ACQUISITION OF SUPREME INDUSTRIES, INC.

6 Months Ended

Jun. 30, 2018

On September 27, 2017, the Company completed the acquisition of Supreme Industries, Inc. (“Supreme”) following a cash tender offer by the Company for all outstanding shares of Supreme’s Class A and Class B common stock for $21 per share and an aggregate consideration paid of $360.4 million. The Company financed the Supreme acquisition and related fees and expenses using the proceeds of the Company’s $325 million offering in aggregate principal amount of 5.50% senior unsecured notes due 2025 (as described in further detail in Note 6) and available cash and cash equivalents.

Supreme is one of the nation’s leading manufacturers of specialized commercial vehicles, including cutaway and dry-freight van bodies, refrigerated units, and stake bodies. Supreme has manufacturing facilities in Goshen and Ligonier, Indiana; Jonestown, Pennsylvania; Cleburne, Texas; Griffin, Georgia; and Moreno Valley, California. Supreme is part of a new Final Mile Products segment created by the Company in the fourth quarter of 2017. This acquisition allows the Company to accelerate our growth and expand our presence in the final mile space, with increased distribution paths and greater customer reach, and supports the Company’s objective to transform into a more diversified industrial manufacturer.

The Company incurred various costs related to the Supreme acquisition including fees paid to an investment banker for acquisition services and the related bridge financing commitment as well as professional fees for diligence, legal and accounting totaling $0.1 million for the six month period ending June 30, 2018. These costs have been recorded as

Acquisition Expenses

in the Condensed Consolidated Statements of Operations.

The aggregate purchase price of $360.4 million was allocated to the opening balance sheet of Supreme at September 27, 2017, the date of acquisition, as follows (in thousands):

Cash	$	36,878
Accounts receivable		25,196
Inventories		33,471
Prepaid expense and other		23,916
Property, plant, and equipment		59,891
Intangibles		161,200
Goodwill		167,714
Other assets		127
Total assets acquired	$	508,393

Current portion of long term debt	$	7,167
Accounts payable		10,546
Other accrued liabilites		55,518
Deferred income taxes		71,880
Long term liabilities		2,918
Total liabilities assumed	$	148,029

Net assets acquired	$	360,364

Acquisition, net of cash acquired	$	323,486

Intangible assets totaling $161.2 million were recorded as a result of the acquisition and consist of the following (in thousands):

Intangibles

	Amount		Useful Life
Tradename	$	20,000	20 years
Customer relationships		139,000	15 years
Backlog		2,200	Less than 1 year
	$	161,200

The Company amortizes the tradename intangible asset utilizing a straight-line approach and the customer relationship intangible asset using an accelerated method that follows the pattern in which the economic benefits of the asset is expected to be consumed. Amortization expense, including the intangible assets preliminarily recorded from the Supreme acquisition, is estimated to be $20.4 million, $21.6 million, $23.1 million, $24.4 million and $19.5 million for the years 2018 through 2022, respectively.

Goodwill of $167.7 million was recorded as a result of the acquisition. The amount recorded as goodwill for the Supreme acquisition is not deductible for tax purposes. Goodwill, calculated as the excess of the consideration transferred over the net assets recognized and represents future economic benefits arising from other assets acquired that could not be individually identified and separately recognized, is comprised of operational synergies that are expected to be realized in both the short and long-term and the opportunity to enter new market sectors with higher margin potential which will enable us to deliver greater value to our customers and shareholders. During the first six months of 2018, the Company made certain adjustments to its purchase price allocation to adjust tax obligations, inventory, accrued liabilities, and accounts receivable, which resulted in $1.5 million decrease in goodwill.

Unaudited Pro forma Results

The results of Supreme are included in the Condensed Consolidated Statement of Operations, including $119.5 million and $12.2 million of revenue and net income, respectively, for the three months ended June 30, 2018 and $191.7 million and $14.3 million of revenue and net income, respectively, for the six months ended June 30, 2018. The following unaudited pro forma information is shown below as if the acquisition of Supreme had been completed as of the beginning of the earliest period presented (in thousands):

	Three Months Ended ‎ June 30,		Six Months Ended ‎ June 30,
	2017		2017
Sales	$	530,280	$	957,839
Net income	$	25,159	$	43,652

The information presented above is for informational purposes only and is not necessarily indicative of the actual results that would have occurred had the acquisition been consummated at the beginning of the respective periods, nor is it necessarily indicative of future operating results of the combined companies under the ownership and management of the Company.