Business Combinations

12 Months Ended

Aug. 27, 2022

Business Combination and Asset Acquisition [Abstract]

Barletta Boat Company, LLC

On August 31, 2021, we purchased 100% of the equity interests of Barletta Boat Company, LLC and Three Limes, LLC (collectively, "Barletta"), a manufacturer of high-quality, premium pontoon boats that are sold through a network of independent authorized dealers.

The acquisition of Barletta resulted in a newly created Marine reportable segment that includes the Barletta and Chris-Craft operating segments.

We acquired Barletta for a purchase price of $286.3 million, including cash payments of $240.1 million, $25.0 million in common stock issued to the sellers (subject to a discount noted below), and contingent consideration from earnout provisions. The common stock fair value included in the purchase price reflects a 12% discount, due to the lack of marketability as these are unregistered shares that have a one-year lockup restriction, which reduced the value of the common stock to $22.0 million. The contingent consideration includes both a potential stock payout as well as a potential cash payment based on achievement of certain financial performance metrics over the next few years. The maximum payout under the earnout is $50.0 million in cash and $15.0 million in stock if all metrics are achieved. The fair value of the earnout as of August 31, 2021 was $24.2 million. The fair value of the earnout as of August 27, 2022 was $39.8 million, of which $21.3 million is included in other current liabilities and $18.5 million is included in other long-term liabilities on the Consolidated Balance Sheets. In the third quarter of Fiscal 2022, we issued 0.2 million shares of common stock in connection with the settlement of the 2021 earnout period obligation.

The total purchase price was allocated to the acquired net tangible and intangible assets of Barletta, based on their preliminary fair values at the date of the acquisition. We finalized the allocation of the purchase price in the third quarter of fiscal 2022.

The following table summarizes the fair values assigned to the Barletta net assets acquired as of the date of acquisition:


(in thousands)	August 31, 2021
Cash	$	11,903
Other current assets	24,564
Property, plant, and equipment	17,250
Goodwill	136,118
Other intangible assets	111,400
Total assets acquired	301,235
Accounts payable	7,181
Product warranties	4,656
Other current liabilities	3,146
Total liabilities assumed	14,983
Total purchase price	$	286,252

Goodwill from the Barletta acquisition is recognized in our newly created Marine segment. We expect that the full amount of goodwill will be deductible for tax purposes.

The intangible assets acquired include a trade name, dealer network, and backlog. The trade name has an indefinite life, while the dealer network is being amortized on a straight line basis over 12 years. The backlog, which was amortized over 10 months, is fully amortized as of August 27, 2022.

Total transaction costs related to the Barletta acquisition were $3.1 million, of which $2.4 million were expensed during the first quarter of Fiscal 2022 and $0.7 million were expensed during the fourth quarter of Fiscal 2021. Transaction costs are included in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income.

Pro forma results of operations for this acquisition have not been presented as they were immaterial to the reported results.

Newmar Corporation

On November 8, 2019, pursuant to the terms of the Stock Purchase Agreement dated September 15, 2019 (the "Purchase Agreement"), Winnebago completed the acquisition of 100% of Newmar Corporation, Dutch Real Estate Corp., New-Way Transport, and New-Serv (collectively “Newmar”). Newmar is a leading manufacturer of Class A and Super C motorized recreation vehicles that are sold through an established network of independent authorized dealers throughout North America.

The following table summarizes the total consideration paid for Newmar, which was subject to purchase price adjustments of $3.3 million as stipulated in the Purchase Agreement:


(in thousands, except for share data)	November 8, 2019
Cash	$	264,434
Winnebago Industries shares: 2,000,000 at $46.29	92,572
Total	$	357,006

The cash portion of the purchase price of the acquisition and certain transaction expenses were funded through the private placement of convertible senior notes (as further described in Note 9) and cash on hand. The stock consideration was discounted by 7.0% due to lack of marketability because of the one-year lock-up restrictions.

The results of Newmar's operations have been included in the Consolidated Financial Statements from the close of the acquisition within the Motorhome segment. The following table provides net revenues and operating loss from the Newmar operating segment included in the consolidated results following the November 8, 2019 closing date:


	2020
Net revenues	$	388,383
Operating loss	(3,642)

The following unaudited pro forma information represents our results of operations as if the Fiscal 2020 acquisition of Newmar had occurred at the beginning of Fiscal 2020:


	2020
Net revenues	$	2,508,792
Net income	72,609
Earnings per share - basic	$	2.16
Earnings per share - diluted	$	2.11

The unaudited pro forma data above includes the following significant non-recurring adjustments made to account for certain costs which would have changed if the acquisition of Newmar had occurred at the beginning of Fiscal 2020:


	2020
Amortization of intangibles (1 year or less useful life)(1)	$	13,610
Increase in amortization of intangible assets(2)	(1,061)
Expenses related to business combination (transaction costs)(3)	9,761
Interest to reflect new debt structure(4)	(4,356)
Taxes related to the adjustments to the pro forma data and to the net income of Newmar(5)	(2,968)

(1) Includes amortization adjustments for the backlog intangible asset and the fair-value inventory adjustment.

(2) Includes amortization adjustments for the dealer network and non-compete intangible assets.

(3) Includes transaction costs related to the Newmar acquisition that were expensed in Fiscal 2020.

(4) Includes adjustments for cash and non-cash interest expense as well as deferred financing costs. Refer to Note 9 for additional information on our debt structure as a result of the acquisition.

(5) Calculated using our U.S. federal statutory rate of 21.0%.