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Acquisitions | 12 Months Ended
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Mar. 28, 2020
Acquisitions [Abstract] |
Acquisitions | NOTE 2 – ACQUISITIONS Monro’s acquisitions are strategic moves in our plan to fill in and expand our presence in our existing and contiguous markets, expand into new markets and leverage fixed operating costs such as distribution, advertising and administration. Acquisitions in this footnote include acquisitions of five or more locations as well as acquisitions of one to four locations that are part of our greenfield store growth strategy. Fiscal 2020 During fiscal 2020, we acquired the following businesses for an aggregate purchase price of $103.6 million. The acquisitions were financed through our existing credit facility. The results of operations for these acquisitions are included in our financial results from the respective acquisition dates. On November 17, 2019, we acquired 18 retail tire and automotive repair stores located in Nevada and Idaho from Nevada Tire Holdings, LLC and Idaho Tire Holdings, LLC. (One retail tire and automotive repair store is expected to open in fiscal 2021.) These stores will operate under the Tire Choice name. On October 27, 2019, we acquired six retail tire and automotive repair stores located in California from S & S Unlimited, Inc. These stores will operate under the Tire Choice name. On October 27, 2019, we acquired three retail tire and automotive repair stores located in California from Lloyd’s Tire Service, Inc. These stores will operate under the Tire Choice name. On August 25, 2019, we acquired one retail tire and automotive repair store located in Louisiana from Atlas Tire Center, Inc. This store operates under the Tire Choice name. On August 25, 2019, we acquired two retail tire and automotive repair stores located in Louisiana from LRZ3 Auto, LLC. These stores operate under the Tire Choice name. On August 25, 2019, we acquired one retail tire and automotive repair store located in Louisiana from T-Boy's Tire and Automotive, LLC. This store operates under the Tire Choice name. On August 25, 2019, we acquired two retail tire and automotive repair stores located in Louisiana from Twin Tire & Auto Care, Inc. These stores operate under the Tire Choice name. On August 25, 2019, we acquired one retail tire and automotive repair store located in Louisiana from Twin Tire & Auto Care Team, Inc. This store operates under the Tire Choice name. On August 25, 2019, we acquired one retail tire and automotive repair store located in Louisiana from Scotty's Tire & Automotive, Inc. This store operates under the Tire Choice name. On June 23, 2019, we acquired two retail tire and automotive repair stores located in California from BAW LLC. These stores operate under the Tire Choice name. On May 19, 2019, we acquired 40 retail tire and automotive repair stores and one distribution center located in California from Certified Tire & Service Centers, Inc. These stores operate under the Tire Choice name. On March 31, 2019, we acquired 12 retail tire and automotive repair stores located in Louisiana from Allied Discount Tire & Brake, Inc. These stores operate under the Tire Choice name. These acquisitions resulted in goodwill related to, among other things, growth opportunities, synergies and economies of scale expected from combining these businesses with ours, as well as unidentifiable intangible assets. All of the goodwill is expected to be deductible for tax purposes. We have recorded finite-lived intangible assets at their estimated fair value related to customer lists. We have recorded acquired ROU assets at the present value of remaining lease payments adjusted to reflect favorable or unfavorable market terms of the lease. We expensed all costs related to acquisitions during fiscal 2020. The total costs related to completed acquisitions were $1.4 million for the year ended March 28, 2020. These costs are included in the Consolidated Statements of Comprehensive Income primarily under operating, selling, general and administrative expenses. Sales and net loss for the fiscal 2020 acquired locations totaled $59.3 million and ($3.9) million, respectively, for the period from acquisition date through March 28, 2020. The net loss of ($3.9) million includes an allocation of certain traditional corporate related items, including vendor rebates, interest expense and the benefit from income taxes. Supplemental pro forma information for the current or prior reporting periods has not been presented due to the impracticability of obtaining detailed, accurate or reliable data for the periods the acquired entities were not owned by Monro. The preliminary fair values of identifiable assets acquired and liabilities assumed were based on preliminary valuations and estimates. The consideration transferred and net liabilities assumed were recorded as goodwill. The preliminary allocation of the aggregate purchase price as of March 28, 2020 was as follows:
