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Acquisitions, Goodwill And Other Intangible Assets | 6 Months Ended
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Jun. 30, 2020
Acquisitions, Goodwill And Other Intangible Assets [Abstract] |
Acquisitions, Goodwill And Other Intangible Assets | ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS Acquisitions Completed During the Six Months Ended June 30, 2020 Polyplastic In January 2020, the Company acquired 100 percent of the equity interests of Polyplastic Group B.V. (with its subsidiaries “Polyplastic”), a premier window supplier to the caravanning industry, headquartered in Rotterdam, Netherlands. The purchase price was $95.8 million, net of cash acquired, plus contingent consideration up to $7.7 million, based on future sales by this operation. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s OEM Segment. As the acquisition of Polyplastic is not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The Company is validating account balances and finalizing the valuation for customer relationships and other identifiable intangible assets, net tangible assets, and the unfunded pension benefit obligation. The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):
Cash consideration, net of cash acquired | $ | 95,766 |
Contingent consideration | 2,796 |
Total fair value of consideration given | $ | 98,562 |
Customer relationship and other identifiable intangible assets | $ | 53,674 |
Net tangible assets, excluding pension obligation | 15,867 |
Unfunded pension benefit obligation | (28,665) |
Total fair value of net assets acquired | $ | 40,876 |
Goodwill (not tax deductible) | $ | 57,686 |
The acquisition of Polyplastic included the assumption of two partially-funded defined benefit pension plans (the "Dutch pension plans") based in the Netherlands. The Dutch pension plans, which are qualified defined benefit pension plans, provide benefits based on years of service and average pay. The benefits earned by the employees are immediately vested. The Company funds the future obligations of the Dutch pension plans by purchasing an insurance contract from a large multi-national insurance company. Each year the Company will make premium payments to the insurance company (1) to provide for the benefit obligation of the current year of service based on each employee's age, gender, and current salary, and (2) for indexations for both active and post-active participants. The Company determines the fair value of the plan asset with the assistance of an actuary using observable inputs (Level 2), which is determined as the present value of the accrued benefits guaranteed by the insurer. The Company recorded the estimated unfunded pension benefit obligation of the Dutch pension plans during the quarter ended June 30, 2020 in other long-term liabilities on the Condensed Consolidated Balance Sheet, as information related to the plans and preliminary assumptions and actuarial reports became available. The key assumptions used to measure the benefit obligation at acquisition date were a discount rate of 1.2 percent, expected rate of return on plan assets of 1.2 percent, wage inflation of 2.0 percent, and expected indexation that conforms to the growth path established by Dutch pension law, which ranged from 0.0 percent at acquisition to 2.0 percent in 2033. The Company also recorded a deferred tax asset related to the Dutch pension plans during the quarter ended June 30, 2020. Contributions and net periodic pension costs for the Dutch pension plans were not material for the period from the acquisition date through June 30, 2020. The customer relationship intangible asset is being amortized over its estimated useful life of 15 years. The fair value of this asset was determined using a discounted cash flow model, which is a level 3 input in the fair value hierarchy. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. Acquisitions with Measurement Period Adjustments During the Six Months Ended June 30, 2020 CURT In December 2019, the Company acquired 100 percent of the equity interests of CURT Acquisition Holdings, Inc. (with its subsidiaries “CURT”), a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket, headquartered in Eau Claire, Wisconsin. The purchase price was $336.6 million, net of cash acquired. