Edgar Filing: ACTUANT CORP

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-11288

ACTUANT CORPORATION

(Exact name of registrant as specified in its charter)

Wisconsin

39-0168610

(State of

incorporation)

(I.R.S.

Employer Id. No.)

N86 W12500 WESTBROOK CROSSING

MENOMONEE FALLS, WISCONSIN 53051

Mailing address: P. O. Box 3241, Milwaukee, Wisconsin 53201

(Address of principal executive offices)

(262) 293-1500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No x

The number of shares outstanding of the registrant’s Class A Common Stock as of December 31, 2012 was 72,941,967.

TABLE OF CONTENTS


	Page No.

Part I—Financial Information

Item 1—Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Earnings		4

Condensed Consolidated Statements of Comprehensive Income		5

Condensed Consolidated Balance Sheets		6

Condensed Consolidated Statements of Cash Flows		7

Notes to Condensed Consolidated Financial Statements		8

Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3—Quantitative and Qualitative Disclosures about Market Risk		23

Item 4—Controls and Procedures		23

Part II—Other Information

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds		24

Item 6—Exhibits		24

FORWARD LOOKING STATEMENTS AND CAUTIONARY FACTORS

This quarterly report on Form 10-Q contains certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include statements regarding expected financial results and other planned events, including, but not limited to, anticipated liquidity, and capital expenditures. Words such as “may,” “should,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “plan,” “project” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We disclaim any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements:

•

economic uncertainty or a prolonged economic downturn;

•

the realization of anticipated cost savings from restructuring activities and cost reduction efforts;

•

market conditions in the truck, automotive, agricultural, industrial, production automation, oil & gas, energy, maintenance, power generation, marine, solar, infrastructure, residential and commercial construction and retail Do-It Yourself (“DIY”) industries;

•

increased competition in the markets we serve and market acceptance of existing and new products;

•

our ability to successfully identify and integrate acquisitions and realize anticipated benefits/results from acquired companies;

•

operating margin risk due to competitive product pricing, operating efficiencies, reduced production levels and material, labor and overhead cost increases;

•

foreign currency, interest rate and commodity risk;

•

supply chain and industry trends, including changes in purchasing and other business practices by customers;

•

regulatory and legal developments including changes to United States taxation rules, health care reform and governmental climate change initiatives;

•

our level of indebtedness, ability to comply with the financial and other covenants in our debt agreements and current credit market conditions.

Our Form 10-K for the fiscal year ended August 31, 2012 contains an expanded description of these and other risks that may affect our business, financial position and results of operations under the section entitled “Risk Factors.”

When used herein, the terms “Actuant,” “we,” “us,” “our” and the “Company” refer to Actuant Corporation and its subsidiaries.

Actuant Corporation provides free-of-charge access to its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, through its website, www.actuant.com, as soon as reasonably practical after such reports are electronically filed with the Securities and Exchange Commission.

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

ACTUANT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended November 30,
	2012		2011
Net sales	$	377,248	$	392,799
Cost of products sold		230,262		240,191

Gross profit		146,986		152,608
Selling, administrative and engineering expenses		87,830		88,109
Amortization of intangible assets		7,854		7,218

Operating profit		51,302		57,281
Financing costs, net		6,322		8,222
Other expense, net		364		657

Earnings before income tax expense		44,616		48,402
Income tax expense		8,273		11,228

Net earnings	$	36,343	$	37,174

Earnings per share:
Basic	$	0.50	$	0.54
Diluted	$	0.49	$	0.50

Weighted average common shares outstanding:
Basic		72,791		68,421
Diluted		74,271		75,142

See accompanying Notes to Condensed Consolidated Financial Statements

ACTUANT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(unaudited)


	Three Months Ended November 30,
	2012			2011
Net earnings	$	36,343		$	37,174
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		12,089			(32,567	)
Pension and other postretirement benefit plans
Actuarial loss arising during period		125			—
Amortization of actuarial losses included in net periodic pension cost		90			33

		215			33
Cash flow hedges
Unrealized net gains arising during period		2			148
Net (gains) losses reclassified into earnings		(131	)		—

		(129	)		148

Total other comprehensive income (loss), net of tax		12,175			(32,386	)

Comprehensive income	$	48,518		$	4,788

See accompanying Notes to Condensed Consolidated Financial Statements

ACTUANT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(unaudited)


	November 30,			August 31,
	2012			2012
ASSETS
Current assets
Cash and cash equivalents	$	68,311		$	68,184
Accounts receivable, net		232,267			234,756
Inventories, net		225,084			211,690
Deferred income taxes		22,785			22,583
Prepaid expenses and other current assets		30,121			24,068

Total current assets		578,568			561,281
Property, plant and equipment
Land, buildings and improvements		50,796			49,866
Machinery and equipment		252,237			242,718

Gross property, plant and equipment		303,033			292,584
Less: Accumulated depreciation		(185,274	)		(176,700	)

Property, plant and equipment, net		117,759			115,884
Goodwill		871,698			866,412
Other intangibles, net		440,188			445,884
Other long-term assets		17,243			17,658

Total assets	$	2,025,456		$	2,007,119

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	164,665		$	174,746
Accrued compensation and benefits		43,696			58,817
Current maturities of debt		8,750			7,500
Income taxes payable		5,982			5,778
Other current liabilities		66,754			72,165

Total current liabilities		289,847			319,006
Long-term debt		387,500			390,000
Deferred income taxes		129,951			132,653
Pension and postretirement benefit liabilities		26,233			26,442
Other long-term liabilities		89,927			87,182
Shareholders’ equity
Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 75,799,085 and 75,519,079 shares, respectively		15,158			15,102
Additional paid-in capital		16,450			7,725
Treasury stock, at cost, 2,917,951 and 2,658,751 shares, respectively		(70,225	)		(63,083	)
Retained earnings		1,197,912			1,161,564
Accumulated other comprehensive loss		(57,297	)		(69,472	)
Stock held in trust		(2,340	)		(2,689	)
Deferred compensation liability		2,340			2,689