|  | As of Acquisition Date
|  | (Dollars in thousands)
Inventories |  | $ | 4,469
Other current assets |  |  | 706
Property, plant and equipment |  |  | 2,367
Finance lease and financing obligation assets, net |  |  | 29,147
Operating lease assets, net |  |  | 42,680
Intangible assets |  |  | 2,847
Other non-current assets |  |  | 305
Long-term deferred income tax assets |  |  | 4,875
Total assets acquired |  |  | 87,396
Current portion of long-term debt, finance leases and financing obligations |  |  | 2,672
Current portion of operating lease liabilities |  |  | 4,416
Deferred revenue |  |  | 1,618
Other current liabilities |  |  | 358
Long-term finance leases and financing obligations |  |  | 36,225
Long-term operating lease liabilities |  |  | 43,668
Other long-term liabilities |  |  | 1,747
Total liabilities assumed |  |  | 90,704
Total net identifiable liabilities assumed |  | $ | (3,308)
Total consideration transferred |  | $ | 103,622
Less: total net identifiable liabilities assumed |  |  | (3,308)
Goodwill |  | $ | 106,930
The following are the intangible assets acquired and their respective fair values and weighted average useful life:
|  | As of Acquisition Date
|  |  |  |  | Weighted
|  | Dollars |  | Average
|  | in thousands |  | Useful Life
Customer lists |  | $ | 2,847 |  |  | 7 years
We continue to refine the valuations and estimates related to inventory, warranty reserves, intangible assets, real property leases and certain liabilities for the fiscal 2020 acquisitions and expect to complete the valuations no later than the first anniversary date of the respective acquisition. We anticipate that adjustments will be made to the fair values of identifiable assets acquired and liabilities assumed during the measurement period and those adjustments may or may not be material. Fiscal 2019 During fiscal 2019, we acquired the following businesses for an aggregate purchase price of $61.7 million. The acquisitions were financed through our existing credit facility. The results of operations for these acquisitions are included in our financial results from the respective acquisition dates. On January 13, 2019, we acquired 13 retail tire and automotive repair stores located in Florida from R.A. Johnson, Inc. These stores operate under the Tire Choice name. On December 9, 2018, we acquired two retail tire and automotive repair stores located in Virginia from Colony Tire Corporation. These stores operate under the Mr. Tire name. On November 4, 2018, we acquired five retail tire and automotive repair stores located in Ohio from Jeff Pohlman Tire & Auto Service, Inc. These stores operate under the Car-X and Mr. Tire names. On October 14, 2018, we acquired one retail tire and automotive repair store located in Illinois from Quality Tire and Auto, Inc. This store operates under the Car-X name. On September 23, 2018, we acquired one retail tire and automotive repair store located in South Carolina from Walton’s Automotive, LLC. This store operates under the Treadquarters name. On September 16, 2018, we acquired one retail tire and automotive repair store located in Illinois from C&R Auto Service, Inc. This store operates under the Car-X name. On September 9, 2018, we acquired four retail tire and automotive repair stores in Arkansas and Tennessee from Steele-Guiltner, Inc. These stores operate under the Car-X name. On July 15, 2018, we acquired one retail tire and automotive repair store located in Pennsylvania from Mayfair Tire & Service Center, Inc. This store operates under the Mr. Tire name. On July 8, 2018, we acquired eight retail tire and automotive repair stores in Missouri from Sawyer Tire, Inc. These stores operate under the Car-X name. On May 13, 2018, we acquired 12 retail/commercial tire and automotive repair stores and one retread facility located in Tennessee, as well as four wholesale locations in North Carolina, Tennessee and Virginia, from Free Service Tire Company, Incorporated. These locations operate under the FreeService Tire name. On April 1, 