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Acquisition | 3 Months Ended
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Mar. 31, 2022
Acquisitions [Abstract] |
Business Combination Disclosure [Text Block] | ote B — Acquisitions Acquisition of Lugano Diamonds & Jewelry, Inc. On September 3, 2021, the LLC, through its newly formed acquisition subsidiaries, Lugano Holding, Inc., a Delaware corporation (“Lugano Holdings”), and Lugano Buyer, Inc., a Delaware corporation (“Lugano Buyer”) and a wholly-owned subsidiary of Lugano Holdings, acquired the issued and outstanding shares of stock of Lugano Diamonds & Jewelry Inc. ("Lugano") other than the certain rollover shares (the “Lugano Transaction”). The Lugano Transaction was effectuated pursuant to a Stock Purchase Agreement (the “Lugano Purchase Agreement”), also dated September 3, 2021, by and among Lugano Buyer, the Sellers named therein (“Sellers”) and Mordechai Haim Ferder in his individual capacity and as initial representative of the Sellers. Lugano is a leading designer, manufacturer and marketer of high-end, one-of-a-kind jewelry sought after by some of the world’s most discerning clientele. Lugano conducts sales via its own retail salons as well as pop-up showrooms at Lugano-hosted or sponsored events in partnership with influential organizations in the equestrian, art and philanthropic community. Lugano is headquartered in Newport Beach, California. The LLC made loans to, and purchased a 60% equity interest in, Lugano. The purchase price, including proceeds from noncontrolling shareholders and net of transaction costs, was $263.3 million. The selling shareholders invested in the transaction along with the LLC, representing 40% initial noncontrolling interest on both a primary and fully diluted basis. The fair value of the noncontrolling interest was determined based on the enterprise value of the acquired entity multiplied by the ratio of the number of shares acquired by the minority holders to total shares. The transaction was accounted for as a business combination. CGM acted as an advisor to the LLC in the acquisition and will continue to provide integration services during the first year of the LLC's ownership of Lugano. CGM will receive integration service fees of $2.3 million payable quarterly over a twelve month period as services are rendered which payments began in the quarter ended December 31, 2021. The LLC incurred $1.8 million of transaction costs in conjunction with the Lugano acquisition, which was included in selling, general and administrative expense in the consolidated statements of operations during the third quarter of 2021. The LLC funded the acquisition with cash on hand and a $120 million draw on its 2021 Revolving Credit Facility. The results of operations of Lugano have been included in the consolidated results of operations since the date of acquisition. Lugano's results of operations are reported as a separate operating segment as a branded consumer business. The table below provides the recording of assets acquired and liabilities assumed as of the date of acquisition.
(in thousands) |  | Preliminary Purchase Price Allocation |  | Measurement Period Adjustments |  | Final Purchase Price Allocation
Assets: |  |  |  |  |  |
Cash |  | $ | 1,433 |  |  | $ | — |  |  | $ | 1,433 |
Accounts receivable (1) |  | 20,954 |  |  | — |  |  | 20,954 |
Inventory |  | 85,794 |  |  | 9,419 |  |  | 95,213 |
Property, plant and equipment |  | 2,743 |  |  | 392 |  |  | 3,135 |
Intangible assets |  | — |  |  | 82,454 |  |  | 82,454 |
Goodwill |  | 158,780 |  |  | (72,443) |  |  | 86,337 |
Other current and noncurrent assets |  | 4,979 |  |  | 4,114 |  |  | 9,093 |
Total assets |  | $ | 274,683 |  |  | $ | 23,936 |  |  | $ | 298,619 |
Liabilities and noncontrolling interest: |  |  |  |  |  |
Current liabilities |  | $ | 7,129 |  |  | $ | 58 |  |  | $ | 7,187 |
Other liabilities |  | 99,381 |  |  | 755 |  |  | 100,136 |
Deferred tax liabilities |  | — |  |  | 23,123 |  |  | 23,123 |
Noncontrolling interest |  | 68,000 |  |  | — |  |  | 68,000 |
Total liabilities and noncontrolling interest |  | $ | 174,510 |  |  | $ | 23,936 |  |  | $ | 198,446 |
Net assets acquired |  | $ | 100,173 |  |  | $ | — |  |  | $ | 100,173 |
Noncontrolling interest |  | 68,000 |  |  | — |  |  | 68,000 |
Intercompany loans to business |  | 99,381 |  |  | (2,420) |  |  | 96,961 |
|  | $ | 267,554 |  |  | $ | (2,420) |  |  | $ | 265,134 |
Acquisition consideration |  |  |  |  |  |
Purchase price |  | $ | 256,000 |  |  | $ | — |  |  | $ | 256,000 |
Cash acquired (estimated) |  | 1,554 |  |  | (120) |  |  | 1,434 |
Net working capital adjustment |  | 10,000 |  |  | (2,300) |  |  | 7,700 |
Total purchase consideration |  | $ | 267,554 |  |  | $ | (2,420) |  |  | $ | 265,134 |
Less: Transaction costs |  | 1,827 |  |  | — |  |  | 1,827 |
Net purchase price |  | $ | 265,727 |  |  | $ | (2,420) |  |  | $ | 263,307 |
(1) The fair value of accounts receivable approximates book value acquired. The allocation of the purchase price presented above is based on management's estimate of the fair values using valuation techniques including the income, cost and market approach. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. Current and noncurrent assets and current and other liabilities are valued at historical carrying values. Inventory is recognized at fair value, with finished goods stated at selling price less an estimated cost to sell. Property, plant and equipment is valued through a purchase price appraisal and will be depreciated on a straight-line basis over the respective remaining useful lives of the assets. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. The goodwill of $86.3 million reflects the strategic fit of Lugano in the Company's branded consumer business and is not expected to be deductible for income tax purposes. The intangible assets recorded related to the Lugano acquisition are as follows (in thousands):
Intangible Assets |  | Fair Value |  | Estimated Useful Lives
Tradename |  | $ | 48,433 |  |  | 18 years
Customer relationships |  | 34,021 |  |  | 15 years
|  | $ | 82,454 |  |  |
The tradename was considered the primary intangible asset and was valued at $48.4 million using a multi-period excess earnings method. The customer relationships were valued at $34.0 million using a multi period excess earnings method. The multi period excess earnings method assumes an asset has value to the extent that it enables its owners to earn a return in excess of the other assets utilized in the business. Unaudited pro forma information The following unaudited pro forma data for the three months ended March 31, 2021 gives effect to the acquisition of Lugano, as described above, and the dispositions of Liberty Safe and ACI, as if these transactions had been completed as of January 1, 2021. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization and depreciation expense, management fees and related tax effects. The information is provided for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transaction had been consummated on the date indicated, nor is it necessarily indicative of future operating results of the consolidated companies, and should not be construed as representing results for any future period.
