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Acquisitions | 9 Months Ended
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Dec. 25, 2021
Acquisitions [Abstract] |
Acquisitions | Note 3 – 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 note 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. 2022 During the first nine months of fiscal 2022, we acquired the following businesses for an aggregate purchase price of $83.2 million. The acquisitions were financed through our Credit Facility, as defined in Note 9. The results of operations for these acquisitions are included in our financial results from the respective acquisition dates. On December 6, 2021, we acquired 11 retail tire and automotive repair stores operating as Car-X franchise locations in Iowa from KR Jones Enterprises, Inc. These stores will operate under the Car-X name. On November 14, 2021, we acquired three retail tire and automotive repair stores located in California from Bud’s Tire and Wheel, Inc. These stores will operate under the Tire Choice name. On November 14, 2021, we acquired two retail tire and automotive repair stores located in California from Eagle Auto & Tire, Inc. These stores will operate under the Mountain View Tire & Service name. On November 14, 2021, we acquired one retail tire and automotive repair store located in California from Golden Reflections. This store will operate under the Mountain View Tire & Service name. On April 25, 2021, we acquired 30 retail tire and automotive repair stores located in California from Mountain View Tire & Service, Inc. These stores operate under the Mountain View Tire & Service name. The acquisitions resulted in goodwill related to, among other things, growth opportunities, synergies and economies of scale expected from combining the businesses with ours, as well as unidentifiable intangible assets. All of the goodwill is expected to be deductible for tax purposes. We expensed all costs related to the acquisitions in the nine months ended December 25, 2021. The total costs related to the completed acquisitions were $0.2 million and $0.6 million for the three months and nine months ended December 25, 2021, respectively. These costs are included in the Consolidated Statements of Income and Comprehensive Income primarily under operating, selling, general and administrative (“OSG&A”) expenses. Sales related to the completed acquisitions for the three months and nine months ended December 25, 2021 totaled $13.7 million and $33.1 million, respectively, for the period from acquisition date through December 25, 2021. 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 accounted for the acquisitions as a business combination using the acquisition method of accounting in accordance with the FASB ASC Topic 805, “Business Combinations.” The assets acquired and liabilities assumed were recorded at their acquisition-date fair values and were consolidated with those of the Company as of the acquisition date. The acquisition-date fair values were assigned based on preliminary valuations and estimates, and the consideration transferred and net liabilities assumed were recorded as goodwill. 2022 Acquisition-date Fair Values Assigned (thousands) Inventory $ 1,208 Other current assets 424 Property and equipment 1,455 Finance lease and financing obligation assets 15,568 Operating lease assets 35,815 Intangible assets 3,120 Other non-current assets 79 Long-term deferred income tax assets 4,332 Total assets acquired 62,001 Current portion of finance leases and financing obligations 1,569 Current portion of operating lease liabilities 3,324 Deferred revenue 1,273 Other current liabilities 273 Long-term finance leases and financing obligations 21,584 Long-term operating lease liabilities 39,401 Other long-term liabilities 1,055 Total liabilities assumed 68,479 Total net identifiable liabilities assumed $ (6,478)Total consideration transferred $ 83,175 Less: total net identifiable liabilities assumed (6,478)Goodwill $ 89,653 The total consideration of $83.2 million is comprised of $81.7 million in cash and $1.5 million in payables to certain sellers, of which $1.1 million is due upon finalization of certain lease assignment terms for one store location. We recorded $3.1 million to amortizable intangible assets, including customer lists and a trade name, with a weighted-average amortizable period of approximately eight years. We have recorded acquired right-of-use (“ROU”) assets at the present value of remaining lease payments adjusted to reflect favorable or unfavorable market terms of the lease. We continue to refine the valuation data and estimates primarily related to inventory, warranty reserves, intangible assets and real property leases and certain liabilities for the 2022 acquisitions and expect to complete the valuations no later than the first anniversary date of the acquisition. We anticipate that adjustments will continue to be made to the fair values of identifiable assets acquired and liabilities assumed and those adjustments may or may not be material. 2021 On December 6, 2020, we acquired 17 retail tire and automotive repair stores located in California from Fred Allen Enterprises, Inc. for $17.1 million. These stores will operate under the Tire Choice name. The acquisition was financed through our Credit Facility. The results of operation for the acquisition are included in our financial results from the acquisition date. Prior to this acquisition, our acquisition activity in 2021 was paused due to the impact of the COVID-19 pandemic. The acquisition resulted in goodwill related to, among other things, growth opportunities, synergies and economies of scale expected from combining the business with ours, as well as unidentifiable intangible assets. All of the goodwill is expected to be deductible for tax purposes. We have recorded a customer list intangible asset with a useful life of seven years at its estimated fair value of approximately $0.4 million. 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 the acquisition in the three months ended December 26, 2020. The total costs related to the completed acquisition were $0.1 million and these costs are included in the Consolidated Statements of Income and Comprehensive Income primarily under OSG&A expenses. Sales related to the completed acquisition totaled $0.9 million for the period from acquisition date through December 26, 2020. 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 accounted for the 2021 acquisition as a business combination using the acquisition method of accounting and we finalized the purchase accounting related to the 2021 acquisition during 2022. As a result of the updated purchase price allocation for the 2021 acquisition, certain of the fair value amounts previously estimated were adjusted during the measurement period. These measurement period adjustments resulted from updated valuation reports and appraisals received from our external valuation specialists, as well as revisions to internal estimates. The measurement period adjustments were not material to the Consolidated Balance Sheet as of December 25, 2021 and the Consolidated Statements of Income and Comprehensive Income for the three months and nine months ended December 25, 2021. The acquired assets and liabilities assumed were recorded at their assigned acquisition-date fair values and were consolidated with those of the Company as of the acquisition date. The consideration transferred and net liabilities assumed were recorded as goodwill. 2021 Acquisition-date Fair Values Assigned (thousands) Inventory $ 1,017 Other current assets 172 Property and equipment 796 Finance lease and financing obligation assets 5,089 Operating lease assets 8,980 Intangible assets 418 Other non-current assets 31 Long-term deferred income tax assets 1,336 Total assets acquired 17,839 Current portion of finance leases and financing obligations 748 Current portion of operating lease liabilities 976 Deferred revenue 697 Other current liabilities 4 Long-term finance leases and financing obligations 7,911 Long-term operating lease liabilities 7,433 Other long-term liabilities 548 Total liabilities assumed 18,317 Total net identifiable liabilities assumed $ (478)Total consideration transferred $ 17,112 Less: total net identifiable liabilities assumed (478)Goodwill $ 17,590 During the nine months ended December 25, 2021, we paid $0.8 million to the seller of the 2021 acquisition as the lease assignment for one store location was finalized during the period.

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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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