On August 30, 2021, the Company completed the acquisition of certain assets and assumption of certain liabilities of L&M Bag & Supply Co., Inc. (“L&M”) in a transaction valued at $60 million, subject to working capital adjustments (the “L&M Acquisition”). L&M is a specialized supplier of geotextile fabrics and geogrids, as well as silt fences, turbidity barriers and safety fences, weed control fabric and sod staples. The transaction price was funded with cash on hand.

On August 9, 2021, the Company completed the acquisition of all of the outstanding shares of Pacific Pipe Company, Inc. (“Pacific Pipe”) in a transaction valued at $103 million, subject to working capital adjustments (the “Pacific Pipe Acquisition”). Pacific Pipe has four branch locations and serves municipalities and contractors in the water, wastewater, storm drainage and irrigation industries throughout Hawaii with a broad product offering. The transaction price was funded with cash on hand.

On August 17, 2020, the Company completed the acquisition of certain assets and assumption of certain liabilities of Water Works Supply Co. (“WWSC”) in a transaction valued at approximately $12 million, subject to a working capital adjustment (the “WWSC Acquisition”). The transaction price was funded through cash on hand. Given the size of the purchase price, a full purchase price allocation has not been presented. However, significant components of the final purchase price allocation include $6 million to customer relationships, $3 million to net working capital, and $2 million to goodwill.

On March 11, 2020, the Company completed the acquisition of all of the outstanding shares of R&B Co. (“R&B”) in a transaction valued at $215 million, subject to a working capital adjustment (the “R&B Acquisition”). The transaction price consisted of $212 million of initial cash consideration, subject to working capital adjustments, and $3 million of contingent consideration to be paid upon satisfaction of certain conditions to either the sellers of R&B or certain former R&B employees and recognized as compensation expense. During fiscal 2021, the Company settled the R&B contingent consideration liability. With the R&B Acquisition, the Company added approximately 10 branch locations to the business, which expanded the Company's presence in California and strengthened the Company's ability to offer complementary waterworks products and fusible services. The transaction price was funded with cash on hand.

The R&B Acquisition included a contingent consideration arrangement of up to $3 million that was payable to the R&B sellers if certain R&B employees failed to complete a post-acquisition one-year service period. The range of the undiscounted amounts payable by the Company under the contingent consideration agreement was between zero and $3 million. The fair value of the contingent consideration recognized on the acquisition date of zero was determined based on the expectation that all former R&B employees would be retained during the one-year retention period (a level 3 fair value measurement based on unobservable inputs).

On July 8, 2019, the Company completed the acquisition of certain assets and assumption of certain liabilities of Long Island Pipe Supply, Inc. and its direct subsidiaries and certain affiliates (collectively, “LIP”) in a transaction valued at up to $225 million, subject to a working capital adjustment (the “LIP Acquisition”). The transaction price consists of $220 million of initial cash consideration and contingent consideration of up to $5 million based upon financial performance after the closing. With the LIP Acquisition, the Company added approximately 20 branch locations to the business, primarily in the states of New York and New Jersey, which enhances the Company’s distribution offerings of fire protection products and fabrication services. The transaction price was funded through an increase in borrowings on the Prior Term Loan Facility as further described in Note 6.

The up-front consideration payment included $15 million to former LIP executives. As such, this initial payment of $15 million was included within prepaid expenses and other assets, current and non-current as prepaid compensation expenses in the Balance Sheet and as an operating cash outflow for fiscal 2019. Each former LIP executive was required to perform services required by his post-acquisition employment or consulting agreement, which range from one to two years, or otherwise would have been required to repay $5 million. As of January 30, 2022, the service periods have passed and no repayment was required. During fiscal 2021, fiscal 2020 and fiscal 2019, the Company recognized $2 million, $7 million and $6 million, respectively, of expense within selling, general and administrative expenses associated with the amortization of these balances.

On February 4, 2019, the Company completed the acquisition of certain assets and liabilities of Maskell Pipe & Supply, Inc. (“Maskell”) in a transaction valued at approximately $19 million, subject to a working capital adjustment (the “Maskell Acquisition”). The transaction price was funded through cash on hand. Given the size of the purchase price, a full purchase price allocation has not been presented. However, significant components of the final purchase price allocation include $6 million to fixed assets, $5 million to customer relationships, $5 million to goodwill and $2 million to net working capital.

During fiscal 2021, the Company completed the acquisition of certain assets and liabilities in transactions valued at $11 million, subject to working capital adjustments (the “Other 2021 Acquisitions”). Given the lack of significance of these transactions, a full purchase price allocation has not been presented. However, a substantial portion of the aggregate purchase price was allocated to customer relationships, goodwill and net working capital.

During fiscal 2019, the Company completed acquisitions of certain assets and liabilities in transactions valued in aggregate at $2 million, subject to working capital adjustments (the “Other 2019 Acquisitions”). Given the lack of significance of these transactions, individually and in the aggregate, a full purchase price allocation has not been presented. However, a substantial portion of the aggregate purchase price was allocated to net working capital.

