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Business Combination | 12 Months Ended
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Aug. 25, 2018
Business Combinations [Abstract] |
Business Combinations Disclosure [Text Block] | Business Combinations Chris-Craft USA, Inc. On June 4, 2018, we acquired 100% of the ownership interest of Chris-Craft USA, Inc. ("Chris-Craft"). The acquisition diversifies our outdoor lifestyle value proposition into the recreational powerboat industry. The assets, liabilities and operating results have been included in our financial statements from the date of acquisition within the Corporate / All Other category. Pro forma results of operations for this acquisition have not been presented, as it was immaterial to the reported results. Grand Design RV, LLC On November 8, 2016, we acquired 100% of the ownership interests of Grand Design RV, LLC ("Grand Design") 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 debt agreements discussed in Note 9, Long-Term Debt. 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. The purchase price allocation was finalized during the first quarter of Fiscal 2018. The final 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 | 3,037 |
Property, plant, and equipment | 8,998 |
Goodwill | 243,456 |
Other intangible assets | 253,100 |
Total assets acquired | 558,473 |
Accounts payable | 11,163 |
Accrued compensation | 3,615 |
Product warranties | 12,904 |
Promotional | 3,976 |
Other | 1,496 |
Deferred tax liabilities | 4,811 |
Total liabilities assumed | 37,965 |
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 Corporation"), which held the remaining 10.66% of the Grand Design member interests. We agreed to acquire Blocker Corporation 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 certain deferred tax liabilities on the opening balance sheet that relate to Blocker Corporation. As of August 25, 2018, Blocker Corporation was dissolved. 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. As of August 25, 2018, goodwill increased $2.0 million as compared to the end of Fiscal 2017. The increase is due to the final purchase price adjustment made for taxes in the first quarter of Fiscal 2018. The allocation of the purchase price to the net assets acquired and liabilities assumed resulted in the recognition of intangible assets. 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. 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 and our allocation changes described in Note 3, Business Segments) from the Grand Design business included in our consolidated results during the fiscal years ended August 25, 2018 and August 26, 2017 following the November 8, 2016 closing date:
| Year Ended
(In thousands) | August 25, 2018 |  |  | August 26, 2017
Net revenues | $ | 969,362 |  |  | $ | 559,664 |
Operating income | 129,123 |  |  | 54,188 |
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 25, 2018 |  | August 26, 2017(1) |  | August 27, 2016
Net revenues | $ | 2,016,829 |  |  | $ | 1,642,786 |  |  | $ | 1,402,897 |
Net income | 102,465 |  |  | 91,163 |  |  | 48,357 |
Income per share - basic | 3.24 |  |  | 2.89 |  |  | 1.53 |
Income per share - diluted | 3.22 |  |  | 2.88 |  |  | 1.53 |
(1) | Net income and income per share include the increased benefit of $16.3 million, net of tax, associated with the termination of the postretirement health care plan in Fiscal 2017.
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 25, 2018 |  | August 26, 2017 |  | August 27, 2016
Amortization of intangibles (1 year or less useful life)(1) | $ | (122 | ) |  | $ | (18,751 | ) |  | $ | 18,871 |
Increase in amortization of intangibles(1) | — |  |  | 1,551 |  |  | 7,733 |
Expenses related to business combination (transaction costs)(2) | (50 | ) |  | (6,649 | ) |  | 6,649 |
Interest to reflect new debt structure(3) | — |  |  | 3,672 |  |  | 19,622 |
Taxes related to the adjustments to the pro forma data and to the income of Grand Design | 64 |  |  | 11,648 |  |  | 1,680 |
(1) | Refer to Note 7, Goodwill and Intangible Assets, for additional information on the intangible assets recorded as a result of the acquisition.
(2) | Pro forma transaction costs include $0.1 million incurred by Grand Design prior to the acquisition.
(3) | Refer to Note 9, Long-Term Debt, for additional information on the new debt structure as a result of the acquisition.
We incurred approximately $7.0 million of acquisition-related costs to date, of which $0.1 million, $6.6 million, and $0.3 million was expensed during Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively. Share Registration As a result of the acquisition of Grand Design, we agreed to register the 4,586,555 shares of common stock issued to the sellers pursuant to the terms of a registration rights agreement. Under the registration rights agreement, we filed a shelf registration statement on January 20, 2017 to register these shares for resale. On April 11, 2017, pursuant to an underwriting agreement dated as of April 5, 2017, by and among the Company, certain of the sellers, and Morgan Stanley & Co., LLC, the sellers sold 2,293,277 shares of common stock in an underwritten block trade.

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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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