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Acquisitions | 9 Months Ended
--- | ---
Mar. 31, 2019
Business Combinations [Abstract] |
Acquisitions | Acquisitions Pursuit On October 15, 2018, the Company completed its acquisition of the assets of Pursuit. The aggregate purchase price for the transaction was $100,073, funded with cash and borrowings under the Company's credit agreement. 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. The Company accounted for the transaction in accordance with ASC 805, Business Combinations. The total consideration given to the former owners of Pursuit has been allocated to the assets acquired and liabilities assumed based on estimates of fair value as of the date of the acquisition. The preliminary measurements of fair value were determined 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 fourth quarter of fiscal 2019. The following table summarizes the preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Pursuit assumed at the acquisition date:
Consideration: |
Cash consideration paid | $ | 100,073 |
Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value: |
Inventories | $ | 8,332 |
Other current assets | 350 |
Property, plant and equipment | 17,454 |
Identifiable intangible assets | 57,900 |
Current liabilities | (3,488 | )
Fair value of assets acquired and liabilities assumed | 80,548 |
Goodwill | 19,525 |
Total purchase price | $ | 100,073 |
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 | $ | 25,400 |  |  | 20
Total definite-lived intangibles | 25,400 |  |  |
Indefinite-lived intangible: |  |  |
Trade name | 32,500 |  |  |
Total intangible assets | $ | 57,900 |  |  |
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: Dealer Relationships - The value associated with Pursuit'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. Trade Name - The value attributed to Pursuit'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. 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 20 years. Goodwill of $19,525 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 $2,846, which were incurred by the Company in the first nine months of fiscal year 2019 related to the Pursuit acquisition, 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 nine months ended March 31, 2019. Pro Forma Financial Information (unaudited): The following unaudited pro forma consolidated results of operations for the three and nine months ended March 31, 2019 and 2018, assumes that the acquisition of Pursuit occurred as of July 1, 2017. The unaudited pro forma financial information combines historical results of Malibu and Pursuit, 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 2018 or the results that may occur in the future:
|  | Three Months Ended March 31, |  | Nine Months Ended March 31,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Net sales |  | $ | 199,918 |  |  | $ | 176,387 |  |  | $ | 530,836 |  |  | $ | 451,687 |
Net income |  | 22,203 |  |  | 21,285 |  |  | 53,223 |  |  | 18,853 |
Net income attributable to Malibu Boats, Inc. |  | 21,099 |  |  | 19,838 |  |  | 50,430 |  |  | 16,066 |
Basic earnings per share |  | $ | 1.01 |  |  | $ | 0.97 |  |  | $ | 2.42 |  |  | $ | 0.80 |
Diluted earnings per share |  | $ | 1.01 |  |  | $ | 0.96 |  |  | $ | 2.41 |  |  | $ | 0.80 |
Cobalt 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 the 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 estimates of fair value as of the date of the acquisition. The measurements of fair value were determined based upon estimates utilizing the assistance of third party valuation specialists. The following table summarizes the 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 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 | )
Fair value of assets acquired and liabilities assumed | 110,734 |
Goodwill | 19,791 |
Total purchase price | $ | 130,525 |
The 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: 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. 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. 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 deductible for income tax purposes. Pro Forma Financial Information (unaudited): The following unaudited pro forma consolidated results of operations for the three months and nine months ended March 31, 2019 and 2018, 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 March 31, |  | Nine Months Ended March 31,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Net sales |  | $ | 199,918 |  |  | $ | 140,429 |  |  | $ | 489,194 |  |  | $ | 358,343 |
Net income |  | 22,203 |  |  | 16,796 |  |  | 49,216 |  |  | 17,626 |
Net income attributable to Malibu Boats, Inc. |  | 21,099 |  |  | 15,672 |  |  | 46,654 |  |  | 15,174 |
Basic earnings per share |  | $ | 1.01 |  |  | $ | 0.76 |  |  | $ | 2.24 |  |  | $ | 0.76 |
Diluted earnings per share |  | $ | 1.01 |  |  | $ | 0.76 |  |  | $ | 2.23 |  |  | $ | 0.76 |

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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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- References No definition available. + Details
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