApS. The executive board does not
receive remuneration.
Consolidated financial statements
Notes
6Share-based payments
No warrants have been granted in the financial years 2022/2023 and 2023/2024.
The Board of Directors and other employees were granted warrants to purchase shares in SMP Nissens II
ApS at a given exercise price. The warrants vested on 30 June 2023. The warrant programs are contingent
on continued employment in the Group unless assessed as a “good leaver”.
The fair value of the granted warrants is estimated using the Black-Scholes Model. The value is calculated
applying the following assumptions:
Estimated volatility (based on a selected peer-group)30%
Risk free interest rate-0.43%
Market value per shareDKK 10
Dividend yield0%
Every warrant grants the right to buy one share in SMP Nissens II ApS at a nominal value of DKK 0.01 at
an exercise price of DKK 10 plus 8% per year.
The fair value per warrant at grant dates was estimated to be DKK 1.10 – 1.19.
Estimating fair value for share-based payment transactions requires a determination of the most
appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also
requires a determination of the most appropriate inputs to the valuation model, including the expected life
of the share option or appreciation right, volatility and dividend yield and making assumptions about them.
The fair values of awards granted were determined using the Black-Scholes Model that takes into account
factors specific to the share incentive plans, such as the vesting period.
The inputs used for the valuation model include, among others, the exercise price of the award, the
expected life of the option, the expected volatility, the expected dividend yield and the risk-free interest
rate.
Specification of outstanding share warrants
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| Board of directors of the parent company | | |
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Outstanding at 1 May 2022 | | | |
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Outstanding at 30 April 2023 | | | |
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Outstanding at 1 May 2023 | | | |
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Outstanding at 30 April 2024 | | | |
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Of total warrants, none are exercisable at 30 April 2024.
In the financial year, there was no expense in regard to share-based payments (2022/2023: 2 thousand
DKK).
Consolidated financial statements
Notes
7Amortisation and depreciation
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| 1 May 2023 - 30 April 2024 | 1 May 2022 - 30 April 2023 |
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Amortisation, intangible assets | | |
Depreciation, property, plant and equipment | | |
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8Net finance costs
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Interest – bank deposits etc. | | |
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Dividend from investments | | |
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Interest on financial assets measured at amortized cost | | |
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Consolidated financial statements
Notes
8Net finance costs (continued)
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Interest – bank loans and other liabilities | | |
Interest on lease liabilities | | |
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Interest on financial liabilities measured at amortized cost | | |
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9Income tax
Income statement
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Tax for the current year can be specified as follows: | | |
Tax on the result for the year | | |
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Tax for the current year can be specified as follows: | | |
Current income tax charge | | |
Change in provision for deferred tax | | |
Adjustments to prior year | | |
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Consolidated financial statements
Notes
9Income tax (continued)
Tax on the result for the year can be explained as follows:
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| 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
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Accounting profit before income tax | | |
Calculated 22% tax on result for the year | | |
Difference in the tax rate in foreign subsidiaries relative to 22% | | |
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Dividend payment from investments | | |
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Other non-deductible expenses | | |
Utilization of tax losses not recognised prior year | | |
Tax adjustments to prior year | | |
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Tax on other comprehensive income
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| 1 May 2023 – 30 April 2024 |
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Exchange differences on the translation of foreign operations | | | |
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| 1 May 2022 – 30 April 2023 |
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Exchange differences on the translation of foreign operations | | | |
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Consolidated financial statements
Notes
9Income tax (continued)
Deferred tax
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Deferred tax for the year recognised in profit for the year | | |
Deferred tax utilisation and adjustment regarding previous year | | |
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Reflected in the statement of financial position as follows: | | |
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Deferred tax 30 April, net | | |
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Property, plant and equipment | | |
Trade and other receivables | | |
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Provisions and other liabilities | | |
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In addition to the tax loss recognised in the balance sheet, the Group has total unrecognised tax losses of
8.4 million DKK (taxable value) which, due to the uncertainty of the future utilization, has not been
recognised in the balance sheet. The tax losses can be carried forward as follow:
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Unrecognised tax loss to be carried forward 30 April | | |
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The Group has a subsidiary in China for which future dividend payments will be subject to withholding tax
in the range of 5 – 10%. The potential withholding tax amounts to 2.2 – 4.4 million DKK.
The withholding tax has not been recognised in the balance sheet as there are no current plans for
dividend payments from the subsidiary in China.
Consolidated financial statements
Notes
9Income tax (continued)
Income tax payable, net
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Adjustment to current tax prior year | | |
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Corporation tax paid during the year | | |
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Income tax payable 30 April | | |
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Consolidated financial statements
Notes
10 Intangible Assets
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| | | Acquired intangible assets | | | | |
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Amortisation and impairment 1 May 2023 | | | | | | | |
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Amortisation and impairment 30 April 2024 | | | | | | | |
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Carrying amount 30 April 2024 | | | | | | | |
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Consolidated financial statements
Notes
10Intangible assets
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| | | Acquired intangible assets | | | | |
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Amortisation and impairment 1 May 2022 | | | | | | | |
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Amortisation and impairment 30 April 2023 | | | | | | | |
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Carrying amount 30 April 2023 | | | | | | | |
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Apart from goodwill of 572.0 million DKK (30 April 2023: 572.0 million DKK) all intangible assets have finite useful lives.
Acquired intangible assets consist primarily of customers and technology with carrying amounts of 43.5 million DKK (30 April 2023: 57.3 million DKK) and 20.1 million
DKK (30 April 2023: 26.5 million DKK) respectively and with remaining lives of 7 years.
Total costs related to research and development activities amount to 25.4 million DKK for the year 1 May 2023 – 30 April 2024 (2022/2023: 25.9 million DKK) of which
4.0 million DKK (2022/2023: 3.9 million DKK) has been capitalized.
Consolidated financial statements
Notes
11Impairment test
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level.
All individual assets or cash-generating units are tested for impairment in circumstances in which indicators
of impairment are identified and therefore, the carrying amount may not be recoverable.
The carrying amount of goodwill is as follows:
Goodwill is tested for impairment once a year and in the case of impairment indicators. Impairment test in
2023/2024 performed as of 31 March 2024 indicates headroom of 1,661 million DKK. No indication of
impairment was identified on the long-term forecast.
The recoverable amount is based on the value in use, which is calculated by means of expected net cash-
flows based on forecasts for 2024/2025 – 2028/2029 agreed by the Executive Board.
The forecasts are based on the expected market developments, including growth in market and expected
price levels.
Amongst other things, the Automotive sales volume is driven by increased product offering, markets shares
and the overall development in the car park in markets where Nissens is present.
The key assumptions underlying the calculation of recoverable amounts and the tolerable sensitivities
hereon are:
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Growth rate in terminal period | | | | |
Discount rate (WACC) – after tax | | | | |
| | | | |
*Allowed individual change in used rates, assuming other rates kept unchanged, before an impairment loss
incurs.
Consolidated financial statements
Notes
12Property, plant and equipment
| | | | | | |
| | | Other fixtures and fittings | | | |
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Depreciation and impairment 1 May 2023 | | | | | | |
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Depreciation and impairment 30 April 2024 | | | | | | |
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Carrying amount 30 April 2024 | | | | | | |
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Consolidated financial statements
Notes
12Property, plant and equipment
| | | | | | |
| | | Other fixtures and fittings | | | |
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Depreciation and impairment 1 May 2022 | | | | | | |
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Depreciation and impairment 30 April 2023 | | | | | | |
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Carrying amount 30 April 2023 | | | | | | |
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Consolidated financial statements
Notes
13Leases
Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
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Other fixtures and fittings | | |
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Further specification of right-of-use assets is disclosed in note 12.
Lease liabilities
Further information about maturity is disclosed in note 28.
Amounts recognized in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
| | |
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Other fixtures and fittings | | |
| | |
Total depreciation charge of right-of-use assets | | |
| | |
| | |
Interest expense (included in finance expenses) | | |
Expense related to short-term leases (included in other external cost) | | |
Expense related to low-value leases (included in other external cost) | | |
The total cash outflow for leases in the year | | |
Estimates and assumptions related to leases are described in note 3.
The Group’s leasing activities
The Group leases various offices, warehouses, equipment and vehicles. Rental contracts are typically
made for fixed periods of 12 months to 6 years, but may have extension options as described below.
Consolidated financial statements
Notes
13Leases (continued)
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for leases in the Group, the lease’s incremental borrowing
rate is used. The incremental borrowing rates used are 2% for buildings and 3.5% for plant and machinery
and other fixtures and fittings.
A not insignificant proportion of the Company’s building leases contains options to extend the lease period
between 1-3 years. To the extent Management found it reasonably certain that these leases will be
exercised, the period of the option is recognized as part of the lease. Extension options are recognized
based on a specific contract-to-contract assessment. As of 30 April 2024, extension options are recognized
with a value of 16.4 million DKK (2022/2023: 19.2 million DKK) as they are exercised with reasonable
certainty. No extension options exceed 5 years. As of 30 April 2024 and 2023, there are no extension
options that with reasonable certainty are not exercised. Management exercises significant judgement in
determining whether these extension and termination options are reasonably certain to be exercised, see
note 3.
Consolidated financial statements
Notes
14Investments in subsidiaries
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Subsidiaries of SMP Nissens II ApS | | | |
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Subsidiaries of SMP Nissens I ApS | | | |
| | | |
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Subsidiaries of SMP Nissens ApS | | | |
K. Nissen International A/S | | | |
| | | |
Subsidiaries of K. Nissen International A/S | | | |
Nissens (Shanghai) Auto Parts Trading Ltd. | | | |
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Subsidiaries of NA International A/S | | | |
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Chlodnice Nissens Polska Sp. z o.o. | | | |
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Nissens Hungaria Jarmuhuto Kft. | | | |
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Nissens North America Inc. | | | |
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Nissens Automotive SK S.R.O. | | | |
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Highway Automotive Sp. z o.o. | | | |
| | | |
| | | |
Selskabet af 29. April 2022 A/S | | | |
Nissens Automotive Service A/S | | | |
Anpartsselskabet af 10. maj 2022 ApS | | | |
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Subsidiaries of SMP Nissens II ApS | | | |
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Subsidiaries of SMP Nissens I ApS | | | |
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Subsidiaries of SMP Nissens ApS | | | |
K. Nissen International A/S | | | |
| | | |
Subsidiaries of K. Nissen International A/S | | | |
Nissens (Shanghai) Auto Parts Trading Ltd. | | | |
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Subsidiaries of NA International A/S | | | |
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Chlodnice Nissens Polska Sp. z o.o. | | | |
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Nissens Hungaria Jarmuhuto Kft. | | | |
| | | |
| | | |
Nissens North America Inc. | | | |
| | | |
| | | |
Nissens Automotive SK S.R.O. | | | |
| | | |
Highway Automotive Sp. z o.o. | | | |
| | | |
| | | |
Selskabet af 29. April 2022 A/S | | | |
Nissens Automotive Service A/S | | | |
Anpartsselskabet af 10. maj 2022 ApS | | | |
| | | |
Consolidated financial statements
Notes
15Other financial assets
For related fair value disclosures refer to note 28.
