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Business Combination, Goodwill and Other Intangible Assets | 12 Months Ended
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Aug. 26, 2017
Business Combinations [Abstract] |
Goodwill and Intangible Assets Disclosure [Text Block] | Business Combination, Goodwill and Other Intangible Assets We acquired 100% of the ownership interests of Grand Design on November 8, 2016 in accordance with the Securities Purchase Agreement for an aggregate purchase price of $520.5 million, which was paid in cash and Winnebago shares as follows:
(In thousands, except shares) |  | November 8, 2016
Cash |  | $ | 396,442 |
Winnebago shares: 4,586,555 at $27.05 per share |  | 124,066 |
Total |  | $ | 520,508 |
The cash portion was funded from cash on hand and borrowings under our ABL and Term Loan agreements. The stock was valued using our share price on the date of closing. The acquisition has been accounted for in accordance with ASC 805, Business Combinations, using the acquisition method of accounting. Under the acquisition method of accounting, the total purchase price was allocated to the net tangible and intangible assets of Grand Design acquired, based on their fair values at the date of the acquisition. We believe that the information provides a reasonable basis for estimating the fair values, but we are waiting for additional information necessary to finalize the amounts related to income taxes. Thus, the preliminary measurements of fair value reflected are subject to change. We expect to finalize the valuation and complete the purchase price allocation during the first quarter of Fiscal 2018 and no later than one year from the acquisition date. The current allocation of the purchase price to assets acquired and liabilities assumed is as follows:
(In thousands) |  | November 8, 2016
Cash |  | $ | 1,748 |
Accounts receivable |  | 32,834 |
Inventories |  | 15,300 |
Prepaid expenses and other assets |  | 3,788 |
Property, plant and equipment |  | 8,998 |
Goodwill |  | 241,499 |
Other intangible assets |  | 253,100 |
Total assets acquired |  | 557,267 |
Accounts payable |  | 11,163 |
Accrued compensation |  | 3,615 |
Product warranties |  | 12,904 |
Promotional |  | 3,976 |
Other |  | 290 |
Deferred tax liabilities |  | 4,811 |
Total liabilities assumed |  | 36,759 |
Total purchase price |  | $ | 520,508 |
The acquisition of 100% of the ownership interests of Grand Design occurred in two steps: (1) direct purchase of 89.34% of Grand Design member interests and (2) simultaneous acquisition of the remaining 10.66% of Grand Design member interests via the purchase of 100% of the shares of SP GE VIII-B GD RV Blocker Corp. (Blocker Corp) which held the remaining 10.66% of the Grand Design member interests. We agreed to acquire Blocker Corp as part of the Securities Purchase Agreement and we did not receive a step-up in basis for 10.66% of the Grand Design assets. As a result, we established a deferred tax liability of $8.5 million on the opening balance sheet that relates to intangibles that will not be amortizable for tax purposes. The goodwill recognized is primarily attributable to the value of the workforce, reputation of founders, customer and dealer growth opportunities and expected synergies. Key areas of cost synergies include increased purchasing power for raw materials and supply chain consolidation. Goodwill is expected to be mostly deductible for tax purposes. The goodwill resulting from the acquisition of Grand Design increased total goodwill to $242.7 million within the Towable segment as of August 26, 2017 from $1.2 million as of August 27, 2016. The allocation of the purchase price to the net assets acquired and liabilities assumed resulted in the recognition of intangible assets with fair value on the closing date of November 8, 2016 and amortization accumulated from the closing date through August 27, 2016 as follows:
(In thousands) |  | Weighted Average Life- Years |  | Fair Value Amount |  | Accumulated Amortization
Trade name |  | Indefinite |  | $ | 148,000 |  |  | $ | — |
Dealer network |  | 12.0 |  | 80,500 |  |  | 5,348 |
Backlog |  | 0.5 |  | 18,000 |  |  | 18,000 |
Non-compete agreements |  | 4.0 |  | 4,600 |  |  | 1,116 |
Leasehold interest-favorable |  | 8.1 |  | 2,000 |  |  | 196 |
Total |  |  |  | 253,100 |  |  | $ | 24,660 |
Accumulated amortization |  |  |  | (24,660 | ) |  |
Net book value of intangible assets |  |  |  | $ | 228,440 |  |  |
We used the income approach to value certain intangible assets. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. We used the income approach known as the relief from royalty method to value the trade name. The relief from royalty method is based on the hypothetical royalty stream that would be received if we were to license the trade name and is based on expected revenues from such license. The fair value of the dealer network was estimated using an income approach known as the cost to recreate/cost savings method. This method uses the replacement of the asset as an indicator of the fair value of the asset. The useful life of the intangible assets was determined considering the period of expected cash flows used to measure the fair value of the intangible assets adjusted as appropriate for the entity-specific factors including legal, regulatory, contractual, competitive, economic or other factors that may limit the useful life of the intangible assets. For Fiscal 2017 and 2016, amortization of intangible assets charged to operations was $24.7 million and $0, respectively. The weig hted average remaining amortization period for intangible assets as of August 26, 2017 was approximatel y 11.0 years. Remaining estimated aggregate annual amortization expense by fiscal year is as follows:
(In thousands) |  | Amount
2018 |  | $ | 7,854 |
2019 |  | 7,733 |
2020 |  | 7,733 |
2021 |  | 7,733 |
2022 |  | 7,106 |
Thereafter |  | 42,281 |
Within the Towable segment, the results of Grand Design's operations have been included in our consolidated financial statements from the close of the acquisition. The following table provides net revenues and operating income (which includes amortization expense) from the Grand Design business included in our consolidated results during the fiscal year ended August 26, 2017 following the November 8, 2016 closing date:
|  | Year Ended
(In thousands) |  | August 26, 2017
Net revenues |  | $ | 559,664 |
Operating income |  | 56,475 |
Unaudited pro forma information has been prepared as if the acquisition had taken place on August 30, 2015. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transaction actually taken place on August 30, 2015, and the unaudited pro forma information does not purport to be indicative of future financial operating results. The unaudited pro forma condensed consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition. Unaudited pro forma information is as follows:
|  | Year Ended
(In thousands, except per share data) |  | August 26, 2017 |  | August 27, 2016
Net revenues |  | $ | 1,642,786 |  |  | $ | 1,402,897 |
Net income |  | 91,163 |  |  | 48,357 |
Income per share - basic |  | 2.89 |  |  | 1.53 |
Income per share - diluted |  | 2.88 |  |  | 1.53 |
The unaudited pro forma data above includes the following significant non-recurring adjustments made to account for certain costs which would have changed if the acquisition of Grand Design had been completed on August 30, 2015:
|  | Year Ended
(In thousands) |  | August 26, 2017 |  | August 27, 2016
Amortization of intangibles (1 year or less useful life) |  | $ | (18,751 | ) |  | $ | 18,871 |
Increase in amortization of intangibles |  | 1,551 |  |  | 7,733 |
Expenses related to business combination (transaction costs) (1) |  | (6,649 | ) |  | 6,649 |
Interest to reflect new debt structure |  | 3,672 |  |  | 19,622 |
Taxes related to the adjustments to the pro forma data and to the income of Grand Design |  | 11,648 |  |  | 1,680 |
(1) Pro forma transaction costs include $0.1 million incurred by Grand Design prior to acquisition. We incurred approximately $6.9 million of acquisition-related costs to date, of which $6.6 million was expensed during Fiscal 2017 and $0.3 million was expensed in Fiscal 2016.

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