Acquisitions

In accordance with the accounting standards regarding business combinations, the results of acquired businesses are included in our consolidated and combined financial statements from the date of acquisition. The purchase price for each acquisition is allocated to the acquired assets and liabilities based on fair value. The excess purchase price over estimated fair value of the net assets acquired is recorded as goodwill.

Savage Arms Acquisition

On June 21, 2013, we acquired Savage Arms, a leading manufacturer of sporting long guns. Operating under the brand names of Savage Arms, Stevens and Savage Range Systems, Savage Arms designs, manufactures and markets centerfire and rimfire rifles, shotguns and shooting range systems used for hunting as well as competitive and recreational target shooting. Savage Arms is included within the Shooting Sports segment. The purchase price was $315,000 net of cash acquired. We believe the acquisition complemented our growing portfolio of leading consumer brands and allowed us to build upon offerings with Savage Arms' prominent, respected brands known for accuracy, quality, innovation, value and craftsmanship. Savage Arms' sales distribution channels, new product development, and sophistication in manufacturing significantly increased our presence with a highly-relevant product offering to distributors, retailers and consumers. Savage Arms employs approximately 400 employees. The purchase price allocation was completed during the first quarter of fiscal 2015. None of the goodwill generated in this acquisition will be deductible for tax purposes.

Bushnell Acquisition

On November 1, 2013, we acquired Bushnell. Bushnell is a leading global designer, marketer and distributor of branded sports optics, outdoor accessories and eyewear. Bushnell is included within the Outdoor Products segment. The purchase price was $985,000 net of cash acquired, subject to customary post-closing adjustments. We believe the acquisition broadened our existing capabilities in the commercial shooting sports market and expanded our portfolio of branded shooting sports products. In addition, this transaction enabled us to enter new sporting markets in golf and snow sports. We have leveraged Bushnell’s strong sourcing, marketing, branding and distribution capabilities and capitalized on Bushnell’s track record of successfully integrating acquisitions and delivering profitable growth. Bushnell employs approximately 1,100 employees. The purchase price allocation was completed during the third quarter of fiscal 2015. A portion of the goodwill generated in this acquisition will be deductible for tax purposes. The total amount of goodwill related to the acquisition deductible for tax purposes is $19,095.

Allocation of Consideration Transferred to Net Assets Acquired:

The purchase prices were allocated based on the estimated fair value of net assets acquired and liabilities assumed at the date of the acquisitions. During fiscal 2015, we recorded fair value adjustments to the preliminary purchase price allocation reported at March 31, 2014. Purchase price adjustments were applied retrospectively back to the date of the acquisitions. These adjustments did not have a material impact on net income (loss) in fiscal 2014 and, therefore, we have not adjusted our net income (loss) for the year ended March 31, 2014.

The following table summarizes the fair values of the assets acquired and liabilities assumed in the acquisitions as originally reported in our Form 10 for the year ended March 31, 2014 and as revised for adjustments made during fiscal 2015:

Savage Arms Purchase Price Allocation



	As Originally Reported			As Revised
Purchase price net of cash acquired:
Cash paid	$	315,000		$	315,000
Cash received for working capital	(2,498		)	(2,498		)
Total purchase price	312,502			312,502
Fair value of assets acquired:
Receivables	$	39,374		$	39,374
Inventories	36,499			36,499
Tradename, technology, and customer relationship intangibles	126,600			126,600
Property, plant, and equipment	24,965			24,965
Other assets	6,589			7,040
Total assets	234,027			234,478
Fair value of liabilities assumed:
Accounts payable	14,461			14,461
Deferred tax liabilities	49,915			49,545
Other liabilities	22,314			21,733
Total liabilities	86,690			85,739
Net assets acquired	147,337			148,739
Goodwill	$	165,165		$	163,763

Bushnell Purchase Price Allocation



	As Originally Reported		As Revised
Purchase price net of cash acquired:
Cash paid	$	985,000	$	985,000
Cash paid for additional working capital	4,185		4,185
Total purchase price	989,185		989,185
Fair value of assets acquired:
Net receivables	$	108,434	$	109,429
Net inventories	160,793		157,184
Tradename, technology, and customer relationship intangibles	364,843		364,700
Property, plant, and equipment	25,080		25,055
Other assets	10,938		7,765
Total assets	670,088		664,133
Fair value of liabilities assumed:
Accounts payable	80,092		80,099
Deferred income taxes	75,692		88,121
Other liabilities	30,025		30,932
Total liabilities	185,809		199,152
Net assets acquired	484,279		464,981
Goodwill	$	504,906	$	524,204

Intangible assets from above include:



	Value		Useful life (years)
Savage Arms
Indefinite lived tradenames	$	70,200	Indefinite
Tradenames	12,900		5-20
Customer Relationships	43,500		5-10
Bushnell
Indefinite lived tradenames	$	95,100	Indefinite
Tradenames	105,700		15
Technology	15,900		6-20
Customer Relationships	148,000		15

Supplemental Pro Forma Data:

We used the acquisition method of accounting to account for these acquisitions and, accordingly, the results of Savage Arms and Bushnell are included in our combined financial statements for the period subsequent to the date of acquisition. The following unaudited supplemental pro forma data for the year ended March 31, 2014 present consolidated information as if the acquisition had been completed on April 1, 2012. The pro forma results were calculated by combining our results with the standalone results of Savage Arms and Bushnell for the pre-acquisition periods, which were adjusted to account for certain costs which would have been incurred during this pre-acquisition period:



	YEAR ENDED
(Amounts in thousands except per share data)	March 31, 2014
Sales	$	2,280,071
Net income	153,643
Basic earnings per common share	2.41
Diluted earnings per common share	2.41

The unaudited supplemental pro forma data above include the following significant non-recurring adjustments made to account for certain costs which would have been incurred if the acquisition had been completed on April 1, 2012, as adjusted for the applicable tax impact:



	YEAR ENDED
(Amounts in thousands)	March 31, 2014
Inventory Step-up, net¹	$	(9,765	)
Fees for advisory, legal, accounting services²	(12,475		)

1. Adjustment reflects the increased cost of goods sold expense which results from the fair value step-up in inventory of $15,500 which was expensed over the first inventory cycle.

2. We removed the fees that were incurred in connection with the acquisition of Savage and Bushnell from fiscal 2014, and considered those fees as incurred during the first quarter of fiscal 2013. Costs were recorded in General and administrative expense.

We made no acquisitions during fiscal 2015 or 2013.