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Acquisitions | 6 Months Ended
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Jan. 31, 2015
Acquisitions |
2. | Acquisitions
Cruiser RV, LLC and DRV, LLC On January 5, 2015, the Company closed on a Stock Purchase Agreement (“CRV/DRV SPA”) for the acquisition of all the outstanding membership units of towable recreational vehicle manufacturer Cruiser RV, LLC (“CRV”) and luxury fifth wheel towable recreational vehicle manufacturer DRV, LLC (“DRV”) through its Heartland Recreational Vehicles, LLC subsidiary (“Heartland”). In accordance with the CRV/DRV SPA, the closing was deemed effective as of January 1, 2015. As contemplated in the CRV/DRV SPA, the Company also acquired, in a series of integrated transactions, certain real estate used in the ongoing operations of CRV and DRV. The initial cash consideration for this acquisition was $47,412, subject to adjustment, and was funded entirely from the Company’s cash on hand. The total cash consideration to be paid is subject to the final determination of the actual net working capital as of the close of business on December 31, 2014, which is expected to be finalized later in fiscal 2015. The Company purchased CRV and DRV to expand its towable recreational vehicle market share and to supplement and expand its existing lightweight travel trailer and luxury fifth wheel product offerings and dealer base. The following table summarizes the preliminary fair values assigned to the CRV and DRV net assets acquired, subject to the finalization of internal and independent external valuations:
Cash |  | $ | 1,062 |
Other current assets |  |  | 22,099 |
Property, plant and equipment |  |  | 4,500 |
Dealer network |  |  | 14,500 |
Trademarks |  |  | 5,400 |
Backlog |  |  | 450 |
Goodwill |  |  | 12,601 |
Current liabilities |  |  | (13,200 | )
Total fair value of net assets acquired |  |  | 47,412 |
Less cash acquired |  |  | (1,062 | )
Total cash consideration for acquisition, less cash acquired |  | $ | 46,350 |
On the acquisition date, amortizable intangible assets had a weighted average useful life of 13.9 years. The dealer network was valued based on the Discounted Cash Flow Method and will be amortized on an accelerated basis over 12 years. The trademarks were valued on the Relief from Royalty Method and will be amortized on a straight line basis over 20 years. Backlog was valued based on the Discounted Cash Flow Method and will be amortized on a straight line basis over 6 weeks. Goodwill is deductible for tax purposes. K.Z., Inc. On May 1, 2014, the Company closed on a Stock Purchase Agreement (“KZ SPA”) for the acquisition of all the outstanding capital stock of towable recreational vehicle manufacturer K.Z., Inc. (“KZ”) for initial cash consideration of $53,405, subject to adjustment, which was funded entirely from the Company’s cash on hand. The final purchase price adjustment of $2,915, included in accounts payable as of July 31, 2014, was based on a final determination of actual net working capital as of the May 1, 2014 closing date and was paid during the first quarter of fiscal 2015. KZ operates as an independent operation in the same manner as the Company’s existing recreational vehicle subsidiaries and is aggregated within the Company’s towable recreational vehicle reportable segment. The Company purchased KZ to expand its towable recreational vehicle market share and supplement its existing towable RV product offerings and dealer base. The following table summarizes the final fair values assigned to the KZ net assets acquired, which are based on internal and independent external valuations:
Cash |  | $ | 996 |
Other current assets |  |  | 34,121 |
Property, plant and equipment |  |  | 15,057 |
Dealer network |  |  | 13,160 |
Trademarks |  |  | 5,540 |
Non-compete agreements |  |  | 450 |
Backlog |  |  | 420 |
Goodwill |  |  | 2,703 |
Current liabilities |  |  | (16,127 | )
Total fair value of net assets acquired |  |  | 56,320 |
Less cash acquired |  |  | (996 | )
Total cash consideration for acquisition, less cash acquired |  | $ | 55,324 |