In the above transactions, to the extent applicable, the excess of purchase price over net tangible and intangible assets acquired resulted in goodwill, which represents the assembled workforce and anticipated long-term growth in new markets, customers and products. Goodwill associated with the L&M Acquisition, WWSC Acquisition, LIP Acquisition, Maskell Acquisition, the Other 2021 Acquisitions and the Other 2019 Acquisitions are fully deductible by the Company for U.S. income tax purposes.

The following table represents the allocation of the transaction price to the fair value of identifiable assets acquired and liabilities assumed in the acquisitions during fiscal 2021, fiscal 2020 and fiscal 2019. Preliminary values of the fiscal 2021 acquisitions are not yet finalized pending the final purchase price allocations and are subject to change once additional information is obtained.


	L&M Acquisition		Pacific Pipe Acquisition		R&B Acquisition		LIP Acquisition
Cash	$	—	$	2	$	3	$	—
Accounts receivable	7		10		25		31
Inventories	16		17		20		37
Intangible assets	19		47		114		94
Goodwill	18		41		89		51
Operating lease right-of-use assets	2		17		9		18
Other assets, current and non-current	5		6		11		6
Total assets acquired	67		140		271		237
Accounts payable	3		5		18		14
Deferred income taxes	—		12		31		—
Contingent consideration	—		—		—		2
Operating lease liabilities	2		17		9		18
Other liabilities, current and non-current	—		—		4		3
Net assets acquired	$	62	$	106	$	209	$	200


	L&M Acquisition		Pacific Pipe Acquisition		R&B Acquisition		LIP Acquisition
Total consideration, net of cash	$	62	$	104	$	207	$	216
Less: Employment and consulting agreement prepayment; operating cash outflow	—		—		—		(15)
Less: Working capital adjustment	—		—		(1)		(1)
Plus: Cash acquired in acquisition	—		2		3		—
Plus: Contingent consideration	—		—		—		2
Total consideration	62		106		209		202
Less: Contingent consideration	—		—		—		(2)
Net assets acquired; investing cash outflow	$	62	$	106	$	209	$	200

The following pro forma information presents a summary of the results of operations for the periods indicated as if the Pacific Pipe and L&M acquisitions had been completed as of February 3, 2020, the R&B Acquisition and associated senior notes issuance had been completed as of February 4, 2019 and the LIP Acquisition and associated term loan borrowings had been completed as of January 29, 2018. The pro forma financial information is based on the historical financial information for the Company and Pacific Pipe, L&M, R&B and LIP, along with certain pro forma adjustments. These pro forma adjustments consist primarily of:

•Reclassification of direct acquisition transaction costs, retention bonuses and inventory fair value adjustments from the period incurred to periods these expenses would have been recognized given the assumed transaction dates identified above;

The following pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the acquisitions occurred on the assumed dates, nor is it necessarily an indication of future operating results. In addition, the pro forma information does not reflect the cost of any integration activities, benefits from any synergies that may be derived from the acquisitions or revenue growth that may be anticipated.

As a result of integration of the acquisitions, including the consolidation of certain acquired and existing branches, it is impracticable to identify the explicit financial performance associated with the Pacific Pipe, L&M, R&B and LIP acquisitions. As such, the Company has not presented the post-acquisition net sales and net income for the Pacific Pipe, L&M, R&B and LIP acquisitions.

The customer relationship intangible assets represent the value associated with those customer relationships in place at the date of the respective acquisitions. The Company valued the customer relationships using an excess earnings method using various inputs such as customer attrition rate, revenue growth rate, gross margin percentage and discount rate. Cash flows associated with the existing relationships are expected to diminish over time due to customer turnover. The Company reflected this expected diminishing cash flow through the utilization of an annual customer attrition rate assumption and in its method of amortization.

The non-compete intangible asset represents the value associated with a non-compete agreement for former executives in place at the date of the respective acquisitions. The trademark intangible asset represents the value associated with the brand names in place at the date of the respective acquisitions.

A summary of the intangible assets acquired and assumptions utilized in the valuation, for the acquisitions is as follows:


	Intangible Asset Amount		Amortization Period	Discount Rate		Attrition Rate
L&M Acquisition
Customer relationships	$	19	10 years	15.5	%	15.0	%

Pacific Pipe Acquisition
Customer relationships	46		10 years	11.5	%	10.0	%
Trademark	1		2 years	11.5	%	N/A

WWSC Acquisition
Customer relationships	6		10 years	13.0	%	15.0	%

R&B Acquisition
Customer relationships	114		15 years	10.0	%	7.5	%

LIP Acquisition
Customer relationships - retail	90		10 years	14.0	%	12.5	%
Customer relationships - distribution	3		15 years	14.0	%	5.0	%
Other intangibles	1

Maskell Acquisition
Customer relationships	5		10 years	13.0	%	12.5	%

Acquisition-related costs, which are included within selling, general and administrative expenses, for each of the completed acquisitions discussed above were as follows:


	Fiscal Years Ended
	January 30, 2022		January 31, 2021		February 2, 2020
L&M Acquisition	$	1	$	—	$	—
Pacific Pipe Acquisition	1		—		—
R&B Acquisition	—		1		1
LIP Acquisition	—		—		1