Acquisitions

6 Months Ended

Jun. 30, 2019

2019 Acquisitions.

To date, the Company did not complete any material acquisitions in 2019.

2018 Acquisitions.

Boat Holdings, LLC

On July 2, 2018, pursuant to the Agreement and Plan of Merger dated May 29, 2018, the Company completed the acquisition of Boat Holdings, LLC, a privately held Delaware limited liability company headquartered in Elkhart, Indiana which manufactures boats (“Boat Holdings”).

The transaction was structured as an acquisition of 100% of the outstanding equity interests in Boat Holdings for aggregate consideration of $806,658,000, net of cash acquired, subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business of Boat Holdings at the closing date. A portion of the aggregate consideration equal to $100,000,000 will be paid in the form of a series of deferred annual payments over 12 years following the closing date.

The Company funded the purchase price for the acquisition by amending, extending, and up-sizing the Credit Facility and with the proceeds of the issuance of 4.23% Senior Notes, Series 2018, due July 3, 2028, described in Note 5.

The consolidated statements of income for the three and six months ended June 30, 2019 include $182,425,000 and $367,235,000 of net sales, and $40,477,000 and $76,641,000 of gross profit, respectively, related to Boat Holdings.

The following table summarizes the preliminary fair values assigned to the Boat Holdings net assets acquired and the determination of net assets (in thousands):



Cash and cash equivalents	$	16,534
Trade receivables	17,528
Inventory	39,948
Other current assets	4,451
Property, plant and equipment	35,299
Customer relationships	341,080
Trademarks / trade names	210,680
Non-compete agreements	2,630
Goodwill	222,372
Accounts payable	(30,064		)
Other liabilities assumed	(37,266		)
Total fair value of net assets acquired	823,192
Less cash acquired	(16,534		)
Total consideration for acquisition, less cash acquired	$	806,658

On the acquisition date, amortizable intangible assets had a weighted-average useful life of approximately 19 years. The customer relationships were valued based on the Discounted Cash Flow Method and are amortized over 15-20 years, depending on the customer class. The trademarks and trade names were valued on the Relief from Royalty Method and have indefinite remaining useful lives. Goodwill is deductible for tax purposes.

The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2018 acquisition of Boat Holdings had occurred at the beginning of fiscal 2018 (in thousands, except per share data).



	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
Sales	$	1,779,315	$	1,689,050	$	3,275,005	$	3,151,165
Net income	89,346		104,446		138,526		166,336

Basic earnings per share	$	1.45	$	1.65	$	2.26	$	2.63
Diluted earnings per common share	$	1.44	$	1.61	$	2.23	$	2.56

The results for the three and six month periods ended June 30, 2019 have been adjusted to exclude the impact of approximately $1,421,000 and $2,474,000 of transaction related costs (pre-tax) incurred by the Company that are directly attributable to the transaction, respectively.

The results for the three and six month periods ended June 30, 2018 have been adjusted to include the pro forma impact of amortization of intangible assets and the depreciation of property, plant, and equipment, based on purchase price allocations; the pro forma impact of additional interest expense relating to the acquisition; and the pro forma tax effect of both income before taxes and the pro forma adjustments. These performance results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.

The pro forma financial information has been prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts may differ materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to result from the integration of the Boat Holdings acquisition.