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Goodwill | 3 Months Ended
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Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill | 8. GOODWILL: We account for acquisitions in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “Intangibles — Goodwill and Other” (“ASC 350”). For business combinations, the excess of the purchase price over the estimated fair value of net assets acquired in a business combination is recorded as goodwill. In December 2022, we acquired Midcoast Construction Enterprises, LLC ("Midcoast Marine Group"), a leading full-service marine construction Company based on Central Florida's Gulf Coast. In October 2022, we purchased all of the outstanding equity of IGY Marinas for an aggregate purchase price of $480,000,000, subject to certain customary closing and post-closing adjustments, and net working capital adjustments including certain holdbacks. In addition, the former equity owners of IGY Marinas (“IGY Sellers”), have the opportunity to earn additional consideration as part of a contingent consideration arrangement subject to the achievement of certain performance metrics. The maximum amount of consideration that can be paid under the contingent consideration arrangement is $100.0 million. The fair value of $67.7 million of the contingent consideration arrangement was estimated by a third-party valuation expert by applying an income valuation approach and is included in other long-term liabilities. The earnout was estimated based on certain performance metrics as a base scenario (among other assumptions) subject to a Monte Carlo simulation. The IGY Sellers are subject to certain customary post-closing covenants and indemnities. The acquisition of IGY Marinas expands the Company’s marina footprint and superyacht services offerings and strengthens its position as the global leader in superyacht and luxury marina destinations in the United States of America, the Caribbean, Mexico and Europe. The following table summarizes the consideration paid for IGY Marinas and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date.
|  | (Amounts in thousands) |
Consideration: |  |  |
Cash purchase price and net working capital adjustments, net of cash acquired of $28,075 |  | $ | 481,349 |
Contingent consideration arrangement |  |  | 67,700 |
Noncontrolling interests in consolidated subsidiaries |  |  | 2,208 |
Fair value of total consideration transferred |  | $ | 551,257 |
Recognized amounts of identifiable assets acquired and liabilities assumed: |  |  |
Net working capital, net of cash acquired of $28,075 |  | $ | (21,296 | )
Property and equipment |  |  | 246,440 |
Operating lease right-of-use assets |  |  | 39,720 |
Intangible assets |  |  | 29,285 |
Equity method investments |  |  | 14,098 |
Other long-term assets |  |  | 6,973 |
Operating lease liabilities |  |  | (29,416 | )
Other liabilities |  |  | (1,301 | )
Deferred tax liabilities, net |  |  | (20,622 | )
Total identifiable net assets acquired: |  |  | 263,881 |
Goodwill |  | $ | 287,376 |
Total |  | $ | 551,257 |
The fair value of current assets acquired includes accounts receivable and other current assets of approximately $4.5 million and $4.1 million, respectively. The fair value of current liabilities assumed includes contract liabilities of approximately $13.3 million, tax contingency reserves of approximately $7.1 million and accrued expenses of approximately $6.3 million. We recorded approximately $287.4 million in goodwill and approximately $29.3 million of other identifiable intangibles, composed of indefinite-lived trade names and customer relationships, in connection with the IGY Marinas acquisition, however, purchase price allocations are preliminary pending receipt of final valuation analyses of certain assets from our valuation advisor. The goodwill represents the assembled workforce, our enhanced geographic reach, and global brand infrastructure. Goodwill of approximately $141.6 million is expected to be deductible for tax purposes. As of the acquisition date, the customer relationships have a weighted average useful life of approximately 4.5 years. For the three months ended December 31, 2021 and 2022, IGY Marinas revenue was approximately $26.0 and $29.5 million, respectively. For the three months ended December 31, 2021 loss before taxes was approximately $2.8 million and for the three months ended December 31, 2022, income before taxes was approximately $4.2 million. The determination of fair value of assets acquired and liabilities assumed requires estimates and assumption that can change as a result of new information obtained about facts and circumstances that existed as of the acquisition date. As such, the Company will make any necessary adjustments to goodwill in the period identified within one year of the acquisition date. Adjustments outside of that range are recognized currently in earnings. Through one of the subsidiaries that it acquired in the IGY Marinas acquisition, the Company has an investment in certain entities that own a marina asset in Cannes, France, which is accounted for under the equity method, as well as a series of notes receivable due from these entities, with a total balance of approximately $6.2 million as of December 31, 2022. In April 2022, through Northrop & Johnson, we acquired Superyacht Management, S.A.R.L., better known as SYM, a superyacht management company based in Golfe-Juan, France. In November 2021, we completed acquisitions for Intrepid, a premier manufacturer of powerboats, and Texas MasterCraft, a watersports dealer in Northern Texas, for aggregate consideration of approximately $67.2 million (net of cash acquired of $9.4 million), including estimated contingent consideration of $6.0 million. Tangible assets acquired, net of liabilities assumed and cash acquired, totaled approximately $20.3 million; intangible assets acquired totaled $7.3 million; and total goodwill recognized was approximately $39.6 million. The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisitions. Approximately $10.7 million of goodwill related to the acquisitions, wholly attributable to Texas MasterCraft, is deductible for tax purposes. In July 2021, we purchased Nisswa Marine a full-service dealer located in Nisswa, Minnesota. In May 2021, we purchased Cruisers Yachts, a manufacturer of sport yacht and yachts with sales through our select retail dealership locations and through independent dealers. In October 2020, we purchased SkipperBud’s, one of the largest boat sales, brokerage, service and marina/storage groups in the United States. In total, current and previous acquisitions have resulted in the recording of $246.5 million and $566.5 million in goodwill and other intangible assets as of September 30, 2022 and December 31, 2022, respectively. In accordance with ASC 350, we test goodwill for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our annual impairment test is performed during the third fiscal quarter. If the carrying amount of a reporting unit’s goodwill exceeds its fair value we recognize an impairment loss in accordance with ASC 350. As of December 31, 2022, and based upon our most recent analysis, we determined through our qualitative assessment that it is not “more likely than not” that the fair values of our reporting units are less than their carrying values. As a result, we did not perform a quantitative goodwill impairment. The following table sets forth the changes in carrying amount of goodwill by reportable segment during the three months ended December 31, 2022:
|  | Retail Operations |  |  | Product Manufacturing |  |  | Total |
|  | (Amounts in thousands) |
Balance as of September 30, 2022 |  | $ | 166,551 |  |  | $ | 69,034 |  |  | $ | 235,585 |
Goodwill acquired |  |  | 288,621 |  |  |  | — |  |  |  | 288,621 |
Foreign currency translation |  |  | 3,512 |  |  |  | — |  |  |  | 3,512 |
Balance as of December 31, 2022 |  | $ | 458,684 |  |  | $ | 69,034 |  |  | $ | 527,718 |

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