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Acquisitions and Investments in Joint Ventures

12 Months Ended

Sep. 28, 2019

Acquisitions and Investments in Joint Ventures

Fiscal 2019

C&S Products

In May 2019, the Company purchased C&S Products, a manufacturer of suet and other wild bird feed products, to complement our existing wild bird feed business for approximately $30.0 million. Subsequent to the acquisition, approximately $4.7 million of cash was used to eliminate the acquired long-term debt. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $3.2 million, which is included in other assets on the Company's consolidated balance sheet as of September 28, 2019. The Company has not yet finalized the allocation of the purchase price to the fair value of the tangible assets, intangible assets and liabilities acquired. The financial results of C&S Products have been included in the results of operations within the Pet segment since the date of acquisition.

Arden Companies

In February 2019, the Company purchased the remaining 55% interest in Arden Companies, a manufacturer of outdoor cushions and pillows, for $13.4 million. Accordingly, the Company remeasured its previously held investment at its acquisition-date fair value and recorded a gain of approximately $3.2 million as part of selling, general and administrative expenses in the Company's consolidated statements of operations. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $15.8 million, of which $10.9 million was allocated to identified intangible assets and approximately $4.9 million was included in goodwill in the Company's consolidated balance sheet as of September 28, 2019. Subsequent to the acquisition, approximately $36 million of cash was used to eliminate most of the acquired long-term debt. Financial results of Arden have been included in the results of operations within the Garden segment since the date of acquisition of the remaining 55% interest. The following table summarizes the purchase price and recording of fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments.



(In thousands)	Amounts Previously Recognized as of Acquisition Date (1)			Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (as Adjusted)
Current assets, net of cash and cash equivalents acquired	$	51,211		$	1,540		$	52,751
Fixed assets	6,311			5,376			11,687
Other Assets	14,868			(14,868		)	—
Goodwill	—			4,900			4,900
Intangible assets	—			10,930			10,930
Current liabilities	(19,853		)	—			(19,853		)
Short-term debt	(22,000		)	—			(22,000		)
Long-term debt	(19,400		)	—			(19,400		)
Fair value of the Company's initial investment	—			(7,878		)	(7,878		)
Net assets acquired, less cash and cash equivalents	$	11,137		$	—		$	11,137

(1) As previously reported in the Company's Form 10-Q for the period ended March 30, 2019 and June 29, 2019.

The Company expects all the goodwill from the acquisition above to be deductible for tax purposes.

The impact to the consolidated statement of operations associated with the finalization of purchase accounting and true-up of intangible assets for Arden Companies was immaterial.

Proforma financial information has not been presented as the C&S Products and Arden Companies acquisitions were not considered material to the Company's overall consolidated financial statements during the periods presented.

Fiscal 2018

General Pet Supply

On April 2, 2018, the Company purchased substantially all of the assets of General Pet Supply, a leading Midwestern U.S. supplier of pet food and supplies for a purchase price of approximately $24.3 million. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $13.6 million, of which $8.1 million was allocated to identified intangible assets and approximately $5.5 million was included in goodwill in the Company’s consolidated balance sheet as of September 29, 2018. Financial results of General Pet Supply have been included in the results of operations within the Pet segment since the date of acquisition. The following table summarizes the purchase price and recording of fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments.



In thousands	Amounts Previously Recognized as of Acquisition Date (1)			Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (as Adjusted)
Current assets, net of cash and cash equivalents acquired	$	12,991		$	—		$	12,991
Fixed assets	1,014			516			1,530
Goodwill	—			5,520			5,520
Other assets	14,147			(14,136		)	11
Other intangible assets, net	—			8,100			8,100
Current liabilities	(3,506		)	—			(3,506		)
Long-term obligations	(361		)				(361		)
Net assets acquired, less cash and cash equivalents	$	24,285		$	—		$	24,285

(1) As previously reported in the Company's Form 10-Q for the period ended June 30, 2018.

The impact to the consolidated statement of operations associated with the finalization of purchase accounting and true-up of intangible assets for General Pet Supply was immaterial.

Bell Nursery

On March 12, 2018, the Company purchased Bell Nursery Holdings, LLC ("Bell"), a leading grower and distributor of live flowers and plants in the mid-Atlantic region of the United States, for a purchase price of approximately $61 million plus contingent consideration of up to $10 million. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $13.6 million, of which $6.2 million was allocated to identified intangible assets and $7.4 million was included in goodwill in the Company's consolidated balance sheet as of September 29, 2018. Financial results of Bell have been included in the results of operations within the Garden segment since the date of acquisition. The following table summarizes the purchase price and recording of fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments.