16Inventory
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Raw materials and consumables | | |
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Inventory is reported net of allowances for obsolescence, analyses of which is as follows:
The net realisable value of inventories is calculated as selling price less costs of completion and costs
necessary to make the sale. The Group has implemented consistent procedures to calculate obsolescence
on inventory.
17Trade and other receivables and prepayments
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Market value of foreign exchange contracts | | |
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Consolidated financial statements
Notes
17Trade and other receivables and prepayments (continued)
Ageing of trade receivables are specified as following
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| | |
Overdue more than 90 days | | |
| | |
| | |
| | |
Provision for bad debts is specified as following
The Group’s usual terms of payments are between 0 (prepayments) – 90 days, depending on the
customer, however for customers under factoring arrangements, this may be up to 360 days.
Consolidated financial statements
Notes
18Contract assets and liabilities
| | |
| | |
| | |
| | |
Receivables from revenue according to note 17 | | |
| | |
| | |
| | |
Prepayments from customers at 30 April 2024 amount to 3.4 million DKK (30 April 2023: 2.7 million DKK).
Delivery of goods related to prepayments are expected in the first quarter of the following financial year.
Revenue recognised as prepayments from customer in the income statement is in line with revenue
recognition under accounting policies. Return obligations depend on the customer’s contracts and are in
general within 12 months.
Performance obligations related to the Group’s order backlog at 30 April 2024 is expected to be delivered
within 12 months. As such, the value of the Groups order backlog is not disclosed.
Consolidated financial statements
Notes
19Equity
Capital management
On a regular basis, the Executive Board assesses whether the Group has an adequate capital structure,
just as the board of Directors regularly evaluates whether the Group’s capital structure is in line with the
best interests of the Group and its stakeholders.
The share capital consists of 29,000,000 A-shares, 42,075,000 B-shares and 425,000 C-shares all with a
nominal value of 0,01 DKK each. The share classes have separate rights in terms of dividend distribution.
According to the current policy, SMP Nissens III ApS does not distribute dividends.
20Non-controlling interests
Subsidiary with non-controlling interests comprise SMP Nissens II ApS (Horsens, Denmark).
Consolidated key financial figures for SMP Nissens II ApS:
| | |
In DKK millions, except for per share data | 1 May 2023 – 30 April 2024 | 1 May 2022 – 30 April 2023 |
Non-controlling interest proportion of ownership | | |
Non-controlling interest proportion of voting rights | | |
| | |
| | |
Operating profit before depreciations and amortisation | | |
Operating profit before interests | | |
| | |
| | |
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| | |
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| | |
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| | |
Cash flows from operating activities | | |
Cash flow from investing activities | | |
Cash flow from investments in fixed assets | | |
Cash flows from financing activities | | |
| | |
Consolidated financial statements
Notes
20Non-controlling interests (continued)
Transactions with non-controlling owners
In 2023/24 purchase of non-controlling shares relates to buy-back of shares in SMP Nissens ApS II:
| |
| |
| |
| |
Reduction of non-controlling interests | |
| |
Change in the parent company’s shareholder’s share of the total equity of the Group | |
| |
21Provisions
Provisions comprise anticipated expenses relating to warranty commitments, pending disputes. For further
disclosure on commitments related to disputes, refer to note 27.
Consolidated financial statements
Notes
22Borrowings
Borrowings is due as follows:
Debt included in the balance sheet includes borrowing expenses, amortized over the maturity of the loan
by 2.3 million DKK (2022/2023: 4.6 million DKK). Total borrowing expenses capitalized during the financial
year amount to 0.0 million DKK (2022/2023: 0.0 million DKK).
Consolidated financial statements
Notes
23Loan from related party
Loan from related party relates to preference shares in SMP Nissens ApS II with a preferred right to
dividend held by a related party, that matures upon a change of control of the group. As the event that
triggers the loan falling due is out of the Group Management’s control, the preference shares are classified
as a financial liability.
The loan has a fixed annual index rate at 6.0 %. Group Management has the option to pay a dividend on
the shares at any time. During 2023/24 the loan was fully paid by way of dividend distribution.
24Trade and other payables
| | |
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| | |
| | |
Holiday pay payable and other employee related costs | | |
Market value of interest rate swap | | |
| | |
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25Change in working capital
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| | |
| | |
| | |
| | |
Change in trade payables, etc. | | |
Change in contract liabilities | | |
| | |
| | |
| | |
| | |
| | |
Depreciation and amortisation | | |
Other change in non-cash operating items | | |
| | |
| | |
| | |
26Non-cash operating items
| | |
| | |
| | |
Depreciation and amortisation | | |
Other change in non-cash operating items | | |
| | |
| | |
| | |
Consolidated financial statements
Notes
27Pledges, collateral, contingencies and commitments
Danish Group entities are jointly taxed with SMP Nissens III ApS, which acts as a management company,
and are jointly and severally liable with several other jointly taxed group entities for the payment of income
taxes as well as withholding taxes on interest, royalties and dividends. The liabilities have been estimated
at 30.4 million DKK at 30 April 2024 (30 April 2023: 0 million DKK).
The Group is party to a minor number of pending disputes. The outcome of these cases is not expected to
have any material impact on the financial position of the Group, neither individually nor in the aggregate.
Commitments
The Group has entered into lease agreements related to cars, plant and computers, with lease terms
between 0 and 6 years. Detailed information related to other contractual commitments in note 30 and
leases in note 13.
Collateral
Land and buildings with a carrying amount of 91.5 million DKK have been pledged as security for mortgage
debt of 110.0 million DKK.
Shares in AX V Nissens ApS, held by the parent company AX V Nissens I ApS in the following subsidiaries
K. Nissen International A/S, NA International A/S, Nissens Automotive A/S, Highway Automotive Sp. z o.o.,
and Nissens Automotive SK S.r.o. have been pledged as security for a revolving credit facility (RCF) and
other facilities with a total commitment of 325 million DKK.
28Financial risk and financial instruments
Risk management policy
The Group’s principal financial liabilities, other than trade payables, are mortgage loans and revolving
credit facilities (RCF). The main purpose of these financial liabilities is to finance the Group’s operations
and acquisitions of assets. The Group’s principal financial assets include accounts receivable. The Group
also enters into derivative transactions. Financial instruments applied by the Group include forward
contracts on exchange rate exposures and interest rate hedging.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management
oversees the management of these risks. The Board of Directors reviews and agrees on policies for
managing each of these risks, which are described below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market prices. Market prices comprise three types of risk: interest rate risk, currency risk and
other price risks such as equity price risk and commodity price risk. The Group applies the following
derivative financial instruments to mitigate market risks: interest rate swaps and forward currency
contracts.
Consolidated financial statements
Notes
28Financial risk and financial instruments (continued)
Currency risk
The majority of Nissens' activities implies currency risks in connection with the purchase and sale of goods
and services in foreign currencies. The largest exposure for purchases relates to the Chinese yuan (CNY),
euro (EUR) and U.S. dollar (USD) whereas largest invoicing currencies are EUR, Polish zloty (PLN), USD
and British pound (GBP). Currency risks are handled within the limitations of the policy approved by the
Board of Directors. The policy recommends the use of layered hedging, but it does not set a minimum
share of the expected future cash-flow which should be secured by financial instruments.
All changes in financial instruments related to foreign currency risk are recognised as financial income or
financial expenses in the income statement.
At the balance sheet date, the Group has the following exposures towards net-monetary positions on
current receivables and total liabilities.
| | | |
| Increase in rates against DKK | 2023/2024 Gain/loss (million DKK) | 2022/2023 Gain/loss (million DKK) |
EUR – current receivables and current liabilities | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Forward exchange contracts of 85 million CNY (2022/2023: 70 million CNY) have been executed to cover the expected two months need. |
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group’s exposure to the risk of changes in the market
interest rates relates primarily to the Group’s mortgage and RCF loans. The interest applied to the RCF
loan is variable on 3-months terms whereas the mortgage interest rate is fixed until March 2025.
An increase in the interest rate by one percentage point in comparison to the interest rate at the balance
sheet date would, all other things being equal, affect the Group’s profit or loss by -1.0 million DKK
(2022/2023: -2.9 million DKK) and equity after tax by -0.8 million DKK (2022/2023: -2.3 million DKK).
Financial instruments
To minimize the interest exposure on the RCF loan, the Group has entered into a cap on the interest rate
on 150 million DKK of the RCF loan. The base interest, 3-month CIBOR, has been capped to 4.5% with a
floor of 1.5% with a maturity date 28 November 2025. The fair value at 30 April 2024 is immaterial. The
contract was settled on 18 May 2024 at a fair value of 0.4 million DKK (liability).
Consolidated financial statements
Notes
28Financial risk and financial instruments (continued)
Pricing risk
The Group is affected by the volatility of primarily aluminium prices. The outlook for aluminium prices is
continuously monitored and decisions on securing expected consumption are made in accordance with
policies hereon. The annual direct consumption of aluminium is approx. 1,800 ton. A 5% change in the
London Metals Exchange reference aluminium price will affect the Group’s profit or loss by 1.6 million DKK
(2022/2023: 1.5 million DKK).
The Group is also affected by the volatility of other raw material prices directly and indirectly.
Due to sourcing activities in China the Group is also exposed to the development in the global freight rates.
In the short to medium term the development in material prices and freight rates may impact earnings until
mitigations can be implemented.
Liquidity risk
The purpose of the Group’s cash management procedures is to ensure that the Group at all times has
sufficient and flexible financial resources at its disposal and is able to honour its obligations when due. The
Group’s liquidity reserves consist of credit balances and fixed overdraft facilities.
Loan facilities
Besides net cash of DKK 69.5 million DKK (2022/2023: -45.1 million DKK), the Group had undrawn credit
facilities of 97 million DKK (2022/2023: 75 million DKK) at 30 April 2024.
