2. Business Acquisitions

The Company operates in a highly fragmented industry. A key component of the Company’s strategy is growth through acquisition that expands its geographic coverage, provides complementary lines of business and increases its market share.

The Company has accounted for all business combinations using the acquisition method. The assets acquired and liabilities assumed were recognized at their acquisition date fair values based on valuation analyses. In valuing acquired assets and liabilities, fair value estimates used Level 3 inputs, including future expected cash flows and discount rates. Goodwill was measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Goodwill recognized is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence and is all attributable to our one operating reportable segment. The results of operations of acquisitions are reflected in the Company’s Condensed Consolidated Financial Statements from the date of acquisition.

Fiscal 2018 Acquisitions

During the nine months ended January 31, 2018, the Company completed the following acquisitions, with an aggregate purchase price of $21.9 million of cash consideration, subject to finalization of working capital settlement amounts. The pro forma impact of these acquisitions is not presented as the effects were not material to the Company’s Condensed Consolidated Financial Statements.


Company Name	Form of Acquisition	Date of Acquisition
ASI Building Products, LLC	Purchase of net assets	August 1, 2017
Washington Builders Supply, Inc.	Purchase of net assets	October 2, 2017
Southwest Building Materials, Ltd.	Purchase of net assets	December 4, 2017

The preliminary allocation of purchase consideration for these acquisitions is summarized as follows:


	Preliminary
	Purchase Price
	Allocation
	January 31, 2018
		(in thousands)
Trade accounts and notes receivable	$	4,525
Inventories		3,824
Property and equipment		909
Tradenames		1,000
Vendor agreement		1,000
Below market leases		350
Intangible assets		8,920
Goodwill		3,310
Liabilities assumed		(1,945)
Purchase price	$	21,893

The goodwill and intangible assets related to these acquisitions are expected to be deductible for U.S. federal income tax purposes. The Company believes that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but, the Company is waiting for additional information (related to the finalization of working capital settlements) necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are preliminary. Such changes are not expected to be significant. The Company expects to complete the purchase price allocation as soon as practicable, but no later than one year from the applicable acquisition date.

Fiscal 2017 Acquisitions

In fiscal 2017, the Company completed the following acquisitions, with an estimated aggregate purchase price of $154.0 million, comprised of $148.7 million of cash consideration and $5.3 million of consideration related to working capital settlements and contingent consideration. The pro forma impact of acquisitions is not presented as the effects were not material to the Company’s Condensed Consolidated Financial Statements.


Company Name	Form of Acquisition	Date of Acquisition
Wall & Ceiling Supply Co., Inc.	Purchase of net assets	May 2, 2016
Rockwise, LLC	Purchase of net assets	July 5, 2016
Steven F. Kempf Building Materials, Inc.	Purchase of net assets	August 29, 2016
Olympia Building Supplies, LLC/Redmill, Inc.	Purchase of 100% of outstanding common stock	September 1, 2016
United Building Materials, Inc.	Purchase of net assets	October 3, 2016
Ryan Building Materials, Inc.	Purchase of net assets	October 31, 2016
Interior Products Supply	Purchase of net assets	December 5, 2016
Hawaii-based distribution business of Grabber Construction Products	Purchase of net assets	February 1, 2017

The preliminary allocation of purchase consideration for these acquisitions is summarized as follows:


	Preliminary				Preliminary
	Purchase Price				Purchase Price
	Allocation		Adjustments/		Allocation
	April 30, 2017		Reclassifications		January 31, 2018
	(in thousands)
Cash and cash equivalents	$	1,558	$	—	$	1,558
Trade accounts and notes receivable		37,691		(63)		37,628
Inventories		16,504		—		16,504
Other current assets		657		14		671
Property and equipment		8,357		—		8,357
Tradenames		9,490		—		9,490
Customer relationships		64,660		—		64,660
Goodwill		37,728		(144)		37,584
Deferred tax liability		(6,011)		—		(6,011)
Liabilities assumed		(16,958)		560		(16,398)
Purchase price	$	153,676	$	367	$	154,043

During the nine months ended January 31, 2018, the Company recorded adjustments to working capital for fiscal 2017 acquisitions resulting in an increase in total consideration paid of $0.4 million. As of January 31, 2018, goodwill of $25.4 million and other intangible assets of $53.6 million related to these acquisitions are expected to be deductible for U.S. federal income tax purposes. Also as of January 31, 2018, goodwill of $12.2 million and other intangible assets of $20.6 million related to these acquisitions are expected to be nondeductible for U.S. federal income tax purposes. The Company believes that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize the fair values of certain acquisitions for which final working capital settlements have not been determined. The additional information necessary is that which will result from these settlements. Such changes are not expected to be significant. The Company expects to complete the purchase price allocation for certain of these acquisitions as soon as practicable but no later than one year from the applicable acquisition date.