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Acquisition | 6 Months Ended
--- | ---
Dec. 31, 2014
Business Combinations [Abstract] |
Acquisition | Acquisition On October 23, 2014, the Company acquired all of the outstanding shares of Malibu Boats Pty Ltd., the Company's exclusive licensee in Australia since 1995. The Licensee had the exclusive right to manufacture and distribute Malibu and Axis products and spare parts in Australia and New Zealand. The acquisition provides direct control of the Company's brand worldwide and provides it with a strong footprint for future growth internationally in Asia. The aggregate purchase price for the transaction was $16.2 million, consisting of $13.3 million in cash and $2.9 million in equity equal to 170,889 shares of the Company's Class A Common Stock. Under the share sale agreement, the number of shares issued was based on the average closing price of shares of the Class A Common Stock for the 20 days immediately prior to, but not including, the closing date of the acquisition. Of the consideration paid in stock, 71.43% is restricted from sale for a period of 2 years from the acquisition date. The Company funded a portion of the purchase price payable in cash with additional borrowings under its revolving credit facility. The Company accounted for the transaction in accordance with ASC 805, Business Combinations. The total consideration given to the former owner of the Licensee has been allocated to the assets acquired and liabilities assumed based on preliminary estimates of their estimated fair values as of the date of the acquisition. Because of the complexities involved with performing the valuation, the Company has recorded the tangible and intangible assets acquired and liabilities assumed based upon their preliminary fair values as of October 23, 2014. The preliminary measurements of fair value were based upon estimates utilizing the assistance of third party valuation specialists, and are subject to change within the measurement period (up to one year from the acquisition date). The Company expects to continue to obtain information to assist it in determining the fair values of the assets acquired and liabilities assumed at the acquisition date during the third quarter of fiscal 2015. Accordingly, the following table summarizes the preliminary purchase price allocation for the acquisition of the Licensee:
Consideration: |
Cash consideration paid | $ | 13,305 |
Equity consideration paid | 2,924 |
Fair value of total consideration transferred | $ | 16,229 |
Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value: |
Cash | $ | 1,642 |
Accounts receivable | 878 |
Inventories | 5,023 |
Other current assets | 195 |
Net property, plant, and equipment | 1,191 |
Identifiable intangible assets | 4,558 |
Other assets | 45 |
Current liabilities | (3,908 | )
Deferred tax liabilities | (1,407 | )
Other liabilities | $ | (34 | )
Preliminary estimate of the fair value of assets acquired and liabilities assumed | $ | 8,183 |
Goodwill | 8,046 |
Total purchase price | $ | 16,229 |
The preliminary fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:
| Preliminary Estimates of Fair Value |  | Useful Life
Reacquired franchise rights | $ | 1,579 |  |  | 5
Dealer relationships | 2,808 |  |  | 15
Non-compete agreement | 61 |  |  | 10
Backlog | 110 |  |  | 0.3
Total | $ | 4,558 |  |  |
The value allocated to inventories reflects the estimated fair value of the acquired inventory based on the expected sales price of the inventory, less an estimated cost to complete and a reasonable profit margin. The fair value of the identifiable intangible assets were determined based on the following approaches: Reacquired Franchise Rights - The reacquired franchise rights intangible asset represents the preliminary value assigned to the remainder of the contractual term of the Licensee's exclusive manufacturing and distributors agreement with the Company and was determined using the multi-period excess earnings method under the income approach. No gain or loss was recognized on the reacquisition of the Company's franchise rights. Dealer Relationships - The value associated with the Licensee's dealer relationships is attributed to its long standing dealer distribution network. The preliminary estimate of fair value assigned to this asset was determined using the income approach, which requires an estimate or forecast of the expected future cash flows from the dealer relationships through the application of the distributor method under the multi-period excess earnings approach. Non-compete - As part of the acquisition, the Licensee entered into a ten-year non-compete agreement with its former owner. The preliminary fair value of the non-compete agreement was determined using the with or without method under the income approach which discounted future cash flows attributable to unfavorable impact of the agreement had it not been in place. Backlog - Backlog relates to the value of orders not yet shipped by Licensee at the acquisition date, and the preliminary fair values were based on an excess earnings approach associated with those orders. Backlog related assets are being recognized commensurate with recognition of the revenue for the orders on which the backlog intangible assets were determined. The fair value of these intangible assets are being amortized using a straight-line method to general and administrative expenses over their estimated useful lives. Goodwill of $8,046 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition, such as assembled workforce, and was allocated to the Company’s Australian operating segment. None of the goodwill is expected to be deductible for income tax purposes. Acquisition-related costs of $723 were expensed by the Company in the periods prior to the acquisition of Malibu Boats Pty Ltd., and are included in selling, general and administrative expenses in the condensed consolidated statement of operations and comprehensive income. Net sales of $4,356 and a net loss of $482 attributable to the Licensee are included in the condensed consolidated statements of operations and comprehensive income for the period from the acquisition date through December 31, 2014. Pro Forma Financial Information (unaudited): The following unaudited pro forma financial consolidated results of operations for the three and six months ended December 31, 2014 and 2013 assume that the acquisition of Licensee had occurred as of July 1, 2013. The unaudited pro forma financial information combines historical results of Malibu with adjustments for depreciation and amortization attributable to preliminary fair value estimates on acquired tangible and intangible assets and eliminations of intercompany sales and cost of sales for the respective periods. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2014 or of the results that may occur in the future:
| Three Months Ended December 31, |  | Six Months Ended December 31,
| 2014 |  | 2013 |  | 2014 |  | 2013
Net sales | $ | 60,590 |  |  | $ | 47,682 |  |  | $ | 128,841 |  |  | $ | 95,289 |
Net income | 5,507 |  |  | 5,223 |  |  | 11,075 |  |  | 10,194 |
Net income attributable to Malibu Boats, Inc. | 3,220 |  |  | — |  |  | 7,465 |  |  | — |
Basic earnings per share | $ | 0.21 |  |  | $ | — |  |  | $ | 0.49 |  |  | $ | — |
Diluted earnings per share | $ | 0.21 |  |  | $ | — |  |  | $ | 0.49 |  |  | $ | — |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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