In addition to the credit facilities, the Group has the following loans:
Maturity analysis
| | | | | |
| | | | | |
| | | | | |
RCF Loan (75 million DKK) | | | | | |
| | | | | |
| | | | | |
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RCF Loan (200 million DKK) | | | | | |
| | | | | |
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| | | | | |
| | | | | |
The contractual cash flows are based on the non-discounted cash flows, including down-payments and
calculated interest based on current interest rates.
Consolidated financial statements
Notes
28Financial risk and financial instruments (continued)
Apart from the above, the Group has bank loans of 27.6 million DKK related to an overdraft facility that is
part of an overall finance arrangement. The finance arrangement is due for renegotiation in November
2025.
Loans (preference shares) from related party does not carry any specific maturity date but may mature
upon a change of control within the Group. Refer to note 23.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or a
customer contract, leading to a financial loss. The Group is exposed to credit risk from its trade receivables
and from its financing activities, including deposits with banks and financial institutions (to the extent the
balance is in surplus of the Group), foreign exchange transactions and other financial instruments. The
credit risk incurred from trade receivables is generally managed by continuous credit evaluation of the
customers and trading partners. In addition, credit risks on counterparties other than banks are minimized
through the use of prepayments and credit insurance. From a historical perspective, losses on receivables
are at a low level.
The maximum credit risk related to trade receivables equals the carrying amount of the trade receivables.
The allowance for expected credit losses for trade receivables is calculated at an individual level when
there is an indication of impairment. For receivables with no indication of impairment, the expected credit
losses are based on the historical credit loss. In 2023/2024, credit losses recognised in the income
statement are less than 0.3% of total revenue, corresponding to historic level. In 2022/2023, credit losses
recognised in the income statement accounted for less than 0.3% of total revenue.
Selected customers offer supply chain financing programs, which the Group utilized to sell certain
receivables, for which the Group only carries an immaterial risk. The profit and loss impact from these
programs is limited to an interest payment on the payments. At the balance sheet date, the nominal value
of receivables sold amounts to 29.0 million DKK (2022/2023: 38.1 million DKK). Payment terms on
receivables sold are up to 360 days.
Consolidated financial statements
Notes
28Financial risk and financial instruments (continued)
Categories of financial instruments
| | |
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| | |
Financial assets at amortized cost | | |
| | |
Cash and cash equivalents | | |
| | |
| | |
Financial liabilities at amortized cost | | |
| | |
| | |
| | |
| | |
| | |
| | |
Financial asset at fair value recognised through profit and loss (hedging) | | |
Financial asset at fair value recognised through other comprehensive income (Other financial assets) | | |
| | |
Derivative financial instruments, net | | |
| | |
| | |
| | |
| | |
Consolidated financial statements
Notes
28Financial risk and financial instruments (continued)
Categories of financial instruments
| | |
| | |
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| | |
Financial assets at amortized cost | | |
| | |
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| | |
| | |
Financial liabilities at amortized cost | | |
| | |
| | |
| | |
| | |
Loans from related parties | | |
| | |
| | |
Financial asset at fair value recognised through profit and loss (hedging) | | |
Financial asset at fair value recognised through other comprehensive income (Other financial assets) | | |
| | |
Derivative financial instruments, net | | |
| | |
| | |
| | |
| | |
Fair value hierarchy of financial instruments measured at fair value
| | | | |
| | |
| | Observable input (Level 2) | Other financial assets (Level 3) | |
| | | | |
| | | | |
| | | | |
| | | | |
Financial liabilities, net | | | | |
| | | | |
| | |
| | Observable input (Level 2) | Other financial assets (Level 3) | |
| | | | |
| | | | |
| | | | |
| | | | |
Financial liabilities, net | | | | |
| | | | |
Consolidated financial statements
Notes
28Financial risk and financial instruments (continued)
Methods and assumptions for calculating fair value
The determined fair value of derivative financial instruments is based on observable market data such as
yield curves or forward rates.
Other financial assets, measured at level 3, include shares in a venture capital fund. For this fund, fair
value is based on information of valuation from the fund themselves based on quarterly reports. The fair
value of the underlying assets in the fund, which comprise non-listed investments, is calculated based on
non-observable inputs, including independent capital activity, operating performance and financial
conditions around the portfolio.
Consolidated financial statements
Notes
29Changes in liabilities arising from financing activities
Reconciliation of movements in cash flows to changes in financing liabilities:
| | | | | |
| | | | |
| | | | Fair value changes and amortisation | |
| | | | | |
Revolving credit facility (RCF) | | | | | |
| | | | | |
| | | | | |
Short term bank facilities | | | | | |
| | | | | |
| | | | | |
Total liabilities from financing activities | | | | | |
| | | | | |
| | | | | |
| | | | |
| | | | Fair value changes and amortisation | |
| | | | | |
Revolving credit facility (RCF) | | | | | |
| | | | | |
| | | | | |
Short term bank facilities | | | | | |
| | | | | |
| | | | | |
Total liabilities from financing activities | | | | | |
| | | | | |
Consolidated financial statements
Notes
30Other contingent liabilities
Other contractual commitments
Other contractual commitments primarily relate to minimum payments under handling and storage
agreements with third parties.
At 30 April 2024 36.1 million DKK (30 April 2023: 27.7 million DKK) was recognised as an expense
regarding other contractual commitments.
31Related party disclosures
SMP Nissens III ApS’ related parties include the following:
| | | | |
| | Basis for controlling influence | Indirect ownership shares | |
| | | | |
| | | | |
| | Participating interest in subsidiary and right to appoint board member | | |
During the year, a dividend was distributed to a related party to repay a preferred right to dividends
including interest on preference shares. Refer to note 23.
Wages and salaries paid to the Board of Directors and the Executive Board is disclosed in note 5.
32Events after the reporting period
In July 2024, the Group repaid the long-term bank loan of 75.0 million DKK.
On 1 November 2024, (SMP, completed its acquisition of 100% of the Company and its direct and indirect
subsidiaries. The acquisition was completed pursuant to a Share Sale and Purchase Agreement, dated as
of 5 July 2024.
Subsequent to closing, the Company’s registered name was changed to SMP Nissens III ApS.
As part of the transaction all outstanding warrants under the share-based payments program were settled
in cash with a payment of 96.0 million DKK.
Financing arrangements with current finance providers terminated upon the change of control, including
the short-term bank loan and the available credit facility. The change of control clause for termination of the
mortgage debt was waived by the bank. After closing, a multi-currency revolving credit facility of 10.0
million USD became available to the Group from SMP’s five-year credit agreement.
Consolidated financial statements
Notes
33Standards issued but not yet effective
At the time of publication of this annual report, the IASB has issued the following new accounting
standards and interpretations that are not mandatory for SMP Nissens III ApS' preparation of the 2023/24
annual report:
► IFRS 18 Presentation and Disclosure in Financial Statements
► Amendments to IAS 1 Presentation of financial statements
-Classification of liabilities as current or non-current
-Non-current liabilities with covenants
► Amendment to IFRS 16 Leases: Lease liability in a sale and leaseback
► Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures:
Supplier Finance Arrangements
► Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of exchangeability
► Amendments to IFRS 9 and IFRS 7 Contracts referencing Nature-dependent Electricity
The approved standards and interpretations not in force will be implemented as they become mandatory
for SMP Nissens III ApS. None of the above standards and interpretations are considered to have an
impact on recognition and measurement for SMP Nissens III ApS.
Consolidated financial statements
Notes
34Restatements to the previously reported Consolidated Financial Statements
Compared to the previously reported consolidated financial statements included in the local Danish Annual
Report dated 28 June 2024 as mentioned in note 1, the company has made certain reclassifications and
adjustments in the balance sheet and the cash flow statement. The result of the year is not affected.
Furthermore, the Company has made some editorial changes to the Accounting Policy section without any
impact on recognition and measurement in the consolidated financial statements and made some
additional explanations and descriptions in the notes.
The impact of the material adjustments can be summarised as follows:
Balance sheet – Equity and Liabilities
The loan (preference shares), as described in note 23, was reclassified from equity to liabilities. The loan
from related party was repaid in the period 1 May 2023 - 30 April 2024, and accordingly, neither total equity
nor total liabilities as of 30 April 2024 are impacted by the adjustment.
As of 30 April 2023, the effect is a reduction of the total equity with DKK 64.8 million and an increase of
total liabilities of the same amount as shown below. Total equity and liabilities are not affected.
| | | | | | |
1 May 2022 – 30 April 2023 | |
| | | |
| | | |
Equity attributable to equity holders of the parent | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Cash flow statement
The above-mentioned reclassification of repayment of preference shares from dividend payment to
repayment of loan from related party has no impact on the Net cash flow from financing activities.
A short-term bank facility is adjusted from cash and cash equivalents to a separate line item in net cash
flows from financing activities named change in short term bank facilities” as follows:
| | | |
1 May 2023 – 30 April 2024 | |
| | | |
| | | |
Change in short term bank facilities | | | |
Net cash flows from financing activities | | | |
| | | |
| | | |
| | | |
Cash and cash equivalents at 1 May | | | |
Cash and cash equivalents at 30 April | | | |
| | | |
Consolidated financial statements
Notes
| | | |
1 May 2022 – 30 April 2023 | |
| | | |
| | | |
Change in short term bank facilities | | | |
Net cash flows from financing activities | | | |
| | | |
| | | |
| | | |
Cash and cash equivalents at 1 May | | | |
Cash and cash equivalents at 30 April | | | |
| | | |
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Introduction
On November 1, 2024 (the "closing date"), Standard Motor Products, Inc. (“Standard Motor Products,” “SMP,” or the “Company”) completed its previously announced acquisition (the “Acquisition”) of SMP Nissens III ApS (formerly known as AX V Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”), pursuant to the terms of a Share Sale and Purchase Agreement (the “Purchase Agreement”), dated as of July 5, 2024, by and among the Company, the sellers party thereto, and Axcel V K/S, as the sellers’ representative. Pursuant to the Purchase Agreement, the Company acquired the entire share capital of Nissens Automotive for €366 million ($397 million), after closing adjustments.
The unaudited pro forma combined balance sheet as of September 30, 2024 gives effect to the Acquisition, as if this transaction had been completed on September 30, 2024 and combines the unaudited consolidated balance sheet of Standard Motor Products as of September 30, 2024 with Nissens Automotive’s unaudited consolidated balance sheet as of September 30, 2024. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023 were prepared as if the Acquisition had been completed on January 1, 2023. These unaudited pro forma combined balance sheet and unaudited pro forma combined income statements are collectively referred to as the pro forma financial information. The pro forma financial information has been derived from the historical consolidated financial statements of Standard Motor Products and Nissens Automotive.
