Acquisition of Controlling Interest in a Joint Venture

6 Months Ended

Sep. 26, 2015

Business Combinations [Abstract]

Acquisition of Controlling Interest in a Joint Venture

Acquisition of Controlling Interest in a Joint Venture

During the second quarter of Fiscal 2016, the Company made contributions to MK Panama totaling $18.5 million, consisting of cash consideration of $3.0 million and elimination of liabilities owed to the Company of $15.5 million, which increased the Company's ownership interest to 75%. As a result of obtaining controlling interest in MK Panama, which was previously accounted for under the equity method of accounting, the Company consolidated MK Panama into its operations beginning with the second quarter of Fiscal 2016. The additional ownership interest provides the Company with more direct control over its operations in Latin America and will allow it to better manage its opportunities in the region.

The Company accounted for its acquisition of controlling interest in MK Panama as a business combination during the second quarter of Fiscal 2016. The following table summarizes the preliminary fair values of the assets acquired and liabilities and non-controlling interest assumed as of the date the Company obtained control of MK Panama (in thousands):

	June 28, 2015
Current assets	$	22,922
Fixed assets	6,374
Customer relationship intangible assets	2,000
Goodwill	12,210
Debt obligations	(9,539		)
Other liabilities	(2,333		)
Total fair value of net assets of MK Panama	31,634
Fair value of preexisting interest in MK Panama	8,107
Non-controlling interest	5,052
Fair value of consideration provided	$	18,475

In connection with this acquisition, the Company recorded non-deductible goodwill of $12.2 million, of which $9.5 million and $2.7 million was assigned to the Company's retail and wholesale segments, respectively. The customer relationship intangible assets are being amortized over 10 years. The amount recorded in the Company's consolidated statement of operations in connection with the revaluation of its prior interest in MK Panama was not material.

The Company is in the process of finalizing estimates related to the cash and non-cash consideration provided in connection with obtaining controlling interest in MK Panama, which could result in measurement period adjustments.