| Acquisitions | Note 2. Acquisitions
Renegade RV Acquisition
On December 30, 2016, the Company acquired 100% of the common
shares of Kibbi, LLC, which operated as Renegade RV
(“Renegade” and the “Renegade
Acquisition”). Renegade is a leading manufacturer of
recreational vehicles and heavy-duty special application trailers.
The purchase price for Renegade was $22,178 ($20,581 net of cash
acquired), subject to an adjustment based on the level of net
working capital and debt at closing, as defined in the purchase
agreement. The net cash consideration paid at closing was
funded through the Company’s ABL Facility. Renegade is
reported as part of the Recreation segment. The preliminary
purchase price allocation resulted in goodwill of $3,132, which is
not deductible for income tax purposes.
The acquisition of Renegade has been accounted for as a business
combination using the acquisition method of accounting, whereby the
purchase price was allocated to tangible and intangible assets
acquired and liabilities assumed based on their estimated fair
values on the acquisition date, with the remaining unallocated
purchase price recorded as goodwill. Fair value measurements
have been applied based on assumptions that market participants
would use in pricing of the asset or liability. The accounting
for this transaction is preliminary and subject to potential
adjustments, no later than one year from the date of
acquisition.
As of January 28, 2017, the Company had not completed
its assessment of the value of acquired assets and liabilities, as
well as the completion of the determination of the final purchase
price calculation, as defined in the purchase agreement.
The following table summarizes the preliminary fair values of the
assets acquired and liabilities assumed for Renegade:
Assets:
Cash $ 1,597
Accounts receivable, net 2,334
Inventories, net 14,226
Other current assets 131
Property, plant and equipment 751
Intangible assets, net 6,400
Total assets acquired $ 25,439
Liabilities:
Accounts payable $ 4,230
Accrued warranty 570
Customer advances 272
Other current liabilities 776
Deferred income taxes 480
Other long-term liabilities 65
Total liabilities assumed $ 6,393
Net Assets Acquired 19,046
Consideration Paid 22,178
Goodwill $ 3,132
Intangible assets acquired as a result of the Renegade Acquisition
are as follows:
Customer relationships (6 year life) $ 4,100
Order backlog (1 year life) 700
Trade names (indefinite life) 1,600
Total intangible assets, net $ 6,400
Sales and operating loss for the three months ended
January 28, 2017 attributable to the Renegade acquisition were
$5,209 and $155, respectively. The Company has not included pro
forma financial information in this report as if the acquisition
had occurred on November 1, 2015, since the Renegade
Acquisition did not meet the materiality requirement for such
disclosure.
Kovatch Mobile Equipment Acquisition
On April 22, 2016, the Company acquired certain real estate
assets and 100% of the common shares of Kovatch Mobile Equipment
Corp. (“KME” and the “KME Acquisition”).
KME produces a broad portfolio of customized specialty fire
apparatus vehicles, and markets them to fire-rescue, military,
aviation, and industrial customers globally. The KME Acquisition
strengthens the Company’s share in the emergency vehicle
market by expanding the Company’s product portfolio into
segments of the fire apparatus market, which have not been
previously served by the Company’s existing businesses and
complements the Company’s existing product portfolio. The
purchase price for KME was $39,602 ($30,112 net of $9,490 cash
acquired) and a subsequent $511 adjustment paid to the Company
based on the level of net working capital and debt at closing. The
net cash consideration paid at closing was funded through the
Company’s ABL Facility. KME is reported as part of the
Fire & Emergency segment. The preliminary purchase price
allocation resulted in goodwill of $1,314, which is not deductible
for income tax purposes.
The acquisition of KME has been accounted for as a business
combination using the acquisition method of accounting, whereby the
purchase price was allocated to tangible and intangible assets
acquired and liabilities assumed based on their estimated fair
values on the acquisition date, with the remaining unallocated
purchase price recorded as goodwill. Fair value measurements have
been applied based on assumptions that market participants would
use in pricing of the asset or liability. The accounting for this
transaction is preliminary and subject to potential adjustments, no
later than one year from the date of acquisition.
As of January 28, 2017, the Company had not completed its
final assessment of the value of liabilities for environmental,
workers compensation and warranty liabilities which existed as of
the date of acquisition. Adjustments which may result from the
completion of this assessment may also result in a change in
the value of deferred income tax assets and liabilities.