|  | Three months ended |  |
(in thousands, except per share data) |  | March 31, 2021 |  |  |  |
Net sales |  | $ | 437,995 |  |  |  |  |
Gross profit |  | $ | 183,722 |  |  |  |  |
Operating income |  | $ | 43,260 |  |  |  |  |
Net income from continuing operations |  | $ | 18,090 |  |  |  |  |
Net income from continuing operations attributable to Holdings |  | $ | 13,861 |  |  |  |  |
Basic and fully diluted net loss per share attributable to Holdings |  | $ | 0.00 |  |  |  |  |
Other acquisitions Marucci Lizard Skins - On October 22, 2021, Marucci Sports acquired Lizard Skins, LLC ("Lizard Skins"), an industry leading provider of sporting goods accessories that revolve around the hand-to-grip interface, for an enterprise value of approximately $47.0 million, excluding customary closing adjustments. The acquisition and related transaction costs were funded through an additional term loan of $44.1 million under the Marucci inter-company credit agreement with the LLC, a draw on the existing Marucci revolving credit facility with the Company, and rollover equity from the selling shareholders of Lizard Skins. Marucci issued 11,915 shares to the selling shareholders in exchange for the rollover equity, which represents an ownership interest of approximately 1% in Marucci. Marucci paid approximately $1.4 million in transaction expenses in connection with the acquisition of Lizard Skins. Lizard Skins is a designer and seller of branded grip products, protective equipment, bags and apparel for use in baseball, cycling, hockey, Esports and lacrosse. The acquisition of Lizard Skins will allow Marucci to build on its leading position in diamond sports while simultaneously developing Marucci's presence in new sports markets such as hockey and cycling. Marucci recorded a purchase price allocation, including goodwill of approximately $10.1 million, which is expected to be deductible for income tax purposes, and intangible assets of $27.9 million. The purchase price allocation is expected to be finalized in the second quarter of 2022. Altor Solutions Plymouth Foam - On October 5, 2021, Altor acquired Plymouth Foam, LLC (“Plymouth”), a manufacturer of protective packaging and componentry, for an enterprise value of approximately $56.0 million, excluding customary closing adjustments. The acquisition and related transaction costs were funded through an additional term loan of $52.0 million under the Altor intercompany credit agreement and a draw on the existing Altor intercompany revolving credit facility with the LLC. Altor paid approximately $0.4 million in transaction fees in connection with the acquisition of Plymouth. Plymouth was founded in 1978 and is based in Plymouth, Wisconsin. Plymouth supplies a wide array of high value products, including custom protective packaging, cold chain packaging and internal components made from expanded polystyrene and expanded polypropylene. Plymouth’s complementary product portfolio will allow Altor to be able to further expand its business and capabilities. Altor recorded a purchase price allocation, including goodwill of approximately $15.5 million, which is not expected to be deductible for income tax purposes, and intangible assets of $20.1 million. The purchase price allocation was finalized in the first quarter of 2022. Polyfoam - On July 1, 2020, Altor acquired substantially all of the assets of Polyfoam Corp. ("Polyfoam"), a Massachusetts-based manufacturer of protective and temperature-sensitive packaging solutions for the medical, pharmaceutical, grocery and food industries, among others. Founded in 1974, Polyfoam operates two manufacturing facilities producing highly engineered foam and injection-molded plastic solutions across a variety of end-markets. The acquisition complements Altor's current operating footprint and provides access to a new customer base and product offerings, including Polyfoam's significant end-market exposure to cold chain (including seafood boxes, insulated shipping containers and grocery delivery totes). The purchase price was approximately $12.8 million and included a potential earnout of $1.4 million if Polyfoam achieved certain financial metrics. The full amount of the earnout was paid during the first quarter of 2022. Arnold Ramco - On March 1, 2021, Arnold acquired Ramco Electric Motors, Inc. ("Ramco"), a manufacturer of stators, rotors and full electric motors, for a purchase price of approximately $34.3 million. The acquisition and related transaction costs were funded through an additional equity investment in Arnold by the LLC of $35.5 million. Ramco was founded in 1987 and is based in Greenville, Ohio. Ramco supplies their custom electric motor solutions for general industrial, aerospace and defense, and oil and gas end-markets. Ramco’s complementary product portfolio will allow Arnold to be able to offer more comprehensive, turnkey solutions to their customers. In connection with the acquisition, Arnold recorded a purchase price allocation of $12.4 million of goodwill, which is not expected to be deductible for income tax purposes and $12.7 million in intangible assets. The remainder of the purchase consideration was allocated to net assets acquired. The purchase price allocation was finalized in the fourth quarter of 2021.

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- Definition Acquisitions [Abstract] + References No definition available. + Details
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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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