Total shareholders’ equity		1,101,998			1,051,836

Total liabilities and shareholders’ equity	$	2,025,456		$	2,007,119

See accompanying Notes to Condensed Consolidated Financial Statements

ACTUANT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended November 30,
	2012			2011
Operating Activities
Net earnings	$	36,343		$	37,174
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization		14,449			13,540
Amortization of debt discount and debt issuance costs		496			497
Stock-based compensation expense		3,477			3,543
Benefit for deferred income taxes		(3,156	)		(950	)
Other non-cash adjustments		(177	)		58
Changes in components of working capital and other:
Accounts receivable		4,539			(9,597	)
Inventories		(11,318	)		(2,595	)
Prepaid expenses and other assets		(6,143	)		(825	)
Trade accounts payable		(11,548	)		(2,886	)
Income taxes payable		1,161			1,216
Accrued compensation and benefits		(13,953	)		(19,169	)
Other accrued liabilities		(1,895	)		469

Net cash provided by operating activities		12,275			20,475

Investing Activities
Proceeds from sale of property, plant and equipment		977			5,918
Capital expenditures		(7,689	)		(5,595	)
Business acquisitions, net of cash acquired		(83	)		(290	)

Net cash (used in) provided by investing activities		(6,795	)		33

Financing Activities
Net borrowings on revolver and other debt		—			4,809
Principal repayments on term loan		(1,250	)		—
Purchase of treasury shares		(7,142	)		(20,410	)
Stock option exercises and related tax benefits		5,473			2,782
Cash dividend		(2,911	)		(2,748	)

Net cash used in financing activities		(5,830	)		(15,567	)

Effect of exchange rate changes on cash		477			(1,043	)

Net increase in cash and cash equivalents		127			3,898
Cash and cash equivalents – beginning of period		68,184			44,221

Cash and cash equivalents – end of period	$	68,311		$	48,119

See accompanying Notes to Condensed Consolidated Financial Statements

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Actuant Corporation (“Actuant,” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial reporting and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The condensed consolidated balance sheet data as of August 31, 2012 was derived from the Company’s audited financial statements, but does not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Company’s fiscal 2012 Annual Report on Form 10-K.

In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the three months ended November 30, 2012 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2013.

Note 2. Acquisitions

The Company completed three business acquisitions during fiscal 2012. All of the acquisitions resulted in the recognition of goodwill in the Company’s consolidated financial statements because the purchase prices reflect the future earnings and cash flow potential of these companies, as well as the complementary strategic fit and resulting synergies these businesses should bring to existing operations. The Company incurred acquisition transaction costs of $0.1 million and $0.3 million for the three months ended November 30, 2012 and 2011, respectively, related to various business acquisition activities.

The Company makes an initial allocation of the purchase price, at the date of acquisition, based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains this information during due diligence and through other sources. If additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), including through asset appraisals and learning more about the newly acquired business, the Company will refine its estimates of fair value.

During fiscal 2012, the Company completed two Maxima Technologies tuck-in acquisitions that further expand the geographic presence, product offerings and technologies of the Engineered Solutions segment. On July 20, 2012 the Company completed the acquisition of the stock of CrossControl AB (“CrossControl”) for $40.6 million of cash, plus potential contingent consideration. CrossControl, headquartered in Sweden, provides advanced electronic solutions for user-machine interaction, vehicle control and mobile connectivity in critical environments. On March 28, 2012 the Company acquired the stock of Turotest Medidores Ltda (“Turotest”) for $8.1 million of cash and $5.3 million of deferred purchase price. Turotest, headquartered in Brazil, designs and manufactures instrument panels and gauges serving the Brazilian agriculture and industrial markets.

In addition, on February 10, 2012 the Company completed the acquisition of the stock of Jeyco Pty Ltd (“Jeyco”) for $20.7 million of cash. This Cortland (Energy segment) tuck-in acquisition, designs and provides specialized mooring, rigging and towing systems and services to the offshore oil & gas industry in Australia and other international markets. Additionally, Jeyco’s products are used in a variety of applications for other markets including cyclone mooring and marine, defense and mining tow systems.

The purchase price allocation for fiscal 2012 acquisitions resulted in the recognition of $40.4 million of goodwill (which is not deductible for tax purposes) and $32.8 million of intangible assets, including $24.2 million of customer relationships, $5.7 million of tradenames, $2.2 million of technologies and $0.7 million of non-compete agreements.

The following unaudited pro forma results of operations of the Company for the three months ended November 30, 2012 and 2011, give effect to these acquisitions as though the transactions and related financing activities had occurred on September 1, 2011 (in thousands, except per share amounts):


	Three Months Ended November 30,
	2012		2011
Net sales
As reported	$	377,248	$	392,799
Pro forma		377,248		415,787
Net earnings
As reported	$	36,343	$	37,174
Pro forma		36,502		40,097
Basic earnings per share
As reported	$	0.50	$	0.54
Pro forma		0.50		0.59
Diluted earnings per share
As reported	$	0.49	$	0.50
Pro forma		0.49		0.54

Note 3. Restructuring

The Company continuously reviews its cost structure to be responsive to changes in end market demand, identify opportunities for cost synergies from recent acquisitions and in light of changes in the worldwide economy. As a result of increased uncertainty and reduced demand, the Company has implemented various restructuring initiatives including workforce reductions, plant consolidations to reduce manufacturing overhead, the continued movement of production and product sourcing to low cost countries and the centralization of certain selling and administrative functions. Restructuring costs were $0.7 million and $0.5 million for the three months ended November 30, 2012 and 2011, respectively. The restructuring reserve at November 30, 2012 and August 31, 2012 was $2.3 million and $2.9 million, respectively. The remaining restructuring related severance will be paid during the next twelve months, while facility consolidation costs (primarily reserves for future lease payments for vacated facilities) will be paid over the underlying lease terms.