The following table summarizes the preliminary fair values of the
assets acquired and liabilities assumed for KME:
Assets:
Cash $ 9,490
Receivables, net 13,651
Inventories, net 67,899
Deferred income taxes 6,233
Other current assets 1,580
Property, plant and equipment 15,332
Intangible assets, net 10,950
Other long-term assets 39
Total assets acquired 125,174
Liabilities:
Accounts payable 13,834
Customer advances 43,438
Accrued warranty 14,357
Deferred income taxes 5,977
Other current liabilities 9,280
Total liabilities assumed 86,886
Net Assets Acquired 38,288
Consideration Paid 39,602
Goodwill $ 1,314
Intangible assets acquired as a result of the KME Acquisition are
as follows:
Customer relationships (9 year life) $ 8,550
Trade names (indefinite life) 2,400
Total intangible assets, net $ 10,950
Net sales and operating loss for the three months ended
January 28, 2017, attributable to the KME acquisition were
$35,829 and $400, respectively. The Company has not included pro
forma financial information in this report as if the acquisition
had occurred on November 1, 2015, since the KME Acquisition
did not meet the materiality requirement for such disclosure.
Hall-Mark Fire Apparatus Acquisition
On November 20, 2015, the Company acquired certain assets and
assumed certain liabilities of Hall-Mark Fire Apparatus Inc.
(“Hall-Mark” and the “Hall-Mark
Acquisition”). The Hall-Mark acquisition provides the Company
with the opportunity to expand its parts and service offerings to
its customers. The purchase price was $3,000 in cash with $2,000
paid at closing and a total of $1,000 payable in quarterly
installments over the next five years. Additionally, the Company
assumed $3,698 of Hall-Mark’s debt, offset by $385 of cash
acquired. The net cash consideration paid at closing was funded
through the Company’s ABL Facility. Hall-Mark is reported as
part of the Fire & Emergency segment. The purchase price
allocation resulted in goodwill of $368, which is deductible for
income tax purposes.
The Hall-Mark Acquisition has been accounted for as a business
combination using the acquisition method of accounting, whereby the
purchase price was allocated to tangible and intangible assets
acquired and liabilities assumed based on their estimated fair
values on the acquisition date, with the remaining unallocated
purchase price recorded as goodwill. Fair value measurements have
been applied based on assumptions that market participants would
use in pricing of the asset or liability.
The following table summarizes the fair values of the assets
acquired and liabilities assumed for Hall-Mark:
Assets:
Cash $ 385
Accounts receivable 3,135
Inventories 2,718
Prepaids & other assets 3,493
Property, plant and equipment 191
Trade names 870
Customer relationships 750
Order backlog 220
Non-compete 530
Total assets acquired 12,292
Liabilities
Accounts payable 891
Other current liabilities 226
Customer deposits 4,845
Debt 3,698
Total liabilities assumed 9,660
Net Assets Acquired 2,632
Consideration Paid 3,000
Goodwill $ 368
The Hall-Mark trade names will be amortized over five years,
customer lists will be amortized over nine years, non-compete one-year
Net sales and operating income for the three months ended
January 28, 2017, attributable to the Hall-Mark acquisition
were $14,211 and $304, respectively. The Company has not included
pro forma financial information as if the acquisition had occurred
on November 1, 2015, since the Hall-Mark Acquisition did not
meet the materiality requirement for such disclosure.
Ancira Acquisition
On December 14, 2015, the Company entered into an agreement to
acquire the land, building, and inventory of a recreational vehicle
dealer in Texas (“Ancira” and the “Ancira
Acquisition”). The purchase price for the Ancira Acquisition
was $19,976.
As the Company did not acquire any business processes, namely the
dealer license from this dealer, the Ancira Acquisition was
accounted for as an asset acquisition, and accordingly, the total
purchase price was allocated to the assets acquired based on their
relative fair value. No intangible assets were acquired or
recognized as a result of the Ancira Acquisition.
The following table summarizes the allocated cost of the assets
acquired in the Ancira Acquisition:
Inventory $ 13,541
Land & land improvements 1,400
Building & improvements 4,849
Machinery & equipment 186
Total purchase price $ 19,976 |
