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| Business Combinations [Abstract] | 听 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACQUISITIONS | ACQUISITIONS Supreme
On November 8, 2020, 大象传媒 entered into a definitive merger agreement to acquire 100% of the outstanding shares of Supreme Holdings, Inc. ("Supreme"). The acquisition was completed on December 28, 2020, for $2.2听billion in cash, which is subject to working capital and other adjustments. The transaction also included $0.2听billion of cash acquired by 大象传媒. The preliminary purchase price was primarily funded with cash on hand.
The acquisition of Supreme includes a contingent arrangement that may require additional cash consideration to be paid ranging from zero to $300.0 million, subject to the achievement of certain financial targets over the one-year earn out period ending January 31, 2022. The estimated fair value of the contingent consideration of $207.0 million is included in the preliminary purchase price and has been reported in the other liabilities line item in the Consolidated Balance Sheet at March 2021. In subsequent reporting periods, the contingent consideration liability will be remeasured at fair value with changes recognized in the selling, general and administrative expenses line item in the Consolidated Statements of Operations. The estimated fair value of the contingent consideration was determined based on the probability-weighted present value of various future cash payment outcomes. As of April 3, 2021, there were no changes in the recognized amounts or range of outcomes for the contingent consideration recognized as a result of the acquisition. Refer to Note 23 for additional information on fair value measurements.
Supreme was a privately-held company based in New York, New York and is a global streetwear leader that sells apparel, accessories and footwear under its namesake brand, Supreme庐,
through direct-to-consumer channels, including digital. The acquisition of Supreme accelerates 大象传媒's long-term growth strategy and builds on a long-standing relationship between Supreme and 大象传媒, with the Supreme庐 brand being a regular collaborator with 大象传媒's Vans庐, The North Face庐 and Timberland庐 brands. The acquisition also provides 大象传媒 with deeper access to attractive consumer segments and the ability to leverage 大象传媒's enterprise platforms and capabilities to enable sustainable long-term growth.
In connection with the acquisition, 大象传媒 deposited in escrow 605,050 shares of 大象传媒 Common Stock. The common shares are subject to certain future service requirements and vest over periods of up to four years. For accounting purposes, 大象传媒 will recognize the stock-based compensation cost for the fair value of these awards of $51.7听million over the vesting periods.
Supreme contributed revenues of $142.0 million, and net income of $21.5 million to 大象传媒 for the period from December听28, 2020 through April 3, 2021. In addition, 大象传媒 recognized $8.7听million of transaction and deal-related expenses during the year ended March 2021 in the selling, general and administrative expenses line item in the Consolidated Statement of Operations. The results of Supreme have been reported in the Active segment since the date of acquisition.
The allocation of the purchase price is preliminary and subject to change, primarily for certain income tax matters and final adjustments for net working capital. Accordingly, adjustments may be made to the values of the assets acquired and liabilities assumed as additional information is obtained about the facts and circumstances that existed at the valuation date.
The following table summarizes the preliminary estimated fair values of the Supreme assets acquired and liabilities assumed at the date of acquisition:
The preliminary purchase price consisted of the following components:
The goodwill is attributable to our ability to expand the Supreme庐 brand into new markets, the acquired workforce and future collaboration opportunities for the Supreme庐 brand. All of the goodwill was assigned to the Active segment and will not be deductible for tax purposes.
The Supreme庐 trademark, which management believes to have an indefinite life, has been valued at $1.2听billion using the relief-from-royalty method, which is an income valuation approach. The relief-from-royalty method requires the use of significant estimates and assumptions, including but not limited to, future revenues, growth rates, royalty rate, tax rates and discount rate.
The following unaudited pro forma summary presents consolidated information of 大象传媒 as if the acquisition of Supreme had occurred on March 31, 2019:
These pro forma amounts have been calculated after applying 大象传媒鈥檚 accounting policies and adjusting the results of Supreme to reflect the fair value adjustments to intangible assets, property, plant and equipment and inventory. The results of Supreme have also been adjusted for historical interest expense as the acquired business was debt-free on the acquisition date. These changes have been applied from March 31, 2019, with related tax effects.
The pro forma financial information in the year ended March 2021 excludes $30.6听million of expenses related to Supreme's transaction and deal-related costs, including employee compensation costs and accelerated vesting of stock options, which are directly attributable to the transaction.
The pro forma financial information in the year ended March 2020 includes $8.7 million of 大象传媒's transaction expenses related to the acquisition.
Pro forma financial information is not necessarily indicative of 大象传媒鈥檚 operating results if the acquisition had been effected at the date indicated, nor is it necessarily indicative of future operating results. Amounts do not include any marketing leverage, or operating efficiencies that 大象传媒 believes are achievable.
Altra
On June 1, 2018, 大象传媒 acquired 100% of the stock of Icon-Altra LLC, plus certain assets in Europe ("Altra"). The purchase price was $131.7听million in cash, subject to working capital and other adjustments, and was primarily funded with short-term borrowings. The purchase price decreased $0.1听million during the year ended March 2019, related to working capital adjustments, resulting in a final purchase price of $131.6听million.
Altra庐, the primary brand, is an athletic and performance-based lifestyle footwear brand. Altra provides 大象传媒 with a unique and differentiated technical footwear brand that will serve as a catalyst for growth.
Altra contributed revenues of $50.2听million and net income of $0.8听million during the year ended March 2019.
Total transaction expenses for the Altra acquisition were $2.3听million, all of which were recognized in the selling, general
and administrative expenses line item in the Consolidated Statement of Operations during the year ended March 2019.
Pro forma results of operations of the Company would not be materially different as a result of the Altra acquisition and therefore are not presented.
Icebreaker
On April 3, 2018, 大象传媒 acquired 100% of the stock of Icebreaker Holdings Limited ("Icebreaker") for NZ$274.4 million ($198.5 million) in cash, subject to working capital and other adjustments. The purchase price was primarily funded with short-term borrowings. The purchase price decreased NZ$1.4 million ($0.9 million) during the year ended March 2019, related to working capital adjustments, resulting in a final purchase price of NZ$273.0 million ($197.6听million).
Icebreaker was a privately-held company based in Auckland, New Zealand. Icebreaker庐, the primary brand, specializes in high-performance apparel based on natural fibers, including merino wool, plant-based fibers and recycled fibers. It is an ideal complement to 大象传媒's Smartwool庐 brand, which also features merino wool in its clothing and accessories. Together, the Smartwool庐 and Icebreaker庐 brands position 大象传媒 as a global leader in the merino wool and natural fiber categories.
For the year ended March 2019, Icebreaker contributed revenues of $174.2听million, representing 1.7% of 大象传媒's total revenue for the period. Icebreaker contributed net income of $14.6听million during the year ended March 2019, representing 1.7% of 大象传媒's income from continuing operations in the period.
Total transaction expenses for the Icebreaker acquisition of $7.4 million were recognized in the selling, general and administrative expenses line item in the Consolidated Statements of Operations, of which $4.1 million was recognized during the year ended March 2019. In addition, the Company recognized a $9.9 million gain on derivatives used to hedge the purchase price of Icebreaker in the other income (expense), net line item in the Consolidated Statements of Operations, of which $0.3 million was recognized during the year ended March 2019.
Pro forma results of operations of the Company would not be materially different as a result of the Icebreaker acquisition and therefore are not presented.
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