The unaudited pro forma combined financial information should be read in conjunction with:
●The accompanying notes to the unaudited pro forma combined financial information;
●The separate audited consolidated financial statements of Standard Motor Products as of and for the year ended December 31, 2023 and the related notes, included in Standard Motor Products' Annual Report on Form 10-K for the fiscal year ended December 31, 2023;
●The separate unaudited consolidated financial statements of Standard Motor Products as of and for the nine months ended September 30, 2024 and the related notes, included in Standard Motor Products' Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2024;
●The separate historical audited consolidated financial statements of Nissens Automotive as of and for the fiscal year ended April 30, 2024, and the related notes, included in Nissens Automotive’s financial statements and audit report for the fiscal year ended April 30, 2024.
The following unaudited pro forma combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” as adopted by the SEC on May 20, 2020. Article 11 permits presentation of reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The Company has elected not to present Management’s Adjustments and is only presenting transaction accounting adjustments in the unaudited pro forma combined financial statements.
Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma combined financial statements are described in the accompanying notes. The unaudited pro forma combined financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the Acquisition and the other related transactions occurred on the dates indicated. Further, the unaudited pro forma combined financial information does not purport to project the future operating results or financial position of Standard Motor Products following the completion of the Acquisition and the other related transactions. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma combined financial statements and are subject to change as additional information becomes available and analyses are performed. The pro forma financial information does not include adjustments to reflect any potential revenue, synergies or dis-synergies, or cost savings that may be achievable in connection with the Acquisition, or the associated costs that may be necessary to achieve such revenues, synergies, or cost savings.
Accounting for the Acquisition
The Acquisition is being accounted for as a business combination using the acquisition method, with Standard Motor Products as the accounting acquirer, in accordance with Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). Under this method of accounting, the aggregate purchase consideration will be allocated to Nissens Automotive’s assets acquired and liabilities assumed based upon their estimated fair values at the date of completion of the Acquisition. The process of valuing the net assets of Nissens Automotive immediately prior to the Acquisition, as well as evaluating accounting policies for conformity, is preliminary. Accordingly, the aggregate purchase consideration allocation and related adjustments reflected in this unaudited pro forma combined financial information are preliminary and subject to revision based on a final determination of fair value. Refer to Note 2 - Basis of Presentation for more information.
Standard Motor Products financed the Acquisition primarily with borrowings under a new five-year credit agreement entered into on September 16, 2024, with JPMorgan Chase Bank N.A., as administrative agent and a syndicate of lenders (the "2024 Credit Agreement") as well as with cash from the combined company balance sheets. Refer to Notes 6(g) and 7(c) for more information.
Standard Motor Products' financial statements were prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") while Nissens Automotive’s financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board ("IASB"). The accounting policies used in the preparation of the pro forma financial information are those set out in Standard Motor Products' audited financial statements as of and for the year ended December 31, 2023. The conformation of Nissens Automotive’s accounting policies along with Standard Motor Products' accounting policies is described below in Note 3.
The transaction accounting adjustments are preliminary, based upon available information as of the date of filing the Current Report on Form 8-K/A to which this pro forma financial information is included as an Exhibit, and prepared solely for the purpose of this pro forma financial information. These adjustments are based on preliminary estimates and will be different from the adjustments that may be determined based on final acquisition accounting, and these differences could be material. The transaction accounting adjustments are based on the consideration paid for the Acquisition, cash on hand and indebtedness adjustments, and the fair values of assets acquired and liabilities assumed. This assessment will not be completed until Standard Motor Products reports its results for the year ended December 31, 2024 and through the measurement period. The estimated fair values assigned in this pro forma financial information are preliminary and represent Standard Motor Products' current best estimate of fair value and are subject to revision.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
As of September 30, 2024
(All amounts expressed in U.S. dollars in thousands unless otherwise noted)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Standard Motor Products (Historical) | | Nissens Automotive
(Historical Reclassified & Aligned)
(DKK) | | Nissens Automotive
(Historical Reclassified & Aligned) | | Pro Forma Transaction Adjustments | | Notes | | Pro Forma Financing Adjustments | | Notes | | Pro Forma Combined |
| ASSETS | | | | | | | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 26,348 | | | 122,741 | | | $ | 18,377 | | | $ | (395,736) | | | (6a) | | $ | 439,571 | | | (6a) | | $ | 88,560 | |
Accounts receivable, less allowances for discounts and expected credit losses | | 217,130 | | | 383,447 | | | 57,410 | | | — | | | | | — | | | | | 274,540 | |
| Inventories | | 503,015 | | | 534,407 | | | 80,012 | | | 9,417 | | | (6b) | | — | | | | | 592,444 | |
Unreturned customer inventories | | 17,843 | | | — | | | — | | | — | | | | | — | | | | | 17,843 | |
| Prepaid expenses and other current assets | | 28,873 | | | 4,247 | | | 636 | | | (996) | | | (6j) | | — | | | | | 28,513 | |
| Total current assets | | 793,209 | | 1,044,842 | | | 156,435 | | (387,315) | | | | 439,571 | | | | 1,001,900 |
| | | | | | | | | | | | | | | | |
Property, plant and equipment, net | | 138,490 | | | 127,556 | | | 19,098 | | | 9,950 | | | (6c) | | — | | | | | 167,538 | |
| Operating lease right-of-use assets | | 96,039 | | | 61,355 | | | 9,186 | | | — | | | | | — | | | | | 105,225 | |
| Goodwill | | 134,725 | | | 572,006 | | | 85,641 | | | 43,637 | | | (6e) | | — | | | | | 264,003 | |
| Other intangibles, net | | 85,837 | | | 225,545 | | | 33,769 | | | 193,331 | | | (6d) | | — | | | | | 312,937 | |
| Deferred income taxes | | 45,315 | | | 13,134 | | | 1,966 | | | — | | | | | — | | | | | 47,281 | |
Investments in unconsolidated affiliates | | 23,914 | | | — | | | — | | | — | | | | | — | | | | | 23,914 | |
| Other assets | | 33,012 | | | 2,589 | | | 385 | | | — | | | | | 1,415 | | | (6g) | | 34,812 | |
Total assets | | $ | 1,350,541 | | | 2,047,027 | | | $ | 306,480 | | | $ | (140,397) | | | | | $ | 440,986 | | | | | 1,957,610 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | |
| Current portion of term loan and other debt | | $ | 2,685 | | | — | | | $ | — | | | $ | — | | | | | $ | 15,615 | | | (6g) | | $ | 18,300 | |
| Accounts payable | | 112,404 | | | 238,364 | | | 35,686 | | | — | | | | | — | | | | | 148,090 | |
| Sundry payables and accrued expenses | | 69,666 | | | 145,673 | | | 21,812 | | | 5,009 | | | (6h) | | — | | | | | 96,487 | |
| Accrued customer returns | | 62,326 | | | 6,892 | | | 1,032 | | | — | | | | | — | | | | | 63,358 | |
| Accrued core liability | | 15,226 | | | — | | | — | | | — | | | | | — | | | | | 15,226 | |
| Accrued rebates | | 53,163 | | | 153,341 | | | 22,958 | | | — | | | | | — | | | | | 76,121 | |
| Payroll and commissions | | 37,050 | | | 22,824 | | | 3,417 | | | — | | | | | — | | | | | 40,467 | |
| Total current liabilities | | 352,520 | | | 567,094 | | 84,905 | | | 5,009 | | | | | 15,615 | | | | | 458,049 | |
| | | | | | | | | | | | | | | | |
| Long-term debt | | 140,163 | | | 110,067 | | | 16,479 | | | — | | | | | 425,371 | | | (6g) | | 582,013 | |
| Noncurrent operating lease liabilities | | 86,259 | | | 41,223 | | | 6,172 | | | — | | | | | — | | | | | 92,431 | |
Other accrued liabilities | | 28,611 | | | 9,413 | | | 1,409 | | | — | | | | | — | | | | | 30,020 | |
Deferred tax liabilities | | — | | | 62,615 | | | 9,375 | | | 46,890 | | | (6f) | | — | | | | | 56,265 | |
| Accrued asbestos liabilities | | 89,544 | | | — | | | — | | | — | | | | | — | | | | | 89,544 | |
| Total liabilities | | 697,097 | | | 790,412 | | | 118,340 | | | 51,899 | | | | | 440,986 | | | | | 1,308,322 | |
| Commitments and contingencies | | | | | | | | | | | | | | | | |
Stockholders' equity: | | | | | | | | | | | | | | | | |
| Common stock - par value $2.00 per share: | | | | | | | | | | | | | | | | |
| Authorized - 30,000,000 shares; issued 23,936,036 shares | | 47,872 | | | 615 | | | 92 | | | (92) | | | (6i) | | — | | | | | 47,872 | |
| Capital in excess of par value | | 103,818 | | | 714,950 | | | 107,042 | | | (107,042) | | | (6i) | | — | | | | | 103,818 | |
| Retained earnings | | 583,919 | | | 185,991 | | | 27,847 | | | (32,003) | | | (6i) | | — | | | | | 579,763 | |
| Accumulated other comprehensive income | | (9,574) | | | 15,773 | | | 2,361 | | | (2,361) | | | (6i) | | — | | | | | (9,574) | |
| Treasury stock - at cost (2,215,186 shares) | | (87,202) | | | — | | | — | | | — | | | | | — | | | | | (87,202) | |
Total SMP stockholders' equity | | 638,833 | | | 917,329 | | 137,342 | | | (141,498) | | | | | — | | | | | 634,677 | |
| Noncontrolling interest | | 14,611 | | | 339,286 | | | 50,798 | | | (50,798) | | | (6i) | | — | | | | | 14,611 | |
Total stockholders' equity | | 653,444 | | | 1,256,615 | | | 188,140 | | | (192,296) | | | | | — | | | | 649,288 | |