Note 4. Goodwill and Other Intangible Assets

The changes in the carrying value of goodwill for the three months ended November 30, 2012 are as follows (in thousands):


	Industrial		Energy		Electrical		Engineered Solutions		Total
Balance as of August 31, 2012	$	81,404	$	259,521	$	213,870	$	311,617	$	866,412
Purchase accounting adjustments		—		—		—		87		87
Impact of changes in foreign currency rates		1,044		2,020		777		1,358		5,199

Balance as of November 30, 2012	$	82,448	$	261,541	$	214,647	$	313,062	$	871,698

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


	Weighted		November 30, 2012						August 31, 2012
	Average		Gross				Net		Gross				Net
	Amortization		Carrying		Accumulated		Book		Carrying		Accumulated		Book
	Period (Years)		Value		Amortization		Value		Value		Amortization		Value
Amortizable intangible assets:
Customer relationships		15	$	349,873	$	100,296	$	249,577	$	347,739	$	93,768	$	253,971
Patents		13		53,042		35,865		17,177		52,851		34,842		18,009
Trademarks and tradenames		19		43,690		9,357		34,333		43,820		8,670		35,150
Non-compete agreements and other		4		7,734		6,590		1,144		7,677		6,316		1,361
Indefinite lived intangible assets:
Tradenames		N/A		137,957		—		137,957		137,393		—		137,393

			$	592,296	$	152,108	$	440,188	$	589,480	$	143,596	$	445,884

Amortization expense recorded on the intangible assets listed above was $7.9 million and $7.2 million for the three months ended November 30, 2012 and 2011, respectively. The Company estimates that amortization expense will be approximately $22.0 million for the remainder of fiscal 2013. Amortization expense for future years is estimated to be as follows: $28.1 million in fiscal 2014, $28.0 million in 2015, $27.9 million in fiscal 2016, $26.7 million in fiscal 2017, $26.3 in fiscal 2018 and $143.2 million thereafter. These future amortization expense amounts represent estimates, which may change based on future acquisitions, changes in foreign currency exchange rates or other factors.

Note 5. Product Warranty Costs

The Company generally offers its customers a warranty on products they purchase, although warranty periods vary by product type and application. During the three months ended November 30, 2011, the warranty reserve was reduced by $5.7 million, the result of a purchase accounting adjustment to Mastervolt’s initial estimated warranty reserve. The reserve for future warranty claims is based on historical claim rates and current warranty cost experience. The following is a rollforward of the accrued product warranty reserve (in thousands):


	Three Months Ended November 30,
	2012			2011
Beginning balances	$	12,869		$	23,707
Purchase accounting adjustment		—			(5,719	)
Provision for warranties		2,417			2,491
Warranty payments and costs incurred		(3,096	)		(2,903	)
Impact of changes in foreign currency rates		271			(1,109	)

Ending balances	$	12,461		$	16,467

Note 6. Debt

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


	November 30, 2012			August 31, 2012
Senior Credit Facility
Revolver	$	—		$	—
Term Loan		96,250			97,500

		96,250			97,500
5.625% Senior Notes		300,000			300,000

Total Senior Indebtedness		396,250			397,500
Less: current maturities of long-term debt		(8,750	)		(7,500	)

Total long-term debt	$	387,500		$	390,000

The Company’s Senior Credit Facility, which matures on February 23, 2016 provides a $600 revolving credit facility, a $100 million term loan and a $300 million expansion option, subject to certain conditions. Borrowings are subject to a pricing grid, which can result in increases or decreases to the borrowing spread, depending on the Company’s leverage ratio, ranging from 1.25% to 2.50% in the case of loans bearing interest at LIBOR and from 0.25% to 1.50% in the case of loans bearing interest at the base rate. At November 30, 2012, the borrowing spread on LIBOR based borrowings was 1.5% (aggregating 1.75% on the outstanding term loan). In addition, a non-use fee is payable quarterly on the average unused credit line under the revolver ranging from 0.2% to 0.4% per annum. At November 30, 2012 the available and unused credit line under the revolver was $596.3 million. Quarterly principal payments of $1.25 million began on the $100 million term loan on March 31, 2012, increasing to $2.5 million per quarter beginning on March 31, 2013, with the remaining principal due at maturity. The Senior Credit Facility, which is secured by substantially all of the Company’s domestic personal property assets, also contains customary limits and restrictions concerning investments, sales of assets, liens on assets, dividends and other payments. The two financial covenants included in the Senior Credit Facility agreement are a maximum leverage ratio of 3.75:1 and a minimum fixed charge coverage ratio of 1.50:1. The Company was in compliance with all debt covenants at November 30, 2012.

On April 16, 2012, the Company issued $300 million of 5.625% Senior Notes due 2022 (the “Senior Notes”). The Senior Notes require no principal installments prior to their June 15, 2022 maturity, require semiannual interest payments in December and June of each year and contain certain financial and non-financial covenants. The Company utilized the net proceeds from this issuance to fund the repurchase of all its then outstanding $250 million of 6.875% Senior Notes due 2017 at a cost of 104%, or $260.4 million.

In March 2012, the Company called all of its then outstanding $117.6 million of 2% Convertible Notes for cash at par. As a result of the call notice, substantially all of the holders of the 2% Convertible Notes converted them into newly issued shares of the Company’s Class A common stock, at a conversion rate of 50.6554 shares per $1,000 of principal amount (resulting in the issuance of 5,951,440 shares of common stock) while the remaining $0.1 million of 2% Convertible Notes were repurchased for cash.

Note 7. Fair Value Measurement

The Company assesses the inputs used to measure the fair value of financial assets and liabilities using a three-tier hierarchy. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The following financial assets and liabilities, measured at fair value, are included in the condensed consolidated balance sheet (in thousands):


	November 30, 2012		August 31, 2012
Level 1 Valuation:
Cash equivalents	$	1,158	$	5,154
Investments		1,602		1,602

Level 2 Valuation:
Foreign currency derivatives	$	576	$	945

At August 31, 2012, Mastervolt’s goodwill ($40.0 million) and tradename ($13.6 million) were written down to estimated fair value, resulting in a non-cash impairment charge of $62.5 million. In order to arrive at the implied fair value of goodwill, the Company assigned the fair value to all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. The tradename was valued using the relief of royalty income approach. These represent Level 3 assets measured at fair value on a nonrecurring basis.

