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Acquisitions | 12 Months Ended
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Apr. 30, 2018
Business Combinations [Abstract] |
Acquisitions | 2. Acquisitions 2018 Acquisitions In August 2017, in two separate transactions, we acquired (1) substantially all of the net assets of Gemtech and (2) Bubba Blade branded products and other assets from Fish Tales, LLC. The aggregate purchase price for the two acquisitions was $23.1 million, subject to certain adjustments, utilizing a combination of cash on hand and borrowings under our revolving line of credit. In connection with the Gemtech acquisition, additional consideration of up to a maximum of $17.1 million may be paid contingent upon the cumulative three year sales volume of Gemtech products. The valuation of this contingent consideration liability was established in accordance with ASC 805 — Business Combinations. Based on current forecasted revenue, we believe it is unlikely that the acquired business will achieve the performance metrics. Therefore, as of April 30, 2018, the contingent liability was recorded at a fair value of $100,000 in non-current liabilities. Gemtech, based in Meridian, Idaho, is a provider of quality suppressors and accessories for the consumer, law enforcement, and military markets. Fish Tales, LLC, based in Oro Valley, Arizona, was a provider of premium sportsmen knives and tools for fishing and hunting, including the premium knife brand Bubba Blade. The Gemtech business will be fully integrated into our Firearms segment, and the Fish Tales, LLC assets and business will be fully integrated into our Outdoor Products & Accessories segment. Therefore, we will not provide discrete financial information for the 2018 Acquisitions in future periods. We are in the process of finalizing the valuations of the assets acquired and liabilities assumed in the 2018 Acquisitions. Therefore, the fair values for these acquisitions are subject to further adjustments as we obtain additional information during the respective measurement periods, which will not exceed 12 months from the date of each acquisition. The 2018 Acquisitions will necessitate the use of this measurement period to adequately analyze and assess a number of factors used in establishing the asset and liability fair values as of each acquisition date, including significant contractual and operational factors underlying the trade name, developed technology, and customer relationship intangible assets. The following table summarizes the estimated preliminary allocation of the purchase price for the 2018 Acquisitions (in thousands):
|  | 2018 Acquisitions |  |  |  | Measurement |  |  |  |  |  |
|  | (As Initially |  |  |  | Period |  |  |  | 2018 Acquisitions |
|  | Reported) |  |  |  | Adjustments |  |  |  | (As Adjusted) |
Accounts receivable |  | $ | 846 |  |  |  |  | (176 | ) |  |  | $ | 670 |
Inventories |  |  | 4,683 |  |  |  |  | 17 |  |  |  |  | 4,700 |
Other current assets |  |  | 145 |  |  |  |  | (51 | ) |  |  |  | 94 |
Property, plant, and equipment |  |  | 506 |  |  |  |  | 13 |  |  |  |  | 519 |
Intangibles |  |  | 6,400 |  |  |  |  | — |  |  |  |  | 6,400 |
Goodwill |  |  | 11,846 |  |  |  |  | 175 |  |  |  |  | 12,021 |
Total assets acquired |  |  | 24,426 |  |  |  |  | (22 | ) |  |  |  | 24,404 |
Accounts payable |  |  | 1,261 |  |  |  |  | (25 | ) |  |  |  | 1,236 |
Accrued payroll |  |  | 49 |  |  |  |  | (1 | ) |  |  | 48 |
Other long term liabilities |  |  | 100 |  |  |  |  | (100 | ) |  |  |  | — |
Total liabilities assumed |  |  | 1,410 |  |  |  |  | (126 | ) |  |  |  | 1,284 |
|  | $ | 23,016 |  |  |  |  | 104 |  |  |  | $ | 23,120 |
Included in general and administrative costs were $769,000 of acquisition-related costs incurred during the year ended April 30, 2018, related to the 2018 Acquisitions. We amortize intangible assets in proportion to expected annual revenue generated from the intangibles that we acquire. The following are the identifiable intangible assets acquired (in thousands) in the 2018 Acquisitions and their respective weighted average lives:
|  |  |  |  | Weighted Average |
|  | Amount |  |  |  | Life (In years) |
Developed technology |  | $ | 1,700 |  |  |  |  | 5.9 |
Customer relationships |  |  | 1,600 |  |  |  |  | 5.2 |
Trade names |  |  | 3,100 |  |  |  |  | 5.6 |
|  | $ | 6,400 |  |  |  |  |  |
