Acquisition of Destiny Homes

9 Months Ended

Dec. 28, 2019

On August 2, 2019, the Company purchased certain manufactured housing assets and assumed certain liabilities of Destiny Homes, which operates one manufacturing facility located in Moultrie, Georgia and produces and distributes manufactured and modular homes through a network of independent retailers in the Southeastern United States, further expanding the Company’s reach. The transaction was accounted for as a business combination and the results of operations have been included in the accompanying Consolidated Financial Statements since the date of acquisition.

The acquisition-date fair value of the total consideration was $16.5 million, which is subject to future adjustments. Neither Destiny Homes nor the Company incurred debt in connection with the purchase or subsequent operations.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands). Certain estimated values are not yet finalized and are subject to change, which could be significant. The allocation of the purchase price is still preliminary due to the short duration since the acquisition date and will be finalized upon completion of the analysis of the fair values of Destiny Home’s assets and specified liabilities. The Company will finalize the amounts recognized as it obtains the information necessary to complete the analysis. We expect to finalize these amounts as soon as possible but no later than one year from the acquisition date.



	August 2, 2019
Accounts receivable	$	908
Inventories	5,508
Property, plant and equipment, net	5,244
Other current assets	3,296
Intangible assets ⁽¹⁾	5,940
Total identifiable assets acquired	20,896
Accounts payable and accrued liabilities	(6,174		)
Net identifiable assets acquired	14,722
Goodwill	1,745
Net assets acquired	$	16,467

(1) Includes $1.7 million assigned to trademarks and trade names, which are considered indefinite lived intangible assets and are not subject to amortization and $4.2 million assigned to a customer-related intangible subject to a useful life of 10 years amortized on a straight-line basis.

Since the acquisition date, Destiny Homes contributed Net revenue of $11.2 million and $17.6 million for the three and nine months ended December 28, 2019, respectively. Destiny Homes increased consolidated Net income on the Company's Consolidated Statements of Comprehensive Income for the three and nine months ended December 28, 2019 by $168,000 and $32,000, respectively. Net income from the Destiny Homes acquisition included required purchase accounting adjustments whereby home product inventory is recorded at fair value upon acquisition. This had the effect of eliminating profits from the related home sales after the acquisition date.

Pro Forma Impact of Acquisition. The following table presents supplemental pro forma information as if the acquisition of Destiny Homes had occurred on April 1, 2018 (in thousands, except per share data):



	Three Months Ended				Nine Months Ended
	December 28, 2019		December 29, 2018		December 28, 2019		December 29, 2018
Net revenue	$	273,722	$	245,742	$	817,674	$	757,112
Net income	20,898		14,832		63,868		52,296
Diluted net income per share	2.25		1.60		6.90		5.63