The fair value of the Company’s cash, accounts receivable, accounts payable, short-term borrowings and its variable rate long-term debt approximated book value at November 30, 2012 and August 31, 2012 due to their short-term nature and the fact that the interest rates approximated market rates. The fair value of the Company’s outstanding $300 million of 5.625% Senior Notes was $310.5 million and $309.8 million at November 30, 2012 and August 31, 2012, respectively. The fair value of the Senior Notes was based on quoted inactive market prices and are therefore classified as Level 2 within the valuation hierarchy.

Note 8. Earnings Per Share

The reconciliations between basic and diluted earnings per share are as follows (in thousands, except per share amounts):


	Three Months Ended November 30,
	2012		2011
Numerator:
Net earnings from continuing operations	$	36,343	$	37,174
Plus: 2% Convertible Notes financing costs, net of taxes		—		511

Net earnings for diluted earnings per share	$	36,343	$	37,685

Denominator:
Weighted average common shares outstanding for basic earnings per share		72,791		68,421
Net effect of dilutive securities—equity based compensation plans		1,480		764
Net effect of 2% Convertible Notes based on the if-converted method		—		5,957

Weighted average common and equivalent shares outstanding for diluted earnings per share		74,271		75,142


Basic Earnings Per Share:	$	0.50	$	0.54

Diluted Earnings Per Share:	$	0.49	$	0.50

At November 30, 2012 and 2011, outstanding share based awards to acquire 789,000 and 3,856,000 shares of common stock were not included in the Company’s computation of earnings per share because the effect would have been anti-dilutive.

As discussed in Note 6, “Debt” the Company issued 5,951,440 shares of common stock in the third quarter of fiscal 2012, in conjunction with the conversion of its 2% Convertible Notes, resulting in an increase in the weighted average common shares outstanding for basic earnings per share. However, the impact of the additional share issuance was already included in the diluted earnings per share calculation, on an if-converted method. The Company has also repurchased common shares on the open market in the last year, as well as issued new shares pursuant to equity compensation plans.

Note 9. Income Taxes

The Company’s income tax expense is impacted by a number of factors, including the amount of taxable earnings derived in foreign jurisdictions with tax rates that are higher or lower than the U.S. Federal statutory rate, permanent items, state tax rates and the ability to utilize various tax credits and net operating loss carryforwards. The Company adjusts the quarterly provision for income taxes based on the estimated annual effective income tax rate and facts and circumstances known at each interim reporting period.

The effective income tax rate was 18.5% and 23.1% for the three months ended November 30, 2012 and 2011, respectively. The decrease in the effective tax rate for the three months ended November 30, 2012, relative to the prior year, reflects the benefits of tax minimization planning, increased foreign tax credits and the utilization of net operating losses.

The gross liability for unrecognized tax benefits, excluding interest and penalties, increased from $24.6 million at August 31, 2012 to $25.3 million at November 30, 2012. Substantially all of these unrecognized tax benefits, if recognized, would reduce the effective income tax rate. In addition, as of November 30, 2012 and August 31, 2012, the Company had liabilities totaling $4.8 million and $4.5 million, respectively, for the payment of interest and penalties related to its unrecognized tax benefits.

Note 10. Segment Information

The Company is a global manufacturer of a broad range of industrial products and systems and is organized into four reportable segments: Industrial, Energy, Electrical, and Engineered Solutions. The Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. The Energy segment provides joint integrity products and services, as well as rope and cable solutions to the global oil & gas, power generation and energy markets. The Electrical segment designs, manufactures and distributes a broad range of electrical products to the retail DIY, wholesale, original equipment manufacturer (“OEM”), solar, utility, marine and other harsh environment markets. The Engineered Solutions segment provides highly engineered position and motion control systems to OEMs in various vehicle markets, as well as a variety of other products to the industrial and agricultural markets.

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


	Three Months Ended November 30,
	2012			2011
Net Sales by Segment:
Industrial	$	101,122		$	100,253
Energy		90,769			80,421
Electrical		69,439			82,833
Engineered Solutions		115,918			129,292

	$	377,248		$	392,799

Net Sales by Reportable Product Line:
Industrial	$	101,122		$	100,253
Energy		90,769			80,421
Electrical		69,439			82,833
Vehicle Systems		61,187			76,363
Other		54,731			52,929

	$	377,248		$	392,799

Operating Profit:
Industrial	$	27,006		$	27,934
Energy		15,387			13,217
Electrical		7,828			4,977
Engineered Solutions		7,625			18,999
General Corporate		(6,544	)		(7,846	)

	$	51,302		$	57,281


	November 30, 2012		August 31, 2012
Assets:
Industrial	$	271,607	$	268,735
Energy		545,760		540,409
Electrical		444,780		437,914
Engineered Solutions		671,372		667,550
General Corporate		91,937		92,511

	$	2,025,456	$	2,007,119

In addition to the impact of changes in foreign currency exchange rates, the comparability of segment and product line information is also impacted by acquisition/divestiture activities and restructuring costs and the related benefits. Corporate assets, which are not allocated, principally represent cash and cash equivalents, capitalized debt issuance costs and deferred income taxes.

Note 11. Contingencies and Litigation

The Company had outstanding letters of credit of $10.9 million and $8.5 million at November 30, 2012 and August 31, 2012, respectively, the majority of which secure self-insured workers compensation liabilities.

The Company is a party to various legal proceedings that have arisen in the normal course of its business. These legal proceedings typically include product liability, environmental, labor, patent claims and other disputes. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable that a loss has been incurred as of the balance sheet date and can be reasonably estimated. In the opinion of management, the resolution of these contingencies, individually and in the aggregate, will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

The Company has facilities in numerous geographic locations that are subject to a range of environmental laws and regulations. Environmental expenditures over the past two years have not been material. Management believes that such costs will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company remains contingently liable for lease payments under leases of businesses that it previously divested or spun-off, in the event that such businesses are unable to fulfill their obligations. The discounted present value of future minimum lease payments for these leases was $12.0 million at November 30, 2012.

