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Acquisition | 6 Months Ended
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Dec. 31, 2017
Business Combinations [Abstract] |
Acquisition | Acquisition On July 6, 2017, the Company completed its acquisition of Cobalt. T he aggregate purchase price for the transaction was $130,525, consisting of $129,525 funded with cash and borrowings under the Company's credit agreement and $1,000 in equity equal to 39,262 shares of the Company's Class A Common Stock based on a closing stock price of $25.47 per share on June 27, 2017. The aggregate purchase price was subject to certain adjustments, including customary adjustments for the amount of working capital in the business at the closing date and subject to adjustment for any judgment or settlement in connection with a pending litigation matter between Cobalt and Sea Ray Boats, Inc. and Brunswick Corporation. William Paxson St. Clair, Jr., a former owner of Cobalt, was appointed as a director to the Company's Board of Directors and as President of Cobalt. The Company accounted for the transaction in accordance with ASC 805, Business Combinations. The total consideration given to the former members of Cobalt 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 July 6, 2017. 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 appraisals of tangible and intangible assets and working capital adjustments to be finalized during the third quarter of fiscal 2018. The following table summarizes the preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Cobalt assumed at the acquisition date:
Consideration: |
Cash consideration paid | $ | 129,525 |
Equity consideration paid | 1,000 |
Fair value of total consideration transferred | $ | 130,525 |
Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value: |
Cash | $ | 3,973 |
Accounts receivable | 2,329 |
Inventories | 14,343 |
Other current assets | 363 |
Property, plant and equipment | 12,934 |
Identifiable intangible assets | 89,900 |
Current liabilities | (13,108 | )
Preliminary estimate of the fair value of assets acquired and liabilities assumed | 110,734 |
Goodwill | 19,791 |
Total purchase price | $ | 130,525 |
The preliminary fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:
| Estimates of Fair Value |  | Estimated Useful Life (in years)
Definite-lived intangibles: |  |  |
Dealer relationships | $ | 56,300 |  |  | 20
Patent | 2,600 |  |  | 15
Total definite-lived intangibles | 58,900 |  |  |
Indefinite-lived intangible: |  |  |
Trade name | 31,000 |  |  |
Total intangible assets | $ | 89,900 |  |  |
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: Trade Name - The value attributed to Cobalt's trade name was determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows. The trade name has an indefinite life. Dealer Relationships - The value associated with Cobalt's dealer relationships is attributed to its long standing dealer distribution network. The 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 multi-period excess earnings approach. The estimated remaining useful life of dealer relationships is approximately twenty years. Patent - The value associated with the patented technology was based on financial projections and the patent's estimated remaining legal life of approximately fifteen years using a variation of the income approach called the royalty savings method. The fair value of the definite-lived intangible assets are being amortized using the straight-line method to general and administrative expenses over their estimated useful lives. Indefinite-lived intangible assets are not amortized, but instead are evaluated for potential impairment on an annual basis in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The weighted average useful life of identifiable definite-lived intangible assets acquired was 19.8 years. Goodwill of $19,791 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition. The indefinite-lived intangible asset and goodwill acquired are expected to be deductible for income tax purposes. Acquisition-related costs of $3,478, which were incurred by the Company in fiscal year 2017 and the first half of fiscal 2018, were expensed in the period incurred, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive income for the fiscal year ended June 30, 2017 and the six months ended December 31, 2017. Pro Forma Financial Information (unaudited): The following unaudited pro forma consolidated results of operations for the three and six months ended December 31, 2017 and 2016, assumes that the acquisition of Cobalt occurred as of July 1, 2016. The unaudited pro forma financial information combines historical results of Malibu and Cobalt, with adjustments for depreciation and amortization attributable to preliminary fair value estimates on acquired tangible and intangible assets for the respective periods. Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings. 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 year 2017 or the results that may occur in the future:
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
Net sales |  | $ | 114,373 |  |  | $ | 89,327 |  |  | $ | 217,914 |  |  | $ | 190,277 |
Net (loss) income |  | (6,271 | ) |  | 3,965 |  |  | 496 |  |  | 11,760 |
Net (loss) income attributable to Malibu Boats, Inc. |  | (7,018 | ) |  | 3,591 |  |  | (805 | ) |  | 10,635 |
Basic (loss) earnings per share |  | $ | (0.34 | ) |  | $ | 0.18 |  |  | $ | (0.04 | ) |  | $ | 0.54 |
Diluted (loss) earnings per share |  | $ | (0.34 | ) |  | $ | 0.18 |  |  | $ | (0.04 | ) |  | $ | 0.54 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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