Total liabilities and stockholders’ equity | | $ | 1,350,541 | | | 2,047,027 | | | $ | 306,480 | | | $ | (140,397) | | | | | $ | 440,986 | | | | | $ | 1,957,610 | |
See the accompanying notes to the Unaudited Pro Forma Combined Financial Information.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2024
(All amounts expressed in U.S. dollars in thousands, except share and per share data, unless otherwise noted)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Standard Motor Products (Historical) | | Nissens Automotive
(Historical Reclassified & Aligned)
(DKK) | | Nissens Automotive
(Historical Reclassified & Aligned) | | Pro Forma Transaction Adjustments | | Notes | | Pro Forma Financing Adjustments | | Notes | | Pro Forma Combined |
| Net sales | | $ | 1,120,497 | | | 1,515,408 | | | $ | 220,861 | | | $ | — | | | | | $ | — | | | | | $ | 1,341,358 | |
| Cost of sales | | 798,162 | | | 914,972 | | | 133,351 | | | — | | | | | — | | | | | 931,513 | |
| Gross profit | | 322,335 | | | 600,436 | | | 87,510 | | | — | | | | | — | | | | | 409,845 | |
| Selling, general, and administrative expenses | | 239,822 | | | 384,592 | | | 55,792 | | | 3,106 | | | (7b) | | — | | | | | 298,720 | |
| Restructuring and integration expenses | | 5,774 | | | — | | | — | | | — | | | | | — | | | | | 5,774 | |
| Other income, net | | 5 | | | 13 | | | 2 | | | — | | | | | — | | | | | 7 | |
| Operating income | | 76,744 | | | 215,857 | | | 31,720 | | | (3,106) | | | | | — | | | | | 105,358 | |
| Other non-operating income, net | | 5,147 | | | 4,591 | | | 669 | | | — | | | | | — | | | | | 5,816 | |
| Interest expense | | 7,964 | | | 10,247 | | | 1,754 | | | — | | | | | 13,104 | | | (7c) | | 22,821 | |
| Earnings from continuing operations before income taxes | | 73,927 | | | 210,201 | | | 30,635 | | | (3,106) | | | | | (13,104) | | | | | 88,353 | |
| Provision for income taxes | | 18,718 | | | 44,695 | | | 6,514 | | | (683) | | | (7d) | | (3,310) | | | (7d) | | 21,239 | |
| Earnings from continuing operations | | 55,209 | | | 165,506 | | | 24,121 | | | (2,423) | | | | | (9,794) | | | | | 67,114 | |
Loss from discontinued operations, net of income tax | | (24,727) | | | — | | | — | | | — | | | | | — | | | | | (24,727) | |
| Net earnings | | 30,482 | | | 165,506 | | | 24,121 | | | (2,423) | | | | | (9,794) | | | | | 42,387 | |
| Net earnings attributable to noncontrolling interest | | 785 | | | 44,687 | | | 6,513 | | | (6,513) | | | (6i) | | — | | | | | 785 | |
| Net earnings attributable to SMP | | $ | 29,697 | | | 120,819 | | | $ | 17,608 | | | $ | 4,090 | | | | | $ | (9,794) | | | | | $ | 41,602 | |
| | | | | | | | | | | | | | | | |
Net earnings (loss) attributable to SMP | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 54,424 | | | | | | | | | | | | | | | $ | 66,329 | |
| Discontinued operations | | (24,727) | | | | | | | | | | | | | | | (24,727) | |
Net earnings attributable to SMP | | $ | 29,697 | | | | | | | | | | | | | | | $ | 41,602 | |
| | | | | | | | | | | | | | | | |
Per common share data | | | | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 2.50 | | | | | | | | | | | | | | | $ | 3.04 | |
| Discontinued operations | | (1.14) | | | | | | | | | | | | | | | (1.14) | |
Net earnings attributable to SMP per common share | | $ | 1.36 | | | | | | | | | | | | | | | $ | 1.90 | |
| | | | | | | | | | | | | | | | |
Diluted: | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 2.45 | | | | | | | | | | | | | | | $ | 2.98 | |
| Discontinued operations | | (1.11) | | | | | | | | | | | | | | | (1.11) | |
Net earnings attributable to SMP per common share | | $ | 1.34 | | | | | | | | | | | | | | | $ | 1.87 | |
| | | | | | | | | | | | | | | | |
Dividend declared per common share | | $ | 0.87 | | | | | | | | | | | | | | | $ | 0.87 | |
| | | | | | | | | | | | | | | | |
Weighted average number of common shares, basic | | 21,802,164 | | | | | | | | | | | | | | | 21,802,164 | |
Weighted average number of common shares, diluted | | 22,225,444 | | | | | | | | | | | | | | | 22,225,444 | |
See the accompanying notes to the Unaudited Pro Forma Combined Financial Information.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2023
(All amounts expressed in U.S. dollars in thousands, except share and per share data, unless otherwise noted)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Standard Motor Products (Historical) | | Nissens Automotive
(Historical Reclassified & Aligned)
(DKK) | | Nissens Automotive
(Historical Reclassified & Aligned) | | Pro Forma Transaction Adjustments | | Notes | | Pro Forma Financing Adjustments | | Notes | | Pro Forma Combined |
| Net sales | | $ | 1,358,272 | | | 1,768,959 | | | $ | 256,838 | | | $ | — | | | | | $ | — | | | | | $ | 1,615,110 | |
| Cost of sales | | 969,446 | | | 1,173,710 | | | 170,413 | | | 9,417 | | | (7a) | | — | | | | | 1,149,276 | |
| Gross profit | | 388,826 | | | 595,249 | | | 86,425 | | | (9,417) | | | | | — | | | | | 465,834 | |
| | | | | | | | | | | | | | | | |
| Selling, general, and administrative expenses | | 293,583 | | | 493,052 | | | 71,587 | | | 10,045 | | | (7b) | | — | | | | | 375,215 | |
| Restructuring and integration expenses | | 2,642 | | | — | | | — | | | — | | | | | — | | | | | 2,642 | |
| Other income, net | | 76 | | | 4,438 | | | 644 | | | — | | | | | — | | | | | 720 | |
| Operating income | | 92,677 | | | 106,635 | | | 15,482 | | | (19,462) | | | | | — | | | | | 88,697 | |
| Other non-operating income, net | | 2,326 | | | 10,306 | | | 1,496 | | | — | | | | | — | | | | | 3,822 | |
| Interest expense | | 13,287 | | | 18,198 | | | 2,642 | | | — | | | | | 18,196 | | | (7c) | | 34,125 | |
| Earnings from continuing operations before income taxes | | 81,716 | | | 98,743 | | | 14,337 | | | (19,462) | | | | | (18,196) | | | | | 58,395 | |
| Provision for income taxes | | 18,368 | | | 18,498 | | | 2,686 | | | (4,018) | | | (7d) | | (4,596) | | | (7d) | | 12,440 | |
| Earnings from continuing operations | | 63,348 | | | 80,245 | | | 11,651 | | | (15,444) | | | | | (13,600) | | | | | 45,955 | |
Loss from discontinued operations, net of income taxes | | (28,996) | | | — | | | — | | | — | | | | | — | | | | | (28,996) | |
| Net earnings | | 34,352 | | | 80,245 | | | 11,651 | | | (15,444) | | | | | (13,600) | | | | | 16,959 | |
| Net earnings attributable to noncontrolling interest | | 204 | | | 21,666 | | | 3,146 | | | (3,146) | | | (6i) | | — | | | | | 204 | |
| Net earnings attributable to SMP | | 34,148 | | | 58,579 | | | 8,505 | | | $ | (12,298) | | | | | $ | (13,600) | | | | | 16,755 | |
| | | | | | | | | | | | | | | | |
| Net earnings (loss) attributable to SMP | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 63,144 | | | | | | | | | | | | | | | $ | 45,751 | |
| Discontinued operations | | (28,996) | | | | | | | | | | | | | | | (28,996) | |
| Net earnings attributable to SMP | | $ | 34,148 | | | | | | | | | | | | | | | $ | 16,755 | |
| | | | | | | | | | | | | | | | |
| Per common share data | | | | | | | | | | | | | | | | |
| Basic: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 2.91 | | | | | | | | | | | | | | | $ | 2.11 | |
| Discontinued operations | | (1.34) | | | | | | | | | | | | | | | (1.34) | |
| Net earnings attributable to SMP per common share | | $ | 1.57 | | | | | | | | | | | | | | | $ | 0.77 | |
| | | | | | | | | | | | | | | | |
| Diluted: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 2.85 | | | | | | | | | | | | | | | $ | 2.06 | |
| Discontinued operations | | (1.31) | | | | | | | | | | | | | | | (1.31) | |
| Net earnings attributable to SMP per common share | | $ | 1.54 | | | | | | | | | | | | | | | $ | 0.75 | |
| | | | | | | | | | | | | | | | |
| Dividend declared per common share | | $ | 1.16 | | | | | | | | | | | | | | | $ | 1.16 | |
| | | | | | | | | | | | | | | | |
| Weighted average number of common shares, basic | | 21,716,177 | | | | | | | | | | | | | | | 21,716,177 | |
| Weighted average number of common shares, diluted | | 22,161,341 | | | | | | | | | | | | | | | 22,161,341 | |
See the accompanying notes to the Unaudited Pro Forma Combined Financial Information.
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(All amounts expressed in U.S. dollars unless otherwise noted)
Note 1 – Description of Transaction
On July 5, 2024, Standard Motor Products entered into an agreement to acquire Nissens Automotive, a leading European automotive parts manufacturer and distributor of aftermarket engine cooling and air conditioning products. The transaction closed on November 1, 2024. Pursuant to the terms of the Purchase Agreement, SMP acquired all of the issued and outstanding shares of Nissens Automotive. The preliminary fair value of consideration transferred was €366 million ($397 million), after closing adjustments.
In connection with the execution of the Purchase Agreement, the Company entered into a credit agreement on September 16, 2024 with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders (the “2024 Credit Agreement") which provides for borrowings of approximately $750 million consisting of:
•$430 million multi-currency revolving credit facility;
•$10 million multi-currency revolving credit facility which will be available to wholly-owned Danish subsidiaries of the Company;
•$200 million delayed draw term loan facility; and
•€100 million delayed draw term loan facility.
Borrowings under the 2024 Credit Agreement were used to finance the Company’s acquisition of Nissens Automotive and related transaction costs.
Note 2 - Basis of Presentation
The pro forma combined balance sheet was prepared using the historical unaudited balance sheets of Standard Motor Products and Nissens Automotive as of September 30, 2024. Standard Motor Products' most recent fiscal year ended on December 31, 2023, and Nissens Automotive's most recent fiscal year ended on April 30, 2024. The unaudited pro forma combined statements of operations were prepared using the historical:
•audited consolidated statement of operations of Standard Motor Products for the year ended December 31, 2023;
•unaudited consolidated statement of operations of Standard Motor Products for the nine months ended September 30, 2024; and
•unaudited consolidated statements of operations of Nissens Automotive, which were derived from the general ledger data for the nine months ended September 30, 2024 and for the year ended December 31, 2023.