Note 12. Guarantor Subsidiaries

As discussed in Note 6, “Debt” on April 16, 2012, Actuant Corporation (the “Parent”) issued $300 million of 5.625% Senior Notes. All of our material domestic wholly owned subsidiaries (the “Guarantors”) fully and unconditionally guarantee (except for certain customary limitations) such debt on a joint and several basis. There are no significant restrictions on the ability of the Guarantors to make distributions to the Parent. The following tables present the results of operations, financial position and cash flows of Actuant Corporation and its subsidiaries, the Guarantor and non-Guarantor entities, and the eliminations necessary to arrive at the information for the Company on a consolidated basis.

Certain assets, liabilities and expenses have not been allocated to the Guarantors and non-Guarantors and therefore are included in the Parent column in the accompanying consolidating financial statements. These items are of a corporate or consolidated nature and include, but are not limited to, tax provisions and related assets and liabilities, certain employee benefit obligations, prepaid and accrued insurance and corporate indebtedness. Intercompany activity in the consolidating financial statements primarily includes loan activity, purchases and sales of goods or services and dividends. Intercompany balances also reflect certain non-cash transactions including transfers of assets and liabilities between the Parent, Guarantor and non-Guarantor, allocation of non-cash expenses from the Parent to the Guarantors and non-Guarantors, the impact of foreign currency rate changes and non-cash intercompany dividends.

CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(In thousands)


	Three Months Ended November 30, 2012
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	45,838		$	124,117		$	207,293		$	—		$	377,248
Cost of products sold		12,408			87,868			129,986			—			230,262

Gross profit		33,430			36,249			77,307			—			146,986
Selling, administrative and engineering expenses		17,453			25,040			45,337			—			87,830
Amortization of intangible assets		321			3,449			4,084			—			7,854

Operating profit		15,656			7,760			27,886			—			51,302
Financing costs, net		6,358			5			(41	)		—			6,322
Intercompany expense (income), net		(7,270	)		1,955			5,315			—			—
Other expense (income), net		(364	)		(316	)		1,044			—			364

Earnings before income tax expense		16,932			6,116			21,568			—			44,616
Income tax expense		3,140			1,134			3,999			—			8,273

Net earnings before equity in earnings of subsidiaries		13,792			4,982			17,569			—			36,343
Equity in earnings of subsidiaries		22,551			17,899			1,024			(41,474	)		—

Net earnings	$	36,343		$	22,881		$	18,593		$	(41,474	)	$	36,343


Comprehensive income	$	48,518		$	28,858		$	26,019		$	(54,877	)	$	48,518


	Three Months Ended November 30, 2011
	Parent			Guarantors		Non-Guarantors			Eliminations			Consolidated
Net sales	$	48,520		$	136,441	$	207,838		$	—		$	392,799
Cost of products sold		15,279			94,632		130,280			—			240,191

Gross profit		33,241			41,809		77,558			—			152,608
Selling, administrative and engineering expenses		20,666			26,262		41,181			—			88,109
Amortization of intangible assets		335			3,420		3,463			—			7,218

Operating profit		12,240			12,127		32,914			—			57,281
Financing costs, net		8,237			3		(18	)		—			8,222
Intercompany expense (income), net		(7,491	)		566		6,925			—			—
Other expense, net		193			344		120			—			657

Earnings before income tax expense		11,301			11,214		25,887			—			48,402
Income tax expense		2,622			2,601		6,005			—			11,228

Net earnings before equity in earnings of subsidiaries		8,679			8,613		19,882			—			37,174
Equity in earnings (loss) of subsidiaries		28,495			16,794		(488	)		(44,801	)		—

Net earnings	$	37,174		$	25,407	$	19,394		$	(44,801	)	$	37,174


Comprehensive income	$	4,788		$	8,339	$	11,321		$	(19,660	)	$	4,788

CONDENSED CONSOLIDATING BALANCE SHEETS

(In thousands)


	November 30, 2012
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets	$	73,934	$	152,380	$	352,254	$	—		$	578,568
Property, plant & equipment, net		6,890		31,077		79,792		—			117,759
Goodwill		62,543		432,464		376,691		—			871,698
Other intangibles, net		14,201		202,745		223,242		—			440,188
Investment in subsidiaries		1,919,244		265,560		92,319		(2,277,123	)		—
Intercompany receivable		—		425,309		301,844		(727,153	)		—
Other long-term assets		11,835		22		5,386		—			17,243

Total assets	$	2,088,647	$	1,509,557	$	1,431,528	$	(3,004,276	)	$	2,025,456

LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities	$	61,673	$	54,539	$	173,635	$	—		$	289,847
Long-term debt		387,500		—		—		—			387,500
Deferred income taxes		88,353		—		41,598		—			129,951
Pension and post-retirement benefit liabilities		22,253		—		3,980		—			26,233
Other long-term liabilities		62,308		525		27,094		—			89,927
Intercompany payable		364,562		—		362,591		(727,153	)		—
Shareholders’ equity		1,101,998		1,454,493		822,630		(2,277,123	)		1,101,998

Total liabilities and shareholders’ equity	$	2,088,647	$	1,509,557	$	1,431,528	$	(3,004,276	)	$	2,025,456


	August 31, 2012
	Parent		Guarantors		Non-Guarantors		Eliminations			Consolidated
ASSETS
Current assets	$	88,559	$	151,168	$	321,554	$	—		$	561,281
Property, plant & equipment, net		6,944		31,818		77,122		—			115,884
Goodwill		62,543		433,193		370,676		—			866,412
Other intangibles, net		14,522		206,194		225,168		—			445,884
Investment in subsidiaries		1,886,478		250,738		90,770		(2,227,986	)		—
Intercompany receivable		—		418,253		307,282		(725,535	)		—
Other long-term assets		12,297		22		5,339		—			17,658

