Business Combinations:

12 Months Ended

Jan. 28, 2017

Business Combinations [Abstract]

Business Combinations:

Business Combinations

On April 19, 2016, we acquired Southern Tide, LLC, which owns the Southern Tide lifestyle apparel brand. Southern Tide carries an extensive selection of men’s shirts, pants, shorts, outerwear, ties, swimwear, footwear and accessories, as well as a women’s collection. The brand’s products are sold through its wholesale operations to specialty stores and department stores as well as through its direct to consumer operations on the Southern Tide website.

The purchase price for the acquisition of Southern Tide was $85 million in cash, subject to adjustment based on net working capital as of the closing date of the acquisition. After giving effect to the final working capital adjustment paid in Fiscal 2016, the purchase price paid was $92.0 million, net of acquired cash of $2.4 million. We used borrowings under our revolving credit facility to finance the transaction. Transaction costs related to this acquisition totaled $0.8 million and are included in SG&A in Corporate and Other in Fiscal 2016.

The following table summarizes our allocation of the purchase price for the Southern Tide acquisition (in thousands):

	Southern Tide acquisition (1)
Cash and cash equivalents	$	2,423
Receivables	6,616
Inventories (2)	16,251
Prepaid expenses	740
Property and equipment	220
Intangible assets	30,240
Goodwill	42,745
Other non-current assets	344
Accounts payable, accrued expenses and other liabilities	(3,473		)
Deferred taxes	(1,812		)
Purchase price	$	94,294

(1) In the Fourth Quarter of Fiscal 2016, we completed our estimated valuation of assets and liabilities acquired as part of the Southern Tide acquisition, including intangible assets and inventories, resulting in changes to the estimated fair values previously disclosed for intangible assets, inventories, deferred taxes and goodwill. The table above reflects the revised estimates of fair value for the assets and liabilities. The revised estimated fair values of the acquired assets and liabilities resulted in reductions to finite-lived intangible assets of $3.2 million and indefinite-lived intangible assets of $7.5 million, deferred taxes of $2.2 million, inventories, net of $0.4 million and other smaller changes resulting in a net increase to goodwill of $9.2 million. The net impact to amounts previously recorded in our consolidated statements of operations for the first, second and third quarters of Fiscal 2016 for inventory step-up and amortization of intangible assets was not material to our consolidated financial statements for Fiscal 2016 or any individual quarter within Fiscal 2016.

(2) Includes a step-up of acquired inventory from cost to fair value of $2.7 million. This step-up amount was recognized in Fiscal 2016 in cost of goods sold in our consolidated statement of operations.

Goodwill represents the amount by which the cost to acquire Southern Tide exceeds the fair value of individual acquired assets less liabilities of the business at acquisition. Intangible assets allocated in connection with our preliminary purchase price allocation consisted of the following (in thousands):

	Useful life	Southern Tide acquisition
Finite lived intangible assets acquired, primarily consisting of customer relationships	5 - 20 years	$	3,440
Trade names and trademarks	Indefinite	26,800
		$	30,240

Pro Forma Information (unaudited)

The consolidated pro forma information presented below (in thousands, except per share data) gives effect to the April 19, 2016 acquisition of Southern Tide as if the acquisition had occurred as of the beginning of Fiscal 2015. The information presented below is for illustrative purposes only, is not indicative of results that would have been achieved if the acquisition had occurred as of the beginning of Fiscal 2015 and is not intended to be a projection of future results of operations. The pro forma statements of operations have been prepared from our and Southern Tide's historical statements of operations for the periods presented, including without limitation, purchase accounting adjustments, but excluding any seller specific management/advisory or similar expenses and any synergies or operating cost reductions that may be achieved from the combined operations in the future.

	Fiscal 2016		Fiscal 2015
Net sales	$	1,034,369	$	1,007,330
Earnings from continuing operations before income taxes	$	92,212	$	95,963
Earnings from continuing operations	$	58,035	$	58,609
Earnings from continuing operations per share:
Basic	$	3.51	$	3.59
Diluted	$	3.49	$	3.57

Fiscal 2016 pro forma information above includes amortization of acquired intangible assets, but excludes the transaction expenses associated with the transaction and the incremental cost of goods sold associated with the step-up of inventory at acquisition that were recognized by us in our Fiscal 2016 consolidated statement of operations. Fiscal 2015 pro forma information above includes amortization of acquired intangible assets, transaction expenses associated with the transaction and incremental cost of goods sold associated with the step-up of inventory at acquisition. Additionally, the pro forma adjustments for each period prior to the date of acquisition reflect an estimate of incremental interest expense associated with additional borrowings and income tax expense that would have been incurred subsequent to the acquisition.

We believe that the acquisition of Southern Tide further advances our strategic goal of owning a diversified portfolio of lifestyle brands. The acquisition provides strategic benefits through growth opportunities and further diversification of our business.

In addition to the Southern Tide acquisition, Lanier Apparel completed two acquisitions resulting in total cash payments of $3.1 million during Fiscal 2016. Assets acquired in these acquisitions primarily consisted of intangible assets, as disclosed in Note 4, and inventory.