The pro forma financial information reflects transaction accounting adjustments that management believes are necessary to present fairly Standard Motor Products' pro forma results of operations and financial position following the closing of the Acquisition as of and for the periods indicated. The transaction accounting adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments necessary to report Standard Motor Products' financial condition and results of operations as if the Acquisition was completed on January 1, 2023 for purposes of the unaudited pro forma combined statements of operations and September 30, 2024 for purposes of the unaudited pro forma combined balance sheet.
The initial allocation of the preliminary estimated consideration in this pro forma financial information is based upon the estimated fair value of the consideration as of the Acquisition closing date on November 1, 2024.
Goodwill represents the excess of the estimated purchase price over the estimated fair value of Nissens Automotive’s identifiable assets and liabilities, including the fair value of the estimated identifiable indefinite-lived and finite-lived intangible assets. Goodwill will not be amortized but will be subject to periodic impairment testing. The goodwill balance shown in the pro forma financial information is preliminary and subject to change as a result of the same factors affecting both the estimated consideration and the estimated fair value of identifiable assets and liabilities acquired. The goodwill balance represents the combined company’s expectations of the strategic opportunities available to it as a result of the Acquisition, as well as business specific knowledge and the replacement cost of an assembled workforce that may be derived from the Acquisition.
Upon completion of the final valuation, the estimated fair value of the acquired assets and liabilities will be updated and allocation of the excess purchase price, if any, will be recorded to goodwill. The calculation of goodwill could be materially impacted by measurement period adjustments. Under ASC 805, costs related to the transaction are expensed in the period they are incurred. Total transaction-related costs incurred by Standard Motor Products in connection with the Acquisition are estimated to be $9.5 million. The total amount is reflected as an expense in the unaudited combined statement of operations for the year ended December 31, 2023.
For purposes of preparing the pro forma financial information, the historical financial information of Nissens Automotive and related pro forma adjustments were translated from Danish kroner ("DKK") to U.S. dollars ("USD") using the following historical exchange rates:
| | | | | |
| Closing exchange rate as of September 30, 2024 | 0.14972 |
| Average exchange rate for the nine months ended September 30, 2024 | 0.14574 |
Average exchange rate for the year ended December 31, 2023 | 0.14519 |
These exchange rates may differ from future exchange rates which would have an impact on the pro forma financial information and would also impact purchase accounting.
Note 3 - Significant Accounting Policies
Standard Motor Products' financial statements were prepared in accordance with U.S. GAAP while Nissens Automotive's financial statements were prepared in accordance with IFRS as issued by the IASB. The accounting policies used in the preparation of the pro forma financial information are those set out in Standard Motor Products' audited financial statements as of and for the year ended December 31, 2023.
Certain adjustments were made to conform the IFRS presentation to U.S. GAAP presentation in alignment with Standard Motor Products' presentation of U.S. GAAP as specified in Note 4. These adjustments and reclassifications have no effect on previously reported total assets, total liabilities and stockholders’ equity, or net income or
loss of Standard Motor Products or Nissens Automotive. Accounting policy differences and additional reclassification adjustments may be identified as Standard Motor Products completes its acquisition accounting in accordance with ASC 805.
At the time of filing the Current Report on Form 8-K/A to which this pro forma financial information is included as an Exhibit, except U.S. GAAP and reclassification adjustments specified in Note 4 related to certain balances presented in the historical financial statements of Nissens Automotive, Standard Motor Products is not aware of any material differences between the accounting policies of the two entities that would continue to exist subsequent to the application of acquisition accounting.
The estimated income tax impacts of the pre-tax adjustments that are reflected in the unaudited combined pro forma financial information are calculated using an estimated blended statutory rate, which is based on preliminary assumptions related to the jurisdictions in which the income (expense) adjustments will be recorded. The estimated blended statutory rate and the effective tax rate of the combined company could be significantly different depending on the post-transaction activities and geographical composition of profit or loss before taxes.
Note 4 – Reclassifications and U.S. GAAP Adjustments
The unaudited combined pro forma financial information has been adjusted to reflect certain reclassifications in the presentation in Nissens Automotive's financial statements to conform to Standard Motor Products' financial statement presentation. In addition, management reviewed the historical Nissens Automotive accounting policies to conform to those of Standard Motor Products. At the current time, the Company is not aware of any differences in accounting policies that would have a material impact on the pro forma financial information.
The Company will conduct a further review of Nissens Automotive’s accounting policies during its post-acquisition integration to determine if there are any additional differences that require adjustment of Nissens Automotive’s revenues, expenses, assets, or liabilities to conform accounting policies and classifications. As a result of that review, the Company may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the pro forma financial information.
Unaudited Pro Forma Combined Balance Sheet Reclassification Adjustments Along With U.S. GAAP Conversion Adjustments
As of September 30, 2024
(All amounts in the reclassification tables and related footnotes below are expressed in DKK in thousands unless otherwise noted)
Refer to the table below for a summary of adjustments made to present Nissens Automotive’s balance sheet as of September 30, 2024, to conform with that of Standard Motor Products.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Standard Motor Products Historical Consolidated Balance Sheet Line Items | Nissens Automotive Historical Consolidated Balance Sheet Line Items | | Nissens Automotive Historical Balances | Reclassification | | U.S. GAAP Alignment | | Nissens Automotive Reclassified & Aligned |
| ASSETS | | | | | | | | |
CURRENT ASSETS: | | | | | | | | |
| Cash and cash equivalents | Cash and cash equivalents | | 122,741 | | — | | | — | | | 122,741 | |
| Accounts receivable, less allowances for discounts and expected credit losses | Trade and other receivables and prepayments | | 357,530 | | 25,917 | | (a), (b) | — | | | 383,447 | |
| Inventories | Inventory | | 534,407 | | — | | | — | | | 534,407 | |
| Prepaid expenses and other current assets | | | — | | 4,247 | | (a), (b), (c) | — | | | 4,247 | |
| Total current assets | | | 1,014,678 | | 30,164 | | | — | | | 1,044,842 | |
Property, plant and equipment, net | Property, plant and equipment | | 178,364 | | (50,808) | | (g) | — | | | 127,556 | |
| Operating lease right-of-use assets | | | — | | 50,808 | | (g) | 10,547 | | (k) | 61,355 | |
| Goodwill | | | — | | 572,006 | | (h) | — | | | 572,006 | |
| Other intangibles, net | Intangible assets | | 797,551 | | (572,006) | | (h) | — | | | 225,545 | |
| Deferred income taxes | Deferred tax assets | | 13,134 | | — | | | — | | | 13,134 | |
| Other assets | Other financial assets | | 5,475 | | (2,886) | | (c) | — | | | 2,589 | |
Total assets | | | 2,009,202 | | 27,278 | | | 10,547 | | | 2,047,027 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | |
| Accounts payable | Trade and other payables | | 450,319 | | (211,955) | | (a) | — | | | 238,364 | |
| Income tax payable | | 54,342 | | (54,342) | | (d) | — | | | — | |
| Sundry payables and accrued expenses | | | — | | 167,717 | | (a), (d), (e), (f) | (22,044) | | (k) | 145,673 | |
| Provisions | | 4,786 | | (4,786) | | (e) | — | | | — | |
| Lease liabilities, current | | 45,236 | | (45,236) | | (f) | — | | | — | |
| Contract liabilities | | 7,374 | | (7,374) | | (i) | — | | | — | |
| Deferred tax liabilities | | 62,615 | | | | (62,615) | | (l) | — | |
| Accrued customer returns | | | — | | 6,892 | | (e), (i) | — | | | 6,892 | |
| Accrued rebates | | | — | | 153,341 | | (a) | — | | | 153,341 | |
| Payroll and commissions | | | — | | 22,824 | | (a) | — | | | 22,824 | |
| Total current liabilities | | | 624,672 | | 27,081 | | | (84,659) | | | 567,094 | |
| Long-term debt | Borrowings | | 110,067 | | — | | | — | | | 110,067 | |
| Noncurrent operating lease liabilities | Lease liabilities | | 9,695 | | — | | | 31,528 | | (k) | 41,223 | |
Other accrued liabilities | Other payables | | 9,216 | | 197 | | (e) | — | | | 9,413 | |
Deferred tax liabilities | | | — | | — | | | 62,615 | | (l) | 62,615 | |
| Total liabilities | | | 753,650 | | 27,278 | | | 9,484 | | | 790,412 | |
Stockholders' equity: | | | | | | | | |
Common stock - par value $2.00 per share: Authorized - 30,000,000 shares; issued 23,936,036 shares | Share capital | | 615 | | — | | | — | | | 615 | |
| Capital in excess of par value | | | — | | 714,950 | | (j) | — | | | 714,950 | |
| Retained earnings | Retained earnings | | 900,941 | | (714,950) | | (j) | — | | | 185,991 | |
| Accumulated other comprehensive income | Foreign currency translation reserve | | 14,710 | | — | | | 1,063 | | (k) | 15,773 | |
| Treasury stock - at cost (2,215,186 shares) | | | — | | — | | | — | | | — | |
Total SMP stockholders' equity | | | 916,266 | | — | | | 1,063 | | | 917,329 | |
| Noncontrolling interest | | | 339,286 | | — | | | — | | | 339,286 | |
| Total stockholders' equity | | | 1,255,552 | | — | | | 1,063 | | | 1,256,615 | |
| Total liabilities and stockholders' equity | | | 2,009,202 | | 27,278 | | | 10,547 | | | 2,047,027 | |
(a) Reclassify trade and other payables of 63,328 to sundry payables and accrued expenses; 153,341 to accrued rebates; 22,824 to payroll and commissions; 4,472 to prepaid expenses and other current assets; and 32,011 to increase accounts receivable, less allowances for discounts and expected credit losses
(b) Reclassify trade and other receivables and prepayments of 5,835 to prepaid expenses and other current assets; 284 to sundry payables and accrued expenses; and 25 to accrued customer returns
(c) Reclassify other financial assets of 2,886 to prepaid expenses and other current assets
(d) Reclassify income tax payable of 54,342 to sundry payables and accrued expenses
(e) Reclassify provisions of 1,406 to sundry payables and accrued expenses; 3,184 to accrued customer returns; and 196 to other accrued liabilities
(f) Reclassify lease liabilities, current of 45,326 to sundry payables and accrued expenses