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s Aftermarket Segment. During the six months ended June 30, 2020, the Company adjusted the preliminary purchase price allocation reported at December 31, 2019 to account for updates to assumptions and estimates related to the fair value of intangible assets and inventories, and to adjust the purchase price for final net working capital balances. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. The purchase price allocation is subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). The acquisition of this business was recorded, as updated, on the acquisition date as follows (in thousands):
| Preliminary at December 31, 2019 |  | Measurement Period Adjustments |  | As Adjusted at June 30, 2020
Cash consideration, net of cash acquired | $ | 337,640 |  |  | $ | (1,053) |  |  | $ | 336,587 |
Assets Acquired |  |  |  |  |
Accounts receivable | $ | 28,611 |  |  | $ | — |  |  | $ | 28,611 |
Inventories | 88,765 |  |  | (6,648) |  |  | 82,117 |
Fixed assets | 24,036 |  |  | — |  |  | 24,036 |
Customer relationship | 112,000 |  |  | (7,800) |  |  | 104,200 |
Tradename and other identifiable intangible assets | 37,705 |  |  | (300) |  |  | 37,405 |
Operating lease right-of-use assets | 27,925 |  |  | — |  |  | 27,925 |
Other tangible assets | 4,060 |  |  | (1,550) |  |  | 2,510 |
Liabilities Assumed |  |  |  |  |
Accounts payable | (18,577) |  |  | — |  |  | (18,577) |
Current portion of operating lease obligations | (5,360) |  |  | — |  |  | (5,360) |
Accrued expenses and other current liabilities | (10,002) |  |  | — |  |  | (10,002) |
Operating lease obligations | (22,565) |  |  | — |  |  | (22,565) |
Deferred taxes | (31,877) |  |  | 1,752 |  |  | (30,125) |
Total fair value of net assets acquired | $ | 234,721 |  |  | $ | (14,546) |  |  | $ | 220,175 |
Goodwill (not tax deductible) | $ | 102,919 |  |  | $ | 13,493 |  |  | $ | 116,412 |
The fair values of the customer relationship and tradename intangible assets are being amortized over their estimated useful lives of 16 years and 20 years, respectively. The fair values of these assets were determined using a discounted cash flow model, which is a level 3 input in the fair value hierarchy. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. Lewmar Marine Ltd. In August 2019, the Company acquired 100 percent of the equity interests of Lewmar Marine Ltd. and related entities (collectively, “Lewmar”), a supplier of leisure marine equipment, headquartered in Havant, United Kingdom. The purchase price was $43.2 million, net of cash acquired. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date in the Company’s OEM Segment and Aftermarket Segment. As the acquisition of Lewmar is not considered to have a material impact on the Company’s financial statements, pro forma results of operations and other disclosures are not presented. During the six months ended June 30, 2020, the Company adjusted the preliminary purchase price allocation reported at December 31, 2019 to account for updates to assumptions and estimates related to the fair value of intangible assets and inventories. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. The acquisition of this business was recorded, as updated, on the acquisition date as follows (in thousands):
| Preliminary at December 31, 2019 |  | Measurement Period Adjustments |  | As Adjusted at June 30, 2020
Cash consideration, net of cash acquired | $ | 43,224 |  |  | $ | — |  |  | $ | 43,224 |
Customer relationship and other identifiable intangible assets | $ | 19,580 |  |  | $ | 2,170 |  |  | $ | 21,750 |
Net tangible assets | 3,286 |  |  | (705) |  |  | 2,581 |
Total fair value of net assets acquired | $ | 22,866 |  |  | $ | 1,465 |  |  | $ | 24,331 |
Goodwill (not tax deductible) | $ | 20,358 |  |  | $ | (1,465) |  |  | $ | 18,893 |
The customer relationship intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. Goodwill Goodwill by reportable segment was as follows:
(In thousands) | OEM Segment |  | Aftermarket Segment |  | Total
Net balance – December 31, 2019 | $ | 215,620 |  |  | $ | 135,494 |  |  | $ | 351,114 |
Acquisitions – 2020 | 57,686 |  |  | — |  |  | 57,686 |
