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Business Combinations | 12 Months Ended
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Aug. 28, 2021
Business Combinations [Abstract] |
Business Combinations | Business Combinations Newmar Corporation On November 8, 2019, pursuant to the terms of the Stock Purchase Agreement dated September 15, 2019 (the "Purchase Agreement"), Winnebago completed the acquisition of 100% of Newmar Corporation, Dutch Real Estate Corp., New-Way Transport, and New-Serv (collectively “Newmar”). Newmar is a leading manufacturer of Class A and Super C motorized recreation vehicles that are sold through an established network of independent authorized dealers throughout North America. The following table summarizes the total consideration paid for Newmar, which was subject to purchase price adjustments as stipulated in the Purchase Agreement:
(in thousands, except for share data) | November 8, 2019
Cash | $ | 264,434 |
Winnebago Industries shares: 2,000,000 at $46.29 | 92,572 |
Total | $ | 357,006 |
The cash portion of the purchase price of the acquisition and certain transaction expenses were funded through the private placement of convertible senior notes (as further described in Note 9) and cash on hand. The stock consideration was discounted by 7.0% due to lack of marketability because of the one-year lock-up restrictions. The total purchase price was allocated to the net tangible and intangible assets of Newmar 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. During the third quarter of Fiscal 2020, we finalized the valuation and completed the purchase price allocation, which included purchase price adjustments of $3,316. The following table summarizes the final fair values assigned to the Newmar net assets acquired and the determination of net assets:
| November 8, 2019
Cash | $ | 3,469 |
Accounts receivable | 37,147 |
Inventories | 82,621 |
Prepaid expenses and other assets | 9,830 |
Property, plant, and equipment | 31,143 |
Goodwill | 73,127 |
Other intangible assets | 172,100 |
Total assets acquired | 409,437 |
Accounts payable | 14,023 |
Accrued compensation | 4,306 |
Product warranties | 15,147 |
Promotional | 6,351 |
Other | 11,636 |
Deferred tax liabilities | 968 |
Total liabilities assumed | 52,431 |
Total purchase price | $ | 357,006 |
The goodwill, recognized in our Motorhome segment, 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. The full amount of goodwill is deductible for tax purposes. The following table summarizes the other intangible assets acquired:
| November 8, 2019 |  | Useful Life-Years
Trade name | $ | 98,000 |  |  | Indefinite
Dealer network | 64,000 |  |  | 12.0
Backlog | 8,800 |  |  | 0.5
Non-compete agreements | 1,300 |  |  | 5.0
The fair value of the trade name and dealer network were estimated using an income approach. Under the income approach, an intangible asset's fair value is equal to the present value of the future economic benefits to be derived from ownership of the asset,using the relief from royalty method. 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 was based on expected revenues. The fair value of the dealer network was estimated using the cost to recreate/cost saving method. This method uses the replacement of the asset as an indicator of the fair value of the asset. The useful lives of the intangibles were determined considering the expected cash flows used to measure the fair value of the intangible assets adjusted for the entity-specific factors including legal, regulatory, contractual, competitive, economic or other factors that may limit the useful life of intangible assets. On the acquisition date, amortizable intangible assets had a weighted-average useful life of approximately 10.5 years. The results of Newmar's operations have been included in our Consolidated Financial Statements from the close of the acquisition within the Motorhome segment. The following table provides net revenues and operating income from the Newmar operating segment included in our consolidated results following the November 8, 2019 closing date:
| 2020
Net revenues | $ | 388,383 |
Net income (loss) | (3,642) |
The following unaudited pro forma information represents our results of operations as if the Fiscal 2020 acquisition of Newmar had occurred at the beginning of Fiscal 2019:
| 2020 |  | 2019
Net revenues | $ | 2,508,792 |  |  | $ | 2,645,914 |
Net income | 72,609 |  |  | 101,692 |
Earnings per share - basic | $ | 2.16 |  |  | $ | 3.03 |
Earnings per share - diluted | $ | 2.11 |  |  | $ | 3.02 |
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 Newmar had occurred at the beginning of Fiscal 2019:
| 2020 |  | 2019
Amortization of intangibles (1 year or less useful life)(1) | $ | 13,610 |  |  | $ | (13,610) |
Increase in amortization of intangible assets(2) | (1,061) |  |  | (5,578) |
Expenses related to business combination (transaction costs)(3) | 9,761 |  |  | (9,950) |
Interest to reflect new debt structure(4) | (4,356) |  |  | (19,155) |
Taxes related to the adjustments to the pro forma data and to the net income of Newmar(5) | (2,968) |  |  | 2,686 |
(1) Includes amortization adjustments for the backlog intangible asset and the fair-value inventory adjustment. (2) Includes amortization adjustments for the dealer network and non-compete intangible assets. (3) Pro forma transaction costs include $652 incurred prior to the acquisition. (4) Includes adjustments for cash and non-cash interest expense as well as deferred financing costs. Refer to Note 9 for additional information on our new debt structure as a result of the acquisition. (5) Calculated using our U.S. federal statutory rate of 21.0%. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transaction actually taken place at the beginning of Fiscal 2019, 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. Total transaction costs related to the Newmar acquisition were $10,413, of which $9,761 were expensed during Fiscal 2020 and $652 were expensed during the fourth quarter of Fiscal 2019. There were no transaction costs related to the acquisition of Newmar that were incurred during Fiscal 2021. Transaction costs are included in Selling, general, and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income.

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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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