Total assets	$	2,071,343	$	1,491,386	$	1,397,911	$	(2,953,521	)	$	2,007,119

LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities	$	76,686	$	63,105	$	179,215	$	—		$	319,006
Long-term debt		390,000		—		—		—			390,000
Deferred income taxes		91,604		—		41,049		—			132,653
Pension and post-retirement benefit liabilities		22,500		—		3,942		—			26,442
Other long-term liabilities		59,929		620		26,633		—			87,182
Intercompany payable		378,788		—		346,747		(725,535	)		—
Shareholders’ equity		1,051,836		1,427,661		800,325		(2,227,986	)		1,051,836

Total liabilities and shareholders’ equity	$	2,071,343	$	1,491,386	$	1,397,911	$	(2,953,521	)	$	2,007,119

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(In thousands)


	Three Months Ended November 30, 2012
	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	(658	)	$	4,779		$	8,154		$	—	$	12,275
Investing Activities
Proceeds from sale of property, plant and equipment		571			14			392			—		977
Capital expenditures		(399	)		(1,291	)		(5,999	)		—		(7,689	)
Business acquisitions, net of cash acquired		—			—			(83	)		—		(83	)

Cash provided by (used in) investing activities		172			(1,277	)		(5,690	)		—		(6,795	)
Financing Activities
Principal repayment of term loans		(1,250	)		—			—			—		(1,250	)
Intercompany loan activity		(4,991	)		(3,593	)		8,584			—		—
Purchase of treasury shares		(7,142	)		—			—			—		(7,142	)
Stock option exercises, related tax benefits and other		5,473			—			—			—		5,473
Cash dividend		(2,911	)		—			—			—		(2,911	)

Cash provided by (used in) financing activities		(10,821	)		(3,593	)		8,584			—		(5,830	)
Effect of exchange rate changes on cash		—			—			477			—		477

Net increase (decrease) in cash and cash equivalents		(11,307	)		(91	)		11,525			—		127
Cash and cash equivalents—beginning of period		12,401			91			55,692			—		68,184

Cash and cash equivalents—end of period	$	1,094		$	—		$	67,217		$	—	$	68,311

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(In thousands)


	Three Months Ended November 30, 2011
	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	(10,089	)	$	7,121		$	23,443		$	—	$	20,475
Investing Activities
Proceeds from sale of property, plant and equipment		—			68			5,850			—		5,918
Capital expenditures		(2,206	)		(571	)		(2,818	)		—		(5,595	)
Business acquistitions, net of cash acquired		(290	)		—			—			—		(290	)

Cash (used in) provided by investing activities		(2,496	)		(503	)		3,032			—		33
Financing Activities
Net borrowings on revolver and other debt		4,700			—			109			—		4,809
Intercompany loan activity		28,060			(6,618	)		(21,442	)		—		—
Purchase of treasury shares		(20,410	)		—			—			—		(20,410	)
Stock option exercises and related tax benefits		2,782			—			—			—		2,782
Cash dividend		(2,748	)		—			—			—		(2,748	)

Cash (used in) provided by financing activities		12,384			(6,618	)		(21,333	)		—		(15,567	)
Effect of exchange rate changes on cash		—			—			(1,043	)		—		(1,043	)

Net (decrease) increase in cash and cash equivalents		(201	)		—			4,099			—		3,898
Cash and cash equivalents—beginning of period		872			—			43,349			—		44,221

Cash and cash equivalents—end of period	$	671		$	—		$	47,448		$	—	$	48,119

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Actuant Corporation, headquartered in Menomonee Falls, Wisconsin, is a Wisconsin corporation incorporated in 1910. We are a global diversified company that designs, manufactures and distributes a broad range of industrial products and systems to various end markets. We are organized into four operating and reportable segments: Industrial, Energy, Electrical and Engineered Solutions.

Our long-term goal is to grow annual diluted earnings per share (“EPS”), excluding unusual or non-recurring items, faster than most multi-industry peers. We intend to leverage our leading market positions to generate annual internal sales growth that exceeds the annual growth rates of the gross domestic product in the geographic regions in which we operate. In addition to internal sales growth, we are focused on acquiring complementary businesses. Following an acquisition, we seek to drive cost reductions, develop additional cross-selling opportunities and deepen customer relationships. We also focus on profit margin expansion and cash flow generation to achieve our financial and EPS growth goals. Our LEAD (“Lean Enterprise Across Disciplines”) process utilizes various continuous improvement techniques to drive out costs and improve efficiencies across all locations and functions worldwide, thereby expanding profit margins. Strong cash flow generation is achieved by maximizing returns on net assets and minimizing primary working capital needs. Our LEAD efforts also support our Growth + Innovation (“G+I”) initiative, a process focused on improving core sales growth. The cash flow that results from efficient asset management and improved profitability is primarily used to fund strategic acquisitions, common stock repurchases and internal growth opportunities.

Our businesses provide a vast array of products and services across multiple customers and geographies which results in significant diversification. The long-term sales growth and profitability of our segments will depend not only on increased demand in end markets and the overall economic environment, but also on our ability to identify, consummate and integrate strategic acquisitions, develop and market innovative new products, expand our business activity geographically and continuously improve operational excellence.

The comparability of the operating results for the three months ended November 30, 2012 to the prior year period has been impacted by acquisitions, changes in foreign currency translation rates and the generally weaker economic conditions that existed in the end markets we serve. Listed below are the significant acquisitions completed since September 1, 2011.


Business	Segment	Acquisition Date
CrossControl AB	Engineered Solutions	July 2012
Turotest Medidores Ltda	Engineered Solutions	March 2012
Jeyco Pty Ltd	Energy	February 2012

In addition to acquisitions, changes in foreign currency exchange rates also influence our financial results as approximately one-half of our sales are denominated in currencies other than the U.S. dollar. The year-over-year weakening of the Euro during the first quarter of fiscal 2013 has unfavorably impacted our operating results due to the translation of non-U.S. dollar denominated results.