On the acquisition date, amortizable intangible assets had a weighted average useful life of 13.9 years. The dealer network was valued based on the Discounted Cash Flow Method and is amortized on an accelerated basis over 12 years. The trademarks were valued on the Relief from Royalty Method and are amortized on a straight line basis over 20 years. The non-compete agreements and backlog were both valued based on the Discounted Cash Flow Method, and the non-compete agreements are amortized on a straight line basis over 5 years while the backlog was amortized on a straight line basis over 2 months. Goodwill is deductible for tax purposes. Bison Coach On October 31, 2013, the Company closed on an Asset Purchase Agreement with Bison Coach, LLC for the acquisition of its net operating assets for initial cash consideration of $16,718, subject to adjustment, which was funded entirely from the Company’s cash on hand. The purchase price adjustment, which was based on a final determination of net assets, was finalized in the third quarter of fiscal 2014 and required an additional cash payment of $196, resulting in total cash consideration of $16,914. As a result of this acquisition, the Company formed a new entity, Bison Coach (“Bison”), which is aggregated within the Company’s towable recreational vehicle reportable segment. The Company purchased the net assets of Bison Coach, LLC to supplement its existing product offerings with Bison’s equestrian products with living quarters. The following table summarizes the final fair values assigned to the Bison net assets acquired, which are based on internal and independent external valuations:
Current assets |  | $ | 4,050 |
Property, plant and equipment |  |  | 625 |
Dealer network |  |  | 7,400 |
Trademarks |  |  | 1,800 |
Backlog |  |  | 140 |
Goodwill |  |  | 6,660 |
Current liabilities |  |  | (3,761 | )
Total fair value of net assets acquired |  | $ | 16,914 |
On the acquisition date, amortizable intangible assets had a weighted average useful life of 13.3 years. The dealer network was valued based on the Discounted Cash Flow Method and is amortized on an accelerated cash flow basis over 12 years. The trademarks were valued on the Relief from Royalty Method and are amortized on a straight line basis over 20 years. Backlog was valued based on the Discounted Cash Flow Method and was amortized on a straight line basis over 6 weeks. Goodwill is deductible for tax purposes. Livin’ Lite RV, Inc. On August 30, 2013, the Company closed on an Asset Purchase Agreement with Livin’ Lite Corp. for the acquisition of its net operating assets for aggregate cash consideration of $16,769, net of cash acquired, which was funded entirely from the Company’s cash on hand. As a result of this acquisition, the Company formed a new entity, Livin’ Lite RV, Inc. (“Livin’ Lite”), which is aggregated within the Company’s towable recreational vehicle reportable segment. The Company purchased the Livin’ Lite Corp. operating assets to expand its recreational vehicle market share and complement its existing brands with Livin’ Lite’s advanced lightweight product offerings. The following table summarizes the final fair values assigned to the Livin’ Lite net assets acquired, which are based on internal and independent external valuations:
Cash |  | $ | 247 |
Other current assets |  |  | 3,626 |
Property, plant and equipment |  |  | 137 |
Dealer network |  |  | 3,200 |
Trademarks |  |  | 1,500 |
Design technology assets |  |  | 1,100 |
Non-compete agreements |  |  | 130 |
Backlog |  |  | 110 |
Goodwill |  |  | 9,113 |
Current liabilities |  |  | (2,147 | )
Total fair value of net assets acquired |  |  | 17,016 |
Less cash acquired |  |  | (247 | )
Total cash paid for acquisition, less cash acquired |  | $ | 16,769 |
On the acquisition date, amortizable intangible assets had a weighted average useful life of 10.2 years. The dealer network was valued based on the Discounted Cash Flow Method and is amortized on an accelerated cash flow basis over 8 years. The trademarks were valued on the Relief from Royalty Method and are amortized on a straight line basis over 20 years. The design technology assets were valued on the Relief from Royalty Method and are amortized on a straight line basis over 5 years. The non-compete agreements and backlog were both valued based on the Discounted Cash Flow Method, and the non-compete agreements are amortized on a straight line basis over 2 years while the backlog was amortized on a straight line basis over 6 weeks. Goodwill is deductible for tax purposes.

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