Measurement period adjustments | (2,346) |  |  | 12,613 |  |  | 10,267 |
Foreign currency translations | 70 |  |  | (298) |  |  | (228) |
Net balance – June 30, 2020 | $ | 271,030 |  |  | $ | 147,809 |  |  | $ | 418,839 |
Goodwill represents the excess of the total consideration given in an acquisition of a business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but instead is tested at the reporting unit level for impairment annually in November, or more frequently if certain circumstances indicate a possible impairment may exist. Other Intangible Assets Other intangible assets consisted of the following at June 30, 2020:
(In thousands) | Gross Cost |  | Accumulated Amortization |  | Net Balance |  | Estimated Useful Life in Years |  |
Customer relationships | $ | 345,491 |  |  | $ | 81,947 |  |  | $ | 263,544 |  |  | 6 | to | 16
Patents | 87,622 |  |  | 46,707 |  |  | 40,915 |  |  | 3 | to | 19
Trade names (finite life) | 61,092 |  |  | 9,369 |  |  | 51,723 |  |  | 3 | to | 20
Trade names (indefinite life) | 7,600 |  |  | — |  |  | 7,600 |  |  | Indefinite |  |
Non-compete agreements | 6,379 |  |  | 4,256 |  |  | 2,123 |  |  | 3 | to | 6
Other | 309 |  |  | 186 |  |  | 123 |  |  | 2 | to | 12
Purchased research and development | 4,687 |  |  | — |  |  | 4,687 |  |  | Indefinite |  |
Other intangible assets | $ | 513,180 |  |  | $ | 142,465 |  |  | $ | 370,715 |  |  |  |  |
Other intangible assets consisted of the following at December 31, 2019:
(In thousands) | Gross Cost |  | Accumulated Amortization |  | Net Balance |  | Estimated Useful Life in Years |  |
Customer relationships | $ | 319,934 |  |  | $ | 69,008 |  |  | $ | 250,926 |  |  | 6 | to | 16
Patents | 76,206 |  |  | 44,611 |  |  | 31,595 |  |  | 3 | to | 19
Trade names (finite life) | 50,917 |  |  | 7,086 |  |  | 43,831 |  |  | 3 | to | 20
Trade names (indefinite life) | 7,600 |  |  | — |  |  | 7,600 |  |  | Indefinite |  |
Non-compete agreements | 7,598 |  |  | 4,947 |  |  | 2,651 |  |  | 3 | to | 6
Other | 309 |  |  | 173 |  |  | 136 |  |  | 2 | to | 12
Purchased research and development | 4,687 |  |  | — |  |  | 4,687 |  |  | Indefinite |  |
Other intangible assets | $ | 467,251 |  |  | $ | 125,825 |  |  | $ | 341,426 |  |  |  |  |
Acquisitions, Goodwill And Other Intangible Assets | ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS Acquisitions Completed During the Six Months Ended June 30, 2020 Polyplastic In January 2020, the Company acquired 100 percent of the equity interests of Polyplastic Group B.V. (with its subsidiaries “Polyplastic”), a premier window supplier to the caravanning industry, headquartered in Rotterdam, Netherlands. The purchase price was $95.8 million, net of cash acquired, plus contingent consideration up to $7.7 million, based on future sales by this operation. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s OEM Segment. As the acquisition of Polyplastic is not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The Company is validating account balances and finalizing the valuation for customer relationships and other identifiable intangible assets, net tangible assets, and the unfunded pension benefit obligation. The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):
Cash consideration, net of cash acquired | $ | 95,766 |
Contingent consideration | 2,796 |
Total fair value of consideration given | $ | 98,562 |
Customer relationship and other identifiable intangible assets | $ | 53,674 |
Net tangible assets, excluding pension obligation | 15,867 |
Unfunded pension benefit obligation | (28,665) |
Total fair value of net assets acquired | $ | 40,876 |
Goodwill (not tax deductible) | $ | 57,686 |