Results of Operations

Global economic uncertainty has created a challenging business environment which has impacted our businesses. Most of our businesses have experienced softening end market demand over the past several quarters. Overall, results of operations for the three months ended November 30, 2012 reflect a negative core sales trend as the European recession, inventory destocking by OEMs in the Engineered Solutions segment and a significantly weaker European solar market in the Electrical segment have lead to double digit core sales declines in both segments. However, our two most profitable segments, Industrial and Energy continued to generate positive core sales growth, as a result of maintenance demand in oil & gas, power generation and industrial markets. In response to the overall economic slow-down, we are taking various actions to lower our cost structure including reductions in workforce, consolidation of facilities and management, as well as product sourcing initiatives. Our priorities during the remainder of fiscal 2013 include the execution of certain restructuring activities, continued working capital management and investments in growth initiatives, including strategic acquisitions and G+I opportunities.

The following table sets forth our results of operations (in millions):


	Three Months Ended November 30,
	2012				2011
Net sales	$	377	100	%	$	393	100	%
Cost of products sold		230	61	%		240	61	%

Gross profit		147	39	%		153	39	%
Selling, administrative and engineering		88	23	%		88	22	%
Amortization of intangible assets		8	2	%		7	2	%

Operating profit		51	14	%		57	15	%
Financing costs, net		6	2	%		8	2	%
Other expense, net		1	0	%		1	0	%

Earnings before income tax expense		44	12	%		48	12	%
Income tax expense		8	2	%		11	3	%

Net earnings	$	36	10	%	$	37	9	%

Fiscal 2013 first quarter consolidated net sales were $377 million, 4% lower than the $393 million in the comparable prior year period. Excluding the $18 million year-over-year increase in sales from acquisitions and the $5 million unfavorable impact of foreign currency exchange rate changes, fiscal 2013 first quarter consolidated core sales declined 7% compared to the prior year. Operating profit for the first quarter of fiscal 2013 was $51 million, compared to $57 million in the prior year period. Reduced sales volumes, unfavorable product mix and investments in growth initiatives drove this year-over-year decline in operating profit. We were able to largely offset the decline in operating profit with lower borrowing costs and income taxes, resulting in net income and diluted earnings per share down only modestly from the prior year. The changes in sales and operating profit at the segment level are discussed in further detail below.

Segment Results (in millions)

Industrial Segment

The Industrial segment is primarily involved in the design, manufacture and distribution of branded hydraulic and mechanical tools to the maintenance, industrial, infrastructure and production automation markets. During the first quarter, core sales growth in the segment was driven by higher global Integrated Solutions activity and steady industrial demand in most regions outside of Western Europe. The Industrial segment focuses on providing customers with innovative lifting solutions, commercializing new products and expanding in faster growing regions and vertical markets. The following table sets forth the results of operations for the Industrial segment (in millions):


	Three Months Ended November 30,
	2012			2011
Net sales	$	101		$	100
Operating profit		27			28
Operating profit %		27	%		28	%

Fiscal 2013 first quarter net sales were $101 million, a 1% increase from the comparable prior year period. Excluding the impact of foreign currency rate changes (which unfavorably impacted sales comparisons by $2 million), core sales increased 2%. Unfavorable product mix along with incremental G+I investments resulted in slightly lower operating profit margins.

Energy Segment

The Energy segment provides joint integrity products and services, as well as rope and cable solutions to the global oil & gas, power generation and other energy markets. Worldwide requirements for energy and supportive oil prices have encouraged customers and asset owners to maintain or increase production, invest in capital projects and complete previously deferred maintenance activities. As a result, we are seeing broad-based strength across this segment. The following table sets forth the results of operations for the Energy segment (in millions):


	Three Months Ended November 30,
	2012			2011
Net sales	$	91		$	80
Operating profit		15			13
Operating profit %		17	%		16	%

Energy segment net sales for the three months ended November 30, 2012 increased by $11 million (13%) to $91 million compared to the prior year period. Excluding sales from the Jeyco acquisition ($7 million), core sales grew 4% for the first quarter of fiscal 2013, the result of continued robust maintenance and capital spending in oil & gas, nuclear, power generation and other energy markets. Improved operating profit margins during the quarter were primarily driven by favorable sales mix.

Electrical Segment

The Electrical segment is primarily involved in the design, manufacture and distribution of a broad range of electrical products to the retail DIY, wholesale, OEM, solar, utility, marine and other harsh environment markets. Weak end market demand in European solar (difficult prior year comparable sales levels, overall economic conditions, changes in government regulations and weak consumer confidence) was the primary reason for the core sales decline in the quarter. This segment continues to focus on driving cost savings from the recently completed North American manufacturing facility consolidation and being responsive to end market demand. The following table sets forth the results of operations for the Electrical segment (in millions):


	Three Months Ended November 30,
	2012			2011
Net sales	$	69		$	83
Operating profit		8			5
Operating profit %		11	%		6	%

Electrical segment first quarter net sales were $69 million, 16% lower than the comparable prior year quarter. The decline in core sales (16%) was largely due to significantly lower solar inverter shipments, the result of weak current year demand and aggressive sales promotions in the prior year. In addition, the impact of channel inventory reductions across the segment’s served North American markets and lower industrial transformer demand contributed to the sales decline. The benefit of prior year restructuring actions, as well as a fire related insurance recovery at our Mastervolt business, drove the improvement in operating profit margins.

Engineered Solutions Segment

The Engineered Solutions segment provides highly engineered position and motion control systems to OEMs in a variety of markets. As anticipated, this segment experienced a core sales decline in the first quarter as challenging end market conditions are now broad based across the segment. European truck and automotive volumes remain at reduced levels, while the global agriculture and North American truck and construction equipment markets have seen recent declines. This segment continues to focus on integrating the recently acquired Turotest and CrossControl businesses and reducing its cost structure in line with reduced OEM build rates. The following table sets forth the results of operations for the Engineered Solutions segment (in millions):


	Three Months Ended November 30,
	2012			2011
Net sales	$	116		$	129
Operating profit		8			19
Operating profit %		7	%		15	%

Net sales in the Engineered Solutions segment decreased by $13 million (10%), from $129 million for the three months ended November 30, 2011 to $116 million for the three months ended November 30, 2012. Excluding the unfavorable impact of changes in foreign currency exchange rates ($3 million) and the $11 million of sales from recent acquisitions, core sales declined 17%. First quarter net sales levels reflect concerted actions by our OEM customers to reduce their inventory levels and production schedules in response to lower demand at the dealer level. Segment operating profit declined from the prior year period, as the impact of restructuring costs and the reduced volume (under-absorption of operating costs) was only partially offset by lower incentive compensation costs.