(g) Reclassify property, plant and equipment of 50,808 to operating lease right-of-use assets
(h) Reclassify intangible assets of 572,006 to goodwill
(i) Reclassify contract liabilities of 3,691 to sundry payables and accrued expenses; and 3,683 to accrued customer returns
(j) Reclassify retained earnings of 714,950 to capital in excess of par value
(k) Adjustment of lease expense to convert from IFRS 16 - Leases to ASC 842, Leases in accordance with SMP accounting policy under U.S. GAAP
(l) Reclassify deferred tax liabilities from current to non-current to align with ASC 740, Income Taxes
Unaudited Pro Forma Combined Statement of Operations Reclassification Adjustments Along With U.S. GAAP Conversion Adjustments
For the nine months ended September 30, 2024 and December 31, 2023
(All amounts in the reclassification tables and related footnotes below are expressed in DKK in thousands unless otherwise noted)
Refer to the table below for a summary of adjustments made to present Nissens Automotive’s statement of operations for the nine months ended September 30, 2024, to conform with that of Standard Motor Products.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Standard Motor Products Historical Consolidated Statement of Operations Line Items | Nissens Automotive Historical Consolidated Statement of Operations Line Items | | Nissens Automotive Historical Consolidated Balances | Reclassification | | U.S. GAAP Alignment | | Nissens Automotive Reclassified & Aligned |
| Net sales | Revenue | | 1,517,205 | | (1,797) | | (a) | — | | | 1,515,408 | |
| Cost of sales | | | | 914,972 | | (a) - (d) | — | | | 914,972 | |
| Cost of raw materials and consumables | | 892,941 | | (892,941) | | (g) | | | — | |
| Changes in inventories of finished goods and work in progress | | (27,160) | | 27,160 | | (g) | — | | | — | |
| Gross profit | | | 651,424 | | (50,988) | | | — | | | 600,436 | |
Selling, general and administrative expenses | | | — | | 362,467 | | (a) - (e) | 22,125 | | (f) | 384,592 | |
| Other external costs | | 215,023 | | (215,023) | | (a) | — | | | — | |
| Depreciation and amortisation | | 67,442 | | (37,386) | | (b) | (30,056) | | (f) | — | |
| Other operating income | | (4,022) | | 4,022 | | (c) | — | | | — | |
| Staff costs | | 164,393 | | (164,393) | | (d) | — | | | — | |
| Restructuring and integration expenses | | | — | | — | | | — | | | — | |
| Other income, net | | | — | | 13 | | | — | | | 13 | |
| Operating income | | | 208,588 | | (662) | | | 7,931 | | | 215,857 | |
| Other non-operating income, net | Financial income | | 3,827 | | 764 | | (e) | — | | | 4,591 | |
| Interest expense | Financial expenses | | 11,930 | | 102 | | (e) | (1,785) | | (f) | 10,247 | |
| Earnings from continuing operations before income taxes | | | 200,485 | | — | | | 9,716 | | | 210,201 | |
| Provision for income taxes | Tax | | 42,556 | | — | | | 2,139 | | | 44,695 | |
| Earnings from continuing operations | | | 157,929 | | — | | | 7,577 | | | 165,506 | |
Loss from discontinued operations, net of income taxes | | | — | | — | | | — | | | — | |
| Net earnings | | | 157,929 | | — | | | 7,577 | | | 165,506 | |
| Net earnings attributable to noncontrolling interest | | | 44,687 | | — | | | — | | | 44,687 | |
| Net earnings attributable to SMP | | | 113,242 | | — | | | 7,577 | | | 120,819 | |
(a) Reclassify other external costs of 198,452 to selling, general and administrative expense; 1,797 to net sales; and 14,774 to cost of sales
(b) Reclassify depreciation and amortisation of 33,470 to selling, general and administrative expense and 3,916 to cost of sales
(c) Reclassify other operating income of 3,275 to cost of sales; 733 to selling, general and administrative expense; and 13 to other income, net
(d) Reclassify staff costs of 130,617 to selling, general and administrative expenses; and 33,776 to cost of sales
(e) Reclassify financial income of 764 to other non-operating income, net; and financial expense of 662 to selling, general and administrative expenses
(f) Adjustment of lease expense to convert from IFRS 16 - Leases to ASC 842, Leases in accordance with SMP accounting policy under U.S. GAAP
(g) Reclassify cost of raw materials and consumables and changes in inventories of finished goods and work in progress to cost of sales
Refer to the table below for a summary of adjustments made to present Nissens Automotive’s statement of operations for the year ended December 31, 2023 to conform with that of Standard Motor Products.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Standard Motor Products Historical Consolidated Statement of Operations Line Items | Nissens Automotive Historical Consolidated Statement of Operations Line Items | | Nissens Automotive Historical Consolidated Balances | Reclassification | | U.S. GAAP Alignment | | Nissens Automotive Reclassified & Aligned |
| Net sales | Revenue | | 1,769,825 | | (866) | | (a) | — | | | 1,768,959 | |
| Cost of sales | | | | 1,173,710 | | (a), (b), (d) | — | | | 1,173,710 | |
| Cost of raw materials and consumables | | 939,395 | | (939,395) | | (g) | | | — | |
| Changes in inventories of finished goods and work in progress | | 156,937 | | (156,937) | | (g) | — | | | — | |
| Gross profit | | | 673,493 | | (78,244) | | | — | | | 595,249 | |
Selling, general and administrative expenses | | | — | | 464,932 | | (a) - (e) | 28,120 | | (f) | 493,052 | |
| Other external costs | | 257,047 | | (257,047) | | (a) | — | | | — | |
| Depreciation and amortisation | | 90,148 | | (65,442) | | (b) | (24,706) | | (f) | — | |
| Other operating income | | (5,593) | | 5,593 | | (c) | — | | | — | |
| Staff costs | | 220,486 | | (220,486) | | (d) | — | | | — | |
| Restructuring and integration expenses | | | — | | — | | | — | | | — | |
| Other income, net | | | — | | 4,438 | | (c) | — | | | 4,438 | |
| Operating income | | | 111,405 | | (1,356) | | | (3,414) | | | 106,635 | |
| Other non-operating income, net | Financial income | | 3,969 | | 6,337 | | (c), (e) | | | 10,306 | |
| Interest expense | Financial expenses | | 14,489 | | 4,981 | | (e) | (1,272) | | (f) | 18,198 | |
| Earnings from continuing operations before income taxes | | | 100,885 | | — | | | (2,142) | | | 98,743 | |
| Provision for income taxes | Tax | | 18,970 | | — | | | (472) | | | 18,498 | |
| Earnings from continuing operations | | | 81,915 | | — | | | (1,670) | | | 80,245 | |
Loss from discontinued operations, net of income taxes | | | — | | — | | | — | | | — | |
| Net earnings | | | 81,915 | | — | | | (1,670) | | | 80,245 | |
| Net earnings attributable to noncontrolling interest | | | 21,666 | | — | | | — | | | 21,666 | |
| Net earnings attributable to SMP | | | 60,249 | | — | | | (1,670) | | | 58,579 | |
(a) Reclassify other external costs of 236,875 to selling, general and administrative expense; 19,328 to cost of sales; and 844 to net sales
(b) Reclassify depreciation and amortisation expense of 62,622 to selling, general and administrative expense; and 2,820 to cost of sales
(c) Reclassify other operating income of 4,438 to other income; and 1,155 to other non-operating income
(d) Reclassify staff costs of 165,233 to selling, general and administrative expenses; and 55,253 to cost of sales
(e) Reclassify financial income of 5,182 to other non-operating income; and financial expenses of 202 to selling, general and administrative expenses
(f) Adjustment of lease expense to convert from IFRS 16 - Leases to ASC 842, Leases in accordance with SMP accounting policy under U.S. GAAP
(g) Reclassify cost of raw materials and consumables and changes in inventories of finished goods and work in progress to cost of sales
Note 5 – Preliminary purchase consideration and purchase price allocation
The accounting for the Acquisition, including the preliminary aggregate purchase consideration, is based on provisional amounts, and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities is based upon the preliminary estimate of fair values. For the preliminary estimate of fair values of assets acquired and liabilities assumed of Nissens Automotive, Standard Motor Products used management's forecasted cash flows, publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions. Standard Motor
Products is expected to use widely accepted income-based, market-based, and cost-based valuation approaches upon finalization of purchase accounting for the Acquisition. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma combined financial information. The unaudited pro forma adjustments are based upon available information and certain assumptions that Standard Motor Products believes are reasonable under the circumstances.
The following table summarizes the fair value of consideration transferred and the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of the Acquisition:
| | | | | | | | |
(in 000's USD) | | Preliminary estimated amount |
Total estimated purchase consideration | | $ | 396,732 | |
| Recognized amounts of identifiable assets acquired and liabilities assumed: | | |
| Cash and cash equivalents | | 18,377 | |
| Accounts receivable, less allowances for discounts and expected credit losses | | 57,410 | |
| Inventories | | 89,429 | |
| Prepaid expenses and other current assets | | 636 | |
Property, plant and equipment, net | | 29,048 | |
| Operating lease right-of-use assets | | 9,186 | |
Other intangibles, net | | 227,100 | |
| Deferred income taxes | | 1,966 | |
| Other assets | | 385 | |
| Total assets acquired | | 433,538 | |
| Accounts payable | | 35,686 | |
| Sundry payables and accrued expenses | | 22,664 | |
| Accrued customer returns | | 1,032 | |
| Accrued rebates | | 22,958 | |
| Payroll and commissions | | 3,417 | |
| Long-term debt | | 16,479 | |
| Noncurrent operating lease liabilities | | 6,172 | |
Other accrued liabilities | | 1,409 | |
| Deferred tax liabilities | | 56,265 | |
| Total liabilities assumed | | 166,083 | |
Net assets acquired | | 267,456 | |
| Goodwill | | $ | 129,277 | |
(i) The unaudited pro forma combined balance sheet has been adjusted to record Nissens Automotive’s inventories at a preliminary fair value of approximately $89.4 million, an increase of $9.4 million from the carrying value. The unaudited pro forma combined statement of operations for the year ended December 31, 2023 has been adjusted to recognize additional cost of sales related to the increased basis based on Nissens Automotive's average historical inventory turnover.
(ii) Preliminary identifiable intangible assets in the unaudited pro forma combined financial information consists of the following:
| | | | | | | | |
| (in 000's USD) | Preliminary Fair Value | Estimated Useful Life |
| Tradenames - Nissens | $ | 73,300 | | Indefinite |
| Tradenames - AVA | 2,300 | Indefinite |
| Tradenames - Highway | 1,100 | 15.0 |
| Customer relationships | 150,400 | | 16.0 |
| Intangible assets acquired | $ | 227,100 | |
A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the amortization expense of approximately $0.3 million for the nine months ended September 30, 2024 and $0.4 million for the year ended December 31, 2023. Pro forma amortization is preliminary and based on the use of straight-line amortization. The amount of amortization following the Acquisition may differ significantly between periods based upon the final value assigned and amortization methodology used for each identifiable intangible asset.