In thousands	Amounts Previously Recognized as of Acquisition Date (1)			Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (as Adjusted)

Current assets, net of cash and cash equivalents acquired	$	28,330		$	(359	)	$	27,971
Fixed assets	30,278			383			30,661
Goodwill	—			7,415			7,415
Other assets	11,647			(11,647		)	—
Other intangible assets, net	—			6,230			6,230
Current liabilities	(11,611		)	(2,022		)	(13,633		)
Net assets acquired, less cash and cash equivalents	$	58,644		$	—		$	58,644

(1) As previously reported in the Company's Form 10-Q for the periods ended March 31, 2018 and June 30, 2018.

The impact to the consolidated statement of operations associated with the finalization of purchase accounting and true-up of intangible assets for Bell was immaterial.

The Company expects all the goodwill from the acquisitions above to be deductible for tax purposes.

Investments

During fiscal 2019, the Company made investments totaling $2.0 million in two ventures, which are accounted for in accordance with ASC 321.

During fiscal 2018, the Company made investments ranging from 13% to 20% in three ventures. The Company invested a total of $9.0 million in these businesses, which are accounted for under ASC 321 and equity method of accounting.

Fiscal 2017

K&H Manufacturing, LLC

On April 28, 2017, the Company purchased K&H Manufacturing, LLC ("K&H"), a producer of premium pet supplies and the largest marketer of heated pet products in the country, for a purchase price of approximately $48.0 million. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $41.2 million, of which $29.2 million was allocated to identified intangible assets and approximately $12 million is included in goodwill in the Company's consolidated balance sheet as of September 29, 2018. Financial results of K&H have been included in the results of operations within the Pet segment since the date of acquisition. The following table summarizes the purchase price and recording of fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments.



	Amounts Previously Recognized as of Acquisition Date (1)			Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (as Adjusted)
In thousands
Current assets, net of cash and cash equivalents acquired	$	5,439		$	613		$	6,052
Fixed assets	315			—			315
Other assets	41,781			(41,781		)	—
Goodwill	—			11,968			11,968
Other intangible assets	—			29,200			29,200
Current liabilities	(757		)	—			(757		)
Net assets acquired, less cash and cash equivalents	$	46,778		$	—		$	46,778

(1) As previously reported in the Company's Form 10-Q for the periods ended June 24, 2017 and December 30, 2017, and the Company's Form 10-K for the period ended September 30, 2017.

Segrest Inc.

On October 21, 2016, the Company acquired Segrest, Inc., a wholesaler of aquarium fish and small live animals, for a purchase price of approximately $60.0 million, of which $6.0 million is in an escrow account managed by an independent trustee and is payable contingent upon future events. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $44.4 million, of which $27.7 million was allocated to identified intangible assets and $25.9 million is included in goodwill in the Company’s consolidated balance sheet as of September 28, 2019. Financial results for Segrest have been included in the results of operations within the Pet segment since the date of acquisition. The following table summarizes the purchase price and the recording of fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments (in thousands):



	Amounts Previously Recognized as of Acquisition Date (1)			Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (as Adjusted)
Purchase Price
Cash paid, net of cash acquired	$	54,043		$	—		$	54,043
Contingent consideration	6,000			(3,300		)	2,700
	$	60,043		$	(3,300	)	$	56,743

Allocation
Current assets, net of cash and cash equivalents acquired	$	7,403		$	(300	)	$	7,103
Fixed assets	7,011			2,242			9,253
Other assets	47,704			(47,704		)	—
Goodwill				25,890			25,890
Other intangible assets				27,650			27,650
Current liabilities	(2,075		)				(2,075		)
Deferred Tax Liability				(11,078		)	(11,078		)
	$	60,043		$	(3,300	)	$	56,743

(1) As previously reported in the Company's Form 10-Q for the periods ended December 24, 2016, March 25, 2017 and June 24, 2017.

Proforma financial information has not been presented as the Segrest and K&H acquisitions were not considered material to the Company's overall consolidated financial statements during the periods presented.

Equity Method Investments

During fiscal 2017, the Company made investments in two ventures. The Company acquired a 45% interest in a mature, seasonal business and a 30% interest in a start-up company. The Company invested a total of $12.5 million in these businesses, which are accounted for under the equity method of accounting.