General Corporate

General corporate expenses were $7 million and $8 million for the three months ended November 30, 2012 and 2011, respectively. The reduction is primarily due to lower incentive compensation costs during the quarter.

Financing Costs, net

All debt is considered to be for general corporate purposes and therefore financing costs have not been allocated to our segments. Financing costs, net were $6 million and $8 million for the three months ended November 30, 2012 and 2011, respectively. The reduction in interest expense in the first quarter of fiscal 2013 reflects the conversion of our 2% Convertible Notes into common stock, as well as the benefit of lower borrowing costs from the refinancing of our Senior Notes (both completed in the third quarter of fiscal 2012).

Income Taxes Expense

Cash Flows

The following table summarizes the cash flows from operating, investing and financing activities (in millions):


	Three Months Ended November 30,
	2012			2011
Net cash provided by operating activities	$	12		$	20
Net cash used in investing activities		(7	)		—
Net cash used in financing activities		(6	)		(15	)
Effect of exchange rates on cash		1			(1	)

Net increase in cash and cash equivalents	$	—		$	4

Cash flows from operating activities during the three months ended November 30, 2012 were $12 million, the result of net earnings, offset by the payment of $17 million of fiscal 2012 incentive compensation costs, reduced accounts payable and increased inventory levels. These operating cash flows funded the repurchase of approximately 0.3 million shares of the Company’s common stock ($7 million) under the stock buyback program, our $3 million annual dividend and $8 million of capital expenditures.

Cash flows from operating activities during the three months ended November 30, 2011 were $20 million, the result of net earnings, offset by the payment of $28 million of fiscal 2011 incentive compensation costs and increased accounts receivable and inventory levels. These operating cash flows and borrowings under the Senior Credit Facility funded the repurchase of approximately 1 million shares of the Company’s common stock ($20 million). Proceeds from the sale of property, plant and equipment (which included the sale-leaseback of certain equipment) more than offset the $6 million of capital expenditures during the first quarter of fiscal 2012.

Primary Working Capital Management

We use primary working capital as a percentage of sales (PWC %) as a key indicator of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows the components of the metric at November 30 (in millions):


	2012			PWC%			2011			PWC%
Accounts receivable, net	$	232			15	%	$	227			15	%
Inventory, net		225			15	%		219			14	%
Accounts payable		(164	)		-11	%		(163	)		-11	%

Net primary working capital	$	293			19	%	$	283			18	%

Our primary working capital and PWC % increased on a year-over-year basis as a result of increased inventory, resulting from our inability to quickly reduce incoming purchases to balance reduced customer production levels.

Liquidity

Our Senior Credit Facility, which matures on February 23, 2016, includes a $600 million revolving credit facility, a $100 million term loan and a $300 million expansion option, subject to certain conditions. Quarterly principal payments of $1.25 million began on the $100 million term loan on March 31, 2012, increasing to $2.5 million per quarter beginning on March 31, 2013, with the remaining principal due at maturity. At November 30, 2012, we had $68 million of cash and cash equivalents and $596 million of available liquidity under our Senior Credit Facility. We believe that the availability under the Senior Credit Facility, combined with our existing cash on hand and funds generated from operations will be adequate to meet operating, debt service, stock buyback, acquisition funding and capital expenditure requirements for the foreseeable future.

See Note 6, “Debt” in the notes to the condensed consolidated financial statements for further discussion on the Senior Credit Facility.

Commitments and Contingencies

We had outstanding letters of credit of approximately $11 million and $8 million at November 30, 2012 and August 31, 2012, respectively, the majority of which secure self-insured workers compensation liabilities.

Contractual Obligations

Our contractual obligations are discussed in Part 1, Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Contractual Obligations” in our Annual Report on Form 10-K for the year ended August 31, 2012, and, as of November 30, 2012, have not materially changed.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

There has been no significant change in our exposure to market risk during the three months ended November 30, 2012. For a discussion of our exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2012.

Item 4 – Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). There have been no changes in our internal control over financial reporting that occurred during the quarter ended November 30, 2012 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

In September 2011, our Board of Directors authorized a stock repurchase program to acquire up to 7,000,000 shares of the Company’s outstanding Class A common stock. The following table presents information regarding the repurchase of common stock during the three months ended November 30, 2012. All of the shares were repurchased as part of the publicly announced program.


	Total Number of Shares Purchased		Average Price Paid per Share		Maximum Number of Shares That May Yet Be Purchased Under the Program
September 1 to September 30, 2012		—		—		4,341,249
October 1 to October 31, 2012		159,200	$	27.95		4,182,049
November 1 to November 30, 2012		100,000		26.84		4,082,049

Total		259,200		27.53

Item 6 – Exhibits

(a) Exhibits

See “Index to Exhibits” on page 26, which is incorporated herein by reference.

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 thereunto duly authorized.


	ACTUANT CORPORATION
	(Registrant)

Date: January 8, 2013	By:	/S/ ANDREW G. LAMPEREUR
		Andrew G. Lampereur
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

ACTUANT CORPORATION

(the “Registrant”)

(Commission File No. 1-11288)

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED November 30, 2012

INDEX TO EXHIBITS


Exhibit	Description	Incorporated Herein By Reference To	Filed Herewith

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002			X

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			X

32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002			X

32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			X

101*	The following materials from the Actuant Corporation Form 10-Q for the quarter ended November 30, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

*	Furnished herewith

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company