The acquisition of Polyplastic included the assumption of two partially-funded defined benefit pension plans (the "Dutch pension plans") based in the Netherlands. The Dutch pension plans, which are qualified defined benefit pension plans, provide benefits based on years of service and average pay. The benefits earned by the employees are immediately vested. The Company funds the future obligations of the Dutch pension plans by purchasing an insurance contract from a large multi-national insurance company. Each year the Company will make premium payments to the insurance company (1) to provide for the benefit obligation of the current year of service based on each employee's age, gender, and current salary, and (2) for indexations for both active and post-active participants. The Company determines the fair value of the plan asset with the assistance of an actuary using observable inputs (Level 2), which is determined as the present value of the accrued benefits guaranteed by the insurer. The Company recorded the estimated unfunded pension benefit obligation of the Dutch pension plans during the quarter ended June 30, 2020 in other long-term liabilities on the Condensed Consolidated Balance Sheet, as information related to the plans and preliminary assumptions and actuarial reports became available. The key assumptions used to measure the benefit obligation at acquisition date were a discount rate of 1.2 percent, expected rate of return on plan assets of 1.2 percent, wage inflation of 2.0 percent, and expected indexation that conforms to the growth path established by Dutch pension law, which ranged from 0.0 percent at acquisition to 2.0 percent in 2033. The Company also recorded a deferred tax asset related to the Dutch pension plans during the quarter ended June 30, 2020. Contributions and net periodic pension costs for the Dutch pension plans were not material for the period from the acquisition date through June 30, 2020. The customer relationship intangible asset is being amortized over its estimated useful life of 15 years. The fair value of this asset was determined using a discounted cash flow model, which is a level 3 input in the fair value hierarchy. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. Acquisitions with Measurement Period Adjustments During the Six Months Ended June 30, 2020 CURT In December 2019, the Company acquired 100 percent of the equity interests of CURT Acquisition Holdings, Inc. (with its subsidiaries “CURT”), a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket, headquartered in Eau Claire, Wisconsin. The purchase price was $336.6 million, net of cash acquired. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s Aftermarket Segment. During the six months ended June 30, 2020, the Company adjusted the preliminary purchase price allocation reported at December 31, 2019 to account for updates to assumptions and estimates related to the fair value of intangible assets and inventories, and to adjust the purchase price for final net working capital balances. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. The purchase price allocation is subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). The acquisition of this business was recorded, as updated, on the acquisition date as follows (in thousands):
| Preliminary at December 31, 2019 |  | Measurement Period Adjustments |  | As Adjusted at June 30, 2020
Cash consideration, net of cash acquired | $ | 337,640 |  |  | $ | (1,053) |  |  | $ | 336,587 |
Assets Acquired |  |  |  |  |
Accounts receivable | $ | 28,611 |  |  | $ | — |  |  | $ | 28,611 |
Inventories | 88,765 |  |  | (6,648) |  |  | 82,117 |
Fixed assets | 24,036 |  |  | — |  |  | 24,036 |
Customer relationship | 112,000 |  |  | (7,800) |  |  | 104,200 |
Tradename and other identifiable intangible assets | 37,705 |  |  | (300) |  |  | 37,405 |
Operating lease right-of-use assets | 27,925 |  |  | — |  |  | 27,925 |
Other tangible assets | 4,060 |  |  | (1,550) |  |  | 2,510 |
Liabilities Assumed |  |  |  |  |
Accounts payable | (18,577) |  |  | — |  |  | (18,577) |
Current portion of operating lease obligations | (5,360) |  |  | — |  |  | (5,360) |
Accrued expenses and other current liabilities | (10,002) |  |  | — |  |  | (10,002) |
Operating lease obligations | (22,565) |  |  | — |  |  | (22,565) |
Deferred taxes | (31,877) |  |  | 1,752 |  |  | (30,125) |
Total fair value of net assets acquired | $ | 234,721 |  |  | $ | (14,546) |  |  | $ | 220,175 |
Goodwill (not tax deductible) | $ | 102,919 |  |  | $ | 13,493 |  |  | $ | 116,412 |
