Business Combinations

12 Months Ended

Feb. 01, 2020

Note 12. Business Combinations

Fiscal 2017 Business Combinations

During Fiscal 2017 we completed certain acquisitions which resulted in our acquisition of TBBC and 12 Lilly Pulitzer Signature Stores. TBBC, which we acquired in December 2017, designs, sources, markets and distributes premium childrenswear including bonnets, hats, apparel, swimwear and accessories through the TBBC e-commerce website as well as wholesale specialty retailers. The Lilly Pulitzer Signature Stores that were acquired are located in Massachusetts, Virginia and Maryland. We believe the TBBC acquisition further advances our strategic goal of owning a diversified portfolio of lifestyle brands, while the acquisition of the Lilly Pulitzer Signature Stores allows for growth of Lilly Pulitzer’s direct to consumer business, particularly in some key markets. Subsequent to their respective acquisitions, the acquired Lilly Pulitzer Signature Stores are included in our Lilly Pulitzer operating group, while the TBBC operations are included in Corporate and Other.

The purchase price, in the aggregate, of our Fiscal 2017 acquisitions was $18 million primarily consisting of cash, subject to adjustment based on net working capital or inventory amounts as of the closing dates of the respective acquisitions. We used borrowings under our revolving credit facility to finance the transactions. Transaction and integration costs related to the acquisitions totaled $1 million and are included in SG&A in Fiscal 2017. The following table summarizes our allocation of the purchase price for the Fiscal 2017 acquisitions, in the aggregate (in thousands):


	Fiscal 2017 acquisitions
Cash and cash equivalents	$	406
Inventories ⁽¹⁾		3,910
Prepaid expenses and other current assets		595
Property and equipment		682
Intangible assets		5,940
Goodwill		6,642
Accounts payable, accrued expenses and other liabilities		(640)
Purchase price ⁽²⁾	$	17,535

(1)

Includes a step-up of acquired inventory from cost to fair value of $1 million with substantially all of this step-up amount recognized in Fiscal 2017 in cost of goods sold in our consolidated statement of operations with the remaining amount recognized in Fiscal 2018 in cost of goods sold in our consolidated statement of operations.

(2)

In connection with the TBBC acquisition, we entered into a contingent consideration agreement pursuant to which we will be obligated to make cash payments to the sellers of up to $4 million in the aggregate subject to TBBC’s achievement of certain earnings targets over a four year period subsequent to the acquisition. Estimated fair value of the contingent consideration amount as of the acquisition date was less than $1 million.

Intangible assets allocated in connection with our purchase price allocation consisted of the following (in thousands):


		Fiscal 2017
	Useful life	acquisitions
Finite lived intangible assets acquired:
Trade names and trademarks	20 years	$	4,220
Other intangible assets including reacquired rights, customer relationships and non-compete agreements	3 - 10 years	$	1,720
		$	5,940