2018, we acquired four retail tire and automotive repair stores located in Minnesota from Liberty Auto Group, Inc. These stores operate under the Car-X name. These acquisitions resulted in goodwill related to, among other things, growth opportunities, synergies and economies of scale expected from combining these businesses with ours, as well as unidentifiable intangible assets. All of the goodwill is expected to be deductible for tax purposes. We have recorded finite-lived intangible assets at their estimated fair value related to customer lists, favorable leases and a trade name. We expensed all costs related to acquisitions during fiscal 2019. The total costs related to completed acquisitions were $0.6 million for the year ended March 30, 2019. These costs are included in the Consolidated Statements of Comprehensive Income primarily under operating, selling, general and administrative expenses. Sales and net loss for the fiscal 2019 acquired locations totaled $49.1 million and ($0.5) million, respectively, for the period from acquisition date through March 30, 2019. The net loss of ($0.5) million includes an allocation of certain traditional corporate related items, including vendor rebates, interest expense and the benefit from income taxes. Supplemental pro forma information for the current or prior reporting periods has not been presented due to the impracticability of obtaining detailed, accurate or reliable data for the periods the acquired entities were not owned by Monro. We finalized the purchase accounting relative to the fiscal 2019 acquisitions during fiscal 2020. As a result of the final purchase price allocations, certain of the fair value amounts previously estimated were adjusted during the measurement period. These measurement period adjustments related to updated valuation reports and appraisals received from our external valuation specialists, as well as revisions to internal estimates. The changes in estimates recorded in fiscal 2020 include a decrease in inventories of $0.3 million; an increase in property, plant and equipment of $0.1 million; a decrease in finance lease and financing obligation assets, net of $0.8 million; a decrease in intangible assets of $0.3 million; a decrease in long-term deferred income tax assets of $0.3 million; an increase in current portion of long-term debt, finance leases and financing obligations of $0.2 million and a decrease in long-term finance leases and financing obligations of $2.4 million. The measurement period adjustments resulted in a decrease of goodwill of $0.6 million. These adjustments were not material to the Consolidated Statement of Comprehensive Income for the fiscal years ended March 28, 2020 and March 30, 2019. We have recorded the identifiable assets acquired and liabilities assumed at their values as of their respective acquisition dates (including any measurement period adjustments), with the remainder recorded as goodwill as follows:
|  | As of Acquisition Date
|  | (Dollars in thousands)
Trade receivables |  | $ | 1,674
Inventories |  |  | 8,968
Other current assets |  |  | 316
Property, plant and equipment |  |  | 8,583
Finance lease and financing obligation assets, net |  |  | 7,546
Intangible assets |  |  | 9,615
Other non-current assets |  |  | 21
Long-term deferred income tax assets |  |  | 2,719
Total assets acquired |  |  | 39,442
Current portion of long-term debt, finance leases and financing obligations |  |  | 1,651
Deferred revenue |  |  | 445
Other current liabilities |  |  | 540
Long-term finance leases and financing obligations |  |  | 16,048
Other long-term liabilities |  |  | 637
Total liabilities assumed |  |  | 19,321
Total net identifiable assets acquired |  | $ | 20,121
Total consideration transferred |  | $ | 61,654
Less: total net identifiable assets acquired |  |  | 20,121
Goodwill |  | $ | 41,533
The following are the intangible assets acquired and their respective fair values and weighted average useful lives:
|  | As of Acquisition Date
|  |  |  |  | Weighted
|  | Dollars |  | Average
|  | in thousands |  | Useful Life
Customer lists |  | $ | 6,042 |  |  | 13 years
Favorable leases |  |  | 3,173 |  |  | 10 years
Trade name |  |  | 400 |  |  | 2 years
Total |  | $ | 9,615 |  |  | 11 years

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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 Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: 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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