Pro forma results of operations assuming that the 2018 Acquisitions had occurred as of May 1, 2016 are not required because of the immaterial impact on our consolidated financial statements for all periods presented. 2017 Acquisitions In fiscal 2017, in three separate transactions, we acquired (1) substantially all of the net assets of Taylor Brands, LLC, (2) substantially all of the assets of Ultimate Survival Technologies Inc. (now referred to as Ultimate Survival Technologies, LLC, or UST), and (3) all of the issued and outstanding stock of Crimson Trace Corporation for an aggregate purchase price of $211.1 million, net of cash acquired, subject to certain adjustments, utilizing cash on hand. In connection with the purchase of Ultimate Survival Technologies, Inc., up to an additional $2.0 million may be paid over a period of two years, contingent upon the financial performance of the acquired business. The valuation of this contingent liability was established in accordance with ASC 805 — Business Combinations. The initial fair value of this contingent consideration liability was $1.7 million. Based on the current forecasted revenue, during the year ended April 30, 2018, we recorded a $1.6 million reduction in the fair value of this contingent consideration liability because we do not expect that the acquired business will achieve the performance metrics. This reduction was recorded in other income on the consolidated statements of income. As of April 30, 2018, the fair value of this contingent liability was $60,000, which was recorded as a current liability. We have completed the valuations of the assets acquired and liabilities assumed related to the 2017 Acquisitions. During the year ended April 30, 2018, we decreased goodwill by $10.1 million, primarily as a result of changes to the valuation of customer relationship intangible assets and the impact to the value of the related deferred tax liabilities relating to the 2017 Acquisitions. As a result, we reduced amortization expense by $476,000, net of tax, during fiscal 2018 relating to these changes for prior fiscal year amortization expense. The following table summarizes the estimated preliminary allocation of the purchase price for the 2017 Acquisitions (in thousands):
|  | 2017 Acquisitions |  |  | Measurement |  |  |  |  |
|  | (As Initially |  |  | Period |  |  | 2017 Acquisitions |
|  | Reported) |  |  | Adjustments |  |  | (As Adjusted) |
Accounts receivable |  | $ | 11,635 |  |  | $ | (213 | ) |  | $ | 11,422 |
Inventories |  |  | 31,269 |  |  |  | 453 |  |  |  | 31,722 |
Income tax receivable |  |  | — |  |  |  | 68 |  |  |  | 68 |
Other current assets |  |  | 430 |  |  |  | (132 | ) |  |  | 298 |
Property, plant, and equipment |  |  | 8,232 |  |  |  | — |  |  |  | 8,232 |
Intangibles |  |  | 97,850 |  |  |  | (14,500 | ) |  |  | 83,350 |
Goodwill |  |  | 92,801 |  |  |  | 10,109 |  |  |  | 102,910 |
Total assets acquired |  |  | 242,217 |  |  |  | (4,215 | ) |  |  | 238,002 |
Accounts payable |  |  | 6,214 |  |  |  | 18 |  |  |  | 6,232 |
Accrued expenses |  |  | 973 |  |  |  | 158 |  |  |  | 1,131 |
Accrued payroll |  |  | 1,500 |  |  |  | (72 | ) |  |  | 1,428 |
Accrued income taxes |  |  | 6 |  |  |  | (6 | ) |  |  | — |
Accrued warranty |  |  | 98 |  |  |  | 96 |  |  |  | 194 |
Deferred income taxes |  |  | 20,658 |  |  |  | (4,409 | ) |  |  | 16,249 |
Total liabilities assumed |  |  | 29,449 |  |  |  | (4,215 | ) |  |  | 25,234 |
|  | $ | 212,768 |  |  | $ | — |  |  | $ | 212,768 |
Included in general and administrative costs are $3.8 million of acquisition-related costs incurred for the 2017 Acquisitions during the year ended April 30, 2017. The 2017 Acquisitions generated $61.1 million of revenue during the year ended April 30, 2017. We amortize intangible assets in proportion to expected yearly revenue generated from the intangibles that we acquire. We amortize order backlog over the estimated life during which the backlog is fulfilled. The following are the identifiable intangible assets acquired (in thousands) in the 2017 Acquisitions and their respective weighted average lives:
|  |  |  | Weighted Average |
|  | Amount |  |  | Life (In years) |
Developed technology |  | $ | 3,000 |  |  |  | 4.1 |
Customer relationships |  |  | 62,100 |  |  |  | 5.0 |
Trade names |  |  | 17,000 |  |  |  | 4.8 |
Order backlog |  |  | 1,150 |  |  |  | 0.3 |
Non-competition agreement |  |  | 100 |  |  |  | 3.4 |
|  | $ | 83,350 |  |  |  |  |
Additionally, the following table reflects the unaudited pro forma results of operations assuming that the 2017 Acquisitions had occurred on May 1, 2015 (in thousands, except per share data):
|  | For the Year |  |  | For the Year |
|  | Ended |  |  | Ended |
|  | April 30, 2017 |  |  | April 30, 2016 |
Net sales |  | $ | 934,247 |  |  | $ | 816,699 |
Income from operations |  |  | 195,295 |  |  |  | 151,258 |
Net income per share - diluted |  |  | 2.30 |  |  |  | 1.80 |
The unaudited pro forma income from operations for the years ended April 30, 2017 and 2016 has been adjusted to reflect increased cost of goods sold from the fair value step-up in inventory, which is expensed over the first inventory cycle, and the amortization of intangibles and order backlog incurred as if the 2017 Acquisitions had occurred on May 1, 2015. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the actual results that would have been achieved had the 2017 Acquisitions occurred as of May 1, 2015 or the results that may be achieved in future periods.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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