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Acquisitions | 12 Months Ended
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Feb. 28, 2022
Business Combinations [Abstract] |
Acquisitions | Note 7 - Acquisitions Osprey On December 29, 2021, we completed the acquisition of Osprey, a longtime U.S. leader in technical and everyday packs. Osprey is highly respected in the outdoor industry with a product lineup that includes a wide range of backpacks and daypacks for hiking, mountaineering, skiing, climbing, mountain biking, trail running, commuting, and school, as well as rugged adventure travel packs, wheeled luggage, and travel accessories. The total purchase consideration, net of cash acquired, was $410.9 million in cash, including the impact of a preliminary $9.1 million favorable customary closing net working capital adjustment. The acquisition was funded with cash on hand and borrowings under our existing revolving credit facility. We incurred pre-tax acquisition-related expenses of $2.4 million during fiscal 2022, which were recognized in SG&A within our consolidated statements of income. We accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. The goodwill recognized is attributable primarily to expected synergies including leveraging our information systems, shared service capabilities and international footprint. The goodwill is not expected to be deductible for income tax purposes. We have provisionally determined the appropriate fair values of the acquired intangible assets and completed our analysis of the economic lives of the assets acquired. We assigned $170.0 million to trade names which were determined to have an indefinite life. We assigned $22.0 million to customer relationships and are amortizing over a 4.5 year expected life, based on historical attrition rates. The following table presents the preliminary net assets recorded upon acquisition of Osprey at December 29, 2021:
(in thousands) |
Assets: |
Receivables | $ | 11,758 |
Inventory | 30,056 |
Prepaid expenses and other current assets | 3,699 |
Income taxes receivable | 4,197 |
Property and equipment | 11,386 |
Goodwill | 208,972 |
Trade names - indefinite | 170,000 |
Customer relationships - definite | 22,000 |
Operating lease assets | 2,155 |
Total assets | 464,223 |
Liabilities: |
Accounts payable | 4,487 |
Accrued expenses and other current liabilities | 7,345 |
Lease liabilities, non-current | 1,719 |
Deferred tax liabilities, net | 39,792 |
Total liabilities | 53,343 |
Net assets recorded | $ | 410,880 |
The fair value of receivables acquired is $11.8 million, with the gross contractual amount being $11.9 million and $0.1 million expected to be uncollectible. The impact of the acquisition of Osprey on our consolidated statements of income for fiscal 2022 is as follows:
December 29, 2021 (acquisition date) through February 28, 2022 (in thousands, except earnings per share data) | Fiscal Year Ended February 28, 2022
Sales revenue, net | $ | 24,373 |
Net income | 696 |
EPS: |
Basic | $ | 0.03 |
Diluted | $ | 0.03 |
The following supplemental unaudited pro forma information presents our financial results as if the acquisition of Osprey had occurred on March 1, 2020. This supplemental pro forma information has been prepared for comparative purposes and would not necessarily indicate what may have occurred if the acquisition had been completed on March 1, 2020, and this information is not intended to be indicative of future results:
| Fiscal Years Ended the Last Day of February,
(in thousands, except earnings per share data) | 2022 |  | 2021
Sales revenue, net | $ | 2,361,906 |  |  | $ | 2,224,196 |
Net income | 202,507 |  |  | 259,311 |
EPS: |  |  |
Basic | $ | 8.39 |  |  | $ | 10.38 |
Diluted | $ | 8.30 |  |  | $ | 10.29 |
These amounts have been calculated after applying our accounting policies and adjusting the results of Osprey to reflect the effect of definite-lived intangible assets recognized as part of the business combination on amortization expense as if the acquisition had occurred on March 1, 2020. Drybar Products On January 23, 2020, we completed the acquisition of Drybar Products for approximately $255.9 million in cash. The purchase price was funded by borrowings under the Company's revolving credit agreement. We accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. Acquisition-related expenses incurred during fiscal 2020 were approximately $2.5 million before tax. Drybar is an innovative, trend setting prestige hair care and styling brand in the multibillion-dollar beauty industry. As part of the transaction, we granted a worldwide license to Drybar Holdings LLC, which has subsequently been assumed by WellBiz Brands, Inc., as successor owner of Drybar blowout salons, to use the Drybar trademark in relation to the franchising and operation of Drybar salons. The salons exclusively use, promote, and sell Drybar products globally. The following table presents the net assets recorded upon acquisition of Drybar Products at January 23, 2020:
(in thousands) |
Assets: |
Receivables | $ | 7,710 |
Inventory | 16,603 |
Prepaid expenses and other current assets | 190 |
Property and equipment | 1,472 |
Goodwill | 172,933 |
Trade names - definite | 30,000 |
Other intangible assets - definite | 33,000 |
Subtotal - assets | 261,908 |
Liabilities: |
Accounts payable | 1,948 |
Accrued expenses | 4,099 |
Subtotal - liabilities | 6,047 |
Net assets recorded | $ | 255,861 |
The impact of the acquisition of Drybar Products on our consolidated statements of income for fiscal 2020 is as follows:
January 23, 2020 (acquisition date) through February 29, 2020 (in thousands, except earnings per share data) | Fiscal Year Ended February 29, 2020
Sales revenue, net | $ | 6,039 |
Net income | 1,483 |
EPS: |
Basic | $ | 0.06 |
Diluted | $ | 0.06 |
The following supplemental unaudited pro forma information presents our financial results as if the acquisition of Drybar Products had occurred on March 1, 2018. This supplemental pro forma information has been prepared for comparative purposes and would not necessarily indicate what may have occurred as if the acquisition had been completed on March 1, 2018, and this information is not intended to be indicative of future results:
(in thousands, except earnings per share data) | Fiscal Year Ended February 29, 2020 |  |
Sales revenue, net | $ | 1,773,592 |  |  |
Net income | 162,114 |  |  |
EPS: |  |  |
Basic | $ | 6.45 |  |  |
Diluted | $ | 6.40 |  |  |

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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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