The fair values of the customer relationship and tradename intangible assets are being amortized over their estimated useful lives of 16 years and 20 years, respectively. The fair values of these assets were determined using a discounted cash flow model, which is a level 3 input in the fair value hierarchy. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. Lewmar Marine Ltd. In August 2019, the Company acquired 100 percent of the equity interests of Lewmar Marine Ltd. and related entities (collectively, “Lewmar”), a supplier of leisure marine equipment, headquartered in Havant, United Kingdom. The purchase price was $43.2 million, net of cash acquired. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date in the Company’s OEM Segment and Aftermarket Segment. As the acquisition of Lewmar is not considered to have a material impact on the Company’s financial statements, pro forma results of operations and other disclosures are not presented. During the six months ended June 30, 2020, the Company adjusted the preliminary purchase price allocation reported at December 31, 2019 to account for updates to assumptions and estimates related to the fair value of intangible assets and inventories. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. The acquisition of this business was recorded, as updated, on the acquisition date as follows (in thousands):
| Preliminary at December 31, 2019 |  | Measurement Period Adjustments |  | As Adjusted at June 30, 2020
Cash consideration, net of cash acquired | $ | 43,224 |  |  | $ | — |  |  | $ | 43,224 |
Customer relationship and other identifiable intangible assets | $ | 19,580 |  |  | $ | 2,170 |  |  | $ | 21,750 |
Net tangible assets | 3,286 |  |  | (705) |  |  | 2,581 |
Total fair value of net assets acquired | $ | 22,866 |  |  | $ | 1,465 |  |  | $ | 24,331 |
Goodwill (not tax deductible) | $ | 20,358 |  |  | $ | (1,465) |  |  | $ | 18,893 |
The customer relationship intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. Goodwill Goodwill by reportable segment was as follows:
(In thousands) | OEM Segment |  | Aftermarket Segment |  | Total
Net balance – December 31, 2019 | $ | 215,620 |  |  | $ | 135,494 |  |  | $ | 351,114 |
Acquisitions – 2020 | 57,686 |  |  | — |  |  | 57,686 |
Measurement period adjustments | (2,346) |  |  | 12,613 |  |  | 10,267 |
Foreign currency translations | 70 |  |  | (298) |  |  | (228) |
Net balance – June 30, 2020 | $ | 271,030 |  |  | $ | 147,809 |  |  | $ | 418,839 |
Goodwill represents the excess of the total consideration given in an acquisition of a business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but instead is tested at the reporting unit level for impairment annually in November, or more frequently if certain circumstances indicate a possible impairment may exist. Other Intangible Assets Other intangible assets consisted of the following at June 30, 2020:
(In thousands) | Gross Cost |  | Accumulated Amortization |  | Net Balance |  | Estimated Useful Life in Years |  |
Customer relationships | $ | 345,491 |  |  | $ | 81,947 |  |  | $ | 263,544 |  |  | 6 | to | 16
Patents | 87,622 |  |  | 46,707 |  |  | 40,915 |  |  | 3 | to | 19
Trade names (finite life) | 61,092 |  |  | 9,369 |  |  | 51,723 |  |  | 3 | to | 20
Trade names (indefinite life) | 7,600 |  |  | — |  |  | 7,600 |  |  | Indefinite |  |
Non-compete agreements | 6,379 |  |  | 4,256 |  |  | 2,123 |  |  | 3 | to | 6
Other | 309 |  |  | 186 |  |  | 123 |  |  | 2 | to | 12
Purchased research and development | 4,687 |  |  | — |  |  | 4,687 |  |  | Indefinite |  |
Other intangible assets | $ | 513,180 |  |  | $ | 142,465 |  |  | $ | 370,715 |  |  |  |  |
Other intangible assets consisted of the following at December 31, 2019:
(In thousands) | Gross Cost |  | Accumulated Amortization |  | Net Balance |  | Estimated Useful Life in Years |  |
Customer relationships | $ | 319,934 |  |  | $ | 69,008 |  |  | $ | 250,926 |  |  | 6 | to | 16
Patents | 76,206 |  |  | 44,611 |  |  | 31,595 |  |  | 3 | to | 19
Trade names (finite life) | 50,917 |  |  | 7,086 |  |  | 43,831 |  |  | 3 | to | 20
Trade names (indefinite life) | 7,600 |  |  | — |  |  | 7,600 |  |  | Indefinite |  |
Non-compete agreements | 7,598 |  |  | 4,947 |  |  | 2,651 |  |  | 3 | to | 6
Other | 309 |  |  | 173 |  |  | 136 |  |  | 2 | to | 12
Purchased research and development | 4,687 |  |  | — |  |  | 4,687 |  |  | Indefinite |  |
Other intangible assets | $ | 467,251 |  |  | $ | 125,825 |  |  | $ | 341,426 |  |  |  |  |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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