Business Combinations

Acquisition of Cloverleaf

The Company completed the acquisition of privately-held Cloverleaf on May 1, 2019. A summary of the preliminary fair value of the assets acquired and liabilities assumed for total cash consideration of $1.25 billion, subject to a 60 day net working capital adjustment, is as follows (in thousands):



	Preliminary Purchase Price Allocation
Assets
Land	$	59,363
Building and improvements	687,821
Machinery and equipment	144,825
Assets under construction	20,968
Operating lease right-of-use assets	1,254
Cash and cash equivalents	4,332
Accounts receivable	21,358
Goodwill	107,643
Acquired identifiable intangibles:
Customer relationships	241,738
Trade names and trademarks	1,623
Other assets	18,720
Total assets	1,309,645
Liabilities
Accounts payable and accrued expenses	30,905
Notes payable	17,179
Operating lease obligations	1,254
Unearned revenue	3,536
Pension and postretirement benefits	2,020
Deferred tax liability	9,063
Total liabilities	63,957
Total consideration for Cloverleaf acquisition	$	1,245,688

The initial purchase accounting is based on management's preliminary assessment, which may differ when final information becomes available. Subsequent adjustments made to the initial purchase accounting, if any, are made within the measurement period, which will be finalized within one year of the acquisition date.

As shown above, the Company recorded approximately $107.6 million of goodwill related to the Cloverleaf Acquisition. The strategic benefits of the acquisition include the Company's ability to add complementary customers into its network, provide an opportunity for growth in the Central and Southeast markets, deepen existing customer relationships, provide three expansion opportunities that are already under construction, provide one development opportunity and leverage integration experience to drive synergies and further enhance the warehouse network for new and existing customers. These factors contributed to the goodwill that was recorded upon consummation of the transaction. The Company believes that a portion of the goodwill recorded as a result of the Cloverleaf Acquisition will be deductible for federal income tax purposes. The assignment of goodwill to each reportable segment is not yet complete.

As shown above, in connection with the Cloverleaf Acquisition the Company recorded an intangible asset of approximately $241.7 million for customer relationships which has been assigned a useful life of 25 years, and approximately $1.6 million for trade names and trademarks which has been assigned a useful life of 1.5 years. These intangible assets will be amortized on a straight-line basis over their respective useful lives.

Acquisition of Lanier

The Company completed the acquisition of privately-held Lanier on May 1, 2019. A summary of the preliminary fair value of the assets acquired and liabilities assumed for total cash consideration of $82.6 million, subject to a 60 day net working capital adjustment, is as follows (in thousands):



	Preliminary Purchase Price Allocation
Assets
Land	$	4,100
Building and improvements	36,935
Machinery and equipment	25,514
Cash and cash equivalents	645
Accounts receivable	1,403
Goodwill	6,163
Acquired identifiable intangibles:
Customer relationships	9,251
Other assets	82
Total assets	84,093
Liabilities
Accounts payable and accrued expenses	1,539
Total liabilities	1,539
Total consideration for Lanier acquisition	$	82,554

As shown above, the Company recorded approximately $6.2 million of goodwill related to the Lanier acquisition. The strategic benefits of the acquisition include increased presence in the north Georgia poultry market and leveraging integration experience to drive synergies and further enhance the warehouse network for new and existing customers. These factors contributed to the goodwill that was recorded upon consummation of the transaction. The Company believes that a portion of the goodwill recorded as a result of the Lanier acquisition will be deductible for federal income tax purposes. The goodwill related to the Lanier acquisition has been assigned to the Warehouse segment.

As shown above, the Company recorded approximately $9.3 million of customer relationships related to the Lanier acquisition which has been assigned a useful life of 25 years and will be amortized on a straight-line basis.

Pro Forma Financial Information

The unaudited pro forma financial information set forth below is based on the historical condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018, adjusted to give effect to the Cloverleaf Acquisition as if it had occurred on January 1, 2018. The pro forma adjustments primarily relate to acquisition expenses, depreciation expense on acquired assets, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to fund the acquisition of Cloverleaf.

On March 1, 2019, Cloverleaf acquired Zero Mountain, Inc. and Subsidiaries (Zero Mountain). As a result, we have included the results of operations of Zero Mountain in the below pro forma financial information. The pro forma adjustments made include the acquisition expenses incurred in connection with Cloverleaf's acquisition of Zero Mountain.

The accompanying unaudited pro forma condensed consolidated financial statements exclude the results of the Lanier acquisition, which was deemed immaterial, and are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations of the Company or the operating partnership would have been had the Cloverleaf Acquisition occurred on the dates assumed, nor are they necessarily indicative of what the results of operations would be for any future periods.

Americold Realty Trust and Subsidiaries



	Pro forma (unaudited)
	(in thousands, except per share data)
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Total revenue	$	463,743	$	449,755	$	907,099	$	895,148
Net income (loss) available to common shareholders⁽¹⁾	$	22,908	$	27,049	$	8,151	$	(19,330	)
Net income (loss) per share, diluted⁽²⁾	$	0.12	$	0.14	$	0.04	$	(0.11	)

Americold Realty Operating Partnership, L.P. and Subsidiaries



	Pro forma (unaudited)
	(in thousands, except per share data)
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Total revenue	$	463,743	$	449,755	$	907,099	$	895,148
Net income (loss) available to common unitholders⁽¹⁾	$	22,908	$	27,049	$	8,151	$	(19,330	)
Net income (loss) per unit, diluted⁽²⁾	$	0.12	$	0.14	$	0.04	$	(0.11	)

⁽¹⁾ Pro forma net income available to common shareholders was adjusted to exclude $15.9 million and $25.7 million of acquisition related costs incurred by the Company during the three and six months ended June 30, 2019, respectively, and to include these charges for the corresponding periods in 2018.

⁽²⁾ Adjusted to give effect to the issuance of approximately 42.1 million common shares in connection with the Cloverleaf Acquisition.

Since the date of acquisition, total revenues of approximately $39.5 million and net income of approximately $1.9 million associated with properties acquired in the Cloverleaf Acquisition are included in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019.