(iii) The unaudited pro forma combined balance sheet has been adjusted to record Nissens Automotive’s property, plant and equipment (consisting of land, buildings and improvements, equipment, furniture and fixtures, and leasehold improvements) at a preliminary fair value of approximately $29.0 million, an increase of $9.9 million from the carrying value. The unaudited pro forma combined statements of operations have been adjusted to recognize additional depreciation expense related to the increased basis in selling, general and administrative expenses. The additional depreciation expense is computed with the assumption that the related assets will be depreciated over a useful life of 25 years on a straight-line basis.
Note 6 – Adjustments to the Unaudited Pro Forma Combined Balance Sheet
(a) Reflects adjustments to cash and cash equivalents:
| | | | | | | | |
(in 000's USD) | | Amount |
Pro forma transaction adjustments: | | |
Cash paid for outstanding Nissens Automotive common stock | | $ | (396,732) |
Cash received for settlement of forward foreign exchange contract to convert USD to euros | | 996 |
Net pro forma transaction adjustment to cash and cash equivalents | | $ | (395,736) |
| | |
Pro forma financing adjustments: | | |
Cash from borrowings, net of debt issuance costs | | $ | 439,571 |
Net pro forma financing adjustment to cash and cash equivalents | | $ | 439,571 |
(b) Reflects the preliminary purchase accounting adjustment for inventories based on the acquisition method of accounting.
| | | | | | | | |
(in 000's USD) | | Amount |
Pro forma transaction adjustments: | | |
| Elimination of Nissens Automotive’s inventories - carrying value | | $ | (80,012) | |
| Preliminary fair value of acquired inventories | | 89,429 |
Net pro forma transaction adjustment to inventories | | $ | 9,417 |
Represents the adjustment of acquired inventories to its preliminary estimated fair value. After the closing, the step up in inventories to fair value will increase cost of sales as the inventories are sold, which for purposes of these pro forma financial statements is assumed to occur within the first six months after the Acquisition.
(c) Reflects the preliminary purchase accounting adjustment for the estimated fair value of property, plant and equipment based on the acquisition method of accounting.
| | | | | | | | |
(in 000's USD) | | Amount |
Pro forma transaction adjustments: | | |
Elimination of Nissens Automotive’s historical net book value of property, plant and equipment | | $ | (19,098) |
Preliminary fair value of acquired property, plant and equipment | | 29,048 |
Net pro forma transaction adjustment to property, plant and equipment, net | | $ | 9,950 |
(d) Reflects the preliminary purchase accounting adjustment for the estimated fair value of acquired intangibles based on the acquisition method of accounting. Refer to Note 5 above for additional information on the acquired intangible assets expected to be recognized.
| | | | | | | | |
(in 000's USD) | | Amount |
Pro forma transaction adjustments: | | |
Elimination of Nissens Automotive’s historical net book value of intangible assets | | $ | (33,769) |
| Preliminary fair value of acquired intangibles | | 227,100 |
Net pro forma transaction adjustment to other intangibles, net | | $ | 193,331 |
(e) Reflects the preliminary purchase accounting adjustment for goodwill which represents the excess of the estimated aggregate purchase consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed.
| | | | | | | | |
(in 000's USD) | | Amount |
Pro forma transaction adjustments: | | |
| Elimination of Nissens Automotive’s historical goodwill | | $ | (85,641) |
Goodwill per purchase price allocation (Note 5) | | 129,277 | |
Net pro forma transaction adjustment to goodwill | | $ | 43,636 |
(f) Reflects the estimated deferred taxes resulting from pro forma fair value adjustments of the acquired assets and assumed liabilities based on the statutory tax rate of 22% and preliminary purchase price allocations. The tax rates used for the pro forma financial information are estimated and could vary from the actual rate in periods after completion of the Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities.
(g) Reflects borrowings, net of unamortized debt issuance costs, to fund the Acquisition and related transaction costs. Standard Motor Products drew down $442 million from the lenders under the 2024 Credit Agreement. The adjustment to current and long-term debt is comprised of the following items:
| | | | | |
(in 000's USD) | Amount |
Pro forma financing adjustments: | |
Current portion of term loan and other debt | $ | 15,615 |
| Long-term debt | 425,371 |
Deferred financing costs | (1,415) |
Net proceeds from new debt borrowings | $ | 439,571 |
(h) Reflects the preliminary purchase accounting adjustment for sundry payables and accrued expenses with the offset to retained earnings.
| | | | | |
(in 000's USD) | Amount |
Pro forma transaction adjustments: | |
Accrual for exit bonuses payable to Nissens's Automotive employees by Nissens Automotive | $ | 852 |
Accrual for SMP transaction costs | 4,157 |
Net pro forma transaction adjustment to sundry payables and accrued expenses | $ | 5,009 |
(i) Reflects adjustments related to the acquisition of all of the issued and outstanding shares of Nissens Automotive, including noncontrolling interest and the elimination of Nissens Automotive’s historical stockholders' equity balances in accordance with the acquisition method of accounting.
(j) Forward foreign exchange contracts to purchase a certain amount of euros that were executed in connection with the transaction.
Note 7 – Adjustments to the Pro Forma Unaudited Combined Statements of Operations
Adjustments included in the pro forma transaction adjustments column and pro forma financing adjustments column in the accompanying unaudited pro forma combined statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:
(a) Reflects the adjustments to cost of sales, including the preliminary estimated fair value of inventories recognized through cost of sales during the first year after the Acquisition.
| | | | | | | | | | | | | | |
(in 000's USD) |
| Nine Months Ended September 30, 2024 | | Year Ended December 31, 2023 |
Pro forma transaction adjustments: | | | | |
Inventory step-up flowing through cost of sales | | $ | — | | $ | 9,417 |
| Net pro forma transaction adjustment to cost of sales | | $ | — | | $ | 9,417 |
Represents $9.4 million additional cost of sales recognized in connection with the step-up of inventories to fair value. SMP will recognize the increased value of inventories in cost of sales as the inventory is sold, which for purposes of this pro forma combined financial information is assumed to occur within the pro forma period, based on Nissens Automotive’s average historical inventory turnover
(b) Reflects the adjustments to selling, general and administrative expenses including the amortization of the estimated fair value of intangibles and the estimated transaction costs expensed.
| | | | | | | | | | | | | | |
(in 000's USD) |
| Nine Months Ended September 30, 2024 | | Year Ended December 31, 2023 |
Pro forma transaction adjustments: | | | | |
Employee retention bonus expenses | | $ | — | | $ | 1,761 |
| Amortization of intangible assets step-up | | 2,827 | | 3,756 |
| Depreciation of property, plant, and equipment step-up | | 279 | | 371 |
Expected transaction costs | | — | | 4,157 |
Net pro forma transaction adjustment to selling, general and administrative expenses | | $ | 3,106 | | $ | 10,045 |
(c) Reflects the expense related to borrowings to fund the Acquisition and related transaction costs and the amortization of financing costs:
| | | | | | | | | | | | | | |
(in 000's USD) |
| Nine Months Ended September 30, 2024 | | Year Ended December 31, 2023 |
Pro forma financing adjustments: | | | | |
| New interest expense on transaction financing: | | | | |
Borrowings denominated in U.S. dollars | | $ | 9,086 | | $ | 12,626 |
Borrowings denominated in euros | | 4,018 | | 5,570 |
Net pro forma financing adjustments to interest expense | | $ | 13,104 | | $ | 18,196 |
The new interest expense financing adjustments included in the unaudited pro forma combined statements of operations reflects the interest expense and amortization of debt issuance costs associated with borrowings to fund the Acquisition and related transaction costs. Interest was recognized for borrowings denominated in U.S. dollars using Adjusted Term SOFR of 4.70% plus 2.00% per annum. Interest expense was recognized for borrowings denominated in euros using Euribor rate of 3.15% plus 1.5% per annum. The costs incurred to secure the 2024 Credit Agreement are amortized on a straight-line basis over the five year term of the commitment.
A sensitivity analysis on interest expense for the year ended December 31, 2023, and the nine months ended September 30, 2024 has been performed to assess the effect of a 12.5 basis point change of the hypothetical interest on the debt borrowings. The following table shows the change in the interest expense for the financing transaction described above:
| | | | | | | | | | | | | | |
(in 000's USD) | | Nine Months Ended September 30, 2024 | | Year Ended December 31, 2023 |
| Interest expense assuming: | | | | |
| Increase of 0.125% | | $ | 100 | | $ | 140 |
| Decrease of 0.125% | | $ | (449) | | $ | (623) |
(d) To record the income tax impact of the pro forma adjustments for the year ended December 31, 2023 and for the nine months ended September 30, 2024, the tax impact of pro forma adjustments was computed using estimated statutory income tax rates for the relevant jurisdictions. The estimated income tax rates generally range between 22% and 25%. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-acquisition activities, including cash needs, the geographical mix of income and changes in tax law.
Note 8 – Earnings Per Share
The following table set forth the computation of pro forma basic and diluted earnings per share for the nine months ended September 30, 2024 and the year ended December 31, 2023:
| | | | | | | | |
(in 000's USD, except share and per share data) | Nine Months Ended September 30, 2024 | Year Ended December 31, 2023 |
| Net earnings (loss) attributable to SMP | | |
| Continuing operations | $ | 66,329 | $ | 45,751 |
| Discontinued operations | (24,727) | (28,996) |
| Net earnings attributable to SMP | $ | 41,602 | $ | 16,755 |
| | |
| Per common share data | | |
| Basic: | | |
| Continuing operations | $ | 3.04 | $ | 2.11 |
| Discontinued operations | (1.14) | (1.34) |
| Net earnings attributable to SMP per common share | $ | 1.90 | $ | 0.77 |
| | |
| Diluted: | | |
| Continuing operations | $ | 2.98 | $ | 2.06 |
| Discontinued operations | (1.11) | (1.31) |
| Net earnings attributable to SMP per common share | $ | 1.87 | $ | 0.75 |
| | |
| Dividend declared per common share | $ | 0.87 | $ | 1.16 |
| | |
| Weighted average number of common shares, basic | 21,802,164 | 21,716,177 |
| Weighted average number of common shares, diluted | 22,225,444 | 22,161,341 |
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Standard Motor Products (NYSE:SMP)
Gráfica de Acción Histórica
De Dic 2024 a Ene 2025
Standard Motor Products (NYSE:SMP)
Gráfica de Acción Histórica
De Ene 2024 a Ene 2025
