3. GBG Acquisition

On October 29, 2018, the Company completed the GBG Acquisition for a preliminary purchase price of $1.2 billion. To finance the acquisition, the Company entered into the Credit Agreements (as defined below). The First Lien Credit Agreement (as defined below) provides for a senior secured asset based revolving credit facility with commitments in an aggregate principal amount of $150.0 million, which subsequently increased to $200.0 million, and a senior secured term loan credit facility in an aggregate principal amount of $645.0 million. The Second Lien Credit Agreement (as defined below) provides for a second lien term loan facility in an aggregate principal amount of $668.0 million. See “Note 8 – Debt” for a discussion of the terms of the Credit Agreements and amendments thereto.

The purchase price allocation is subject to adjustment until the Company has completed its analysis within the measurement period. The purchase price allocation is preliminary and the finalization of the Company’s purchase price allocation may result in changes in the valuation of assets acquired and liabilities assumed. The Company will finalize the purchase price allocation during the fourth quarter of 2019.

During the three months ended September 30, 2019, the Company obtained additional information regarding the fair value of certain acquired assets and liabilities based on facts that existed at the date of acquisition. The following table sets forth the current allocation of the purchase price to the net assets acquired and liabilities assumed, including measurement period adjustments (in thousands):


	Preliminary Purchase		Measurement Period		Revised Purchase
	Price Allocation		Adjustments		Price Allocation
Assets acquired and liabilities assumed:
Accounts receivable	$	65,106	$	328	$	65,434
Inventories		371,605		21,698		393,303
Prepaid expenses and other current assets		56,380		—		56,380
Property and equipment		86,971		—		86,971
Other assets		41		—		41
Accounts payable and accrued expenses		(589,849)		(2,708)		(592,557)

Intangible assets and liabilities acquired:
Goodwill		367,725		(19,318)		348,407
Leasehold interests		(2,310)		—		(2,310)
Customer relationships		824,000		—		824,000
Preliminary purchase price	$	1,179,669	$	—	$	1,179,669

Unaudited pro forma financial information

The following table presents our unaudited pro forma results for the three months ended September 30, 2018 and nine months ended September 30, 2018, as if the GBG Acquisition had occurred on January 1, 2018. The unaudited pro forma financial information presented includes the effects of adjustments related to the amortization of acquired tangible and intangible assets, and excludes other non-recurring transaction costs directly associated with the acquisition such as legal and other professional service fees.


	Three months ended September 30,			Nine months ended September 30,
	2018			2018
	(in thousands)			(in thousands)
Net sales	$	605,710		$	1,586,177
Cost of goods sold		495,826			1,250,806
Gross margin		109,884			335,371
Gross margin % of net sales		18.1	%		21.1	%
Operating expenses
Selling, general and administrative		151,607			431,491
Depreciation and amortization		22,177			68,526
Total operating expenses		173,784			500,017
Operating loss		(63,900)			(164,646)
Interest expense		38,066			114,131
Other (income) expense, net		22			(17,551)
Loss before income taxes		(101,988)			(261,226)
Income tax benefit		(1,152)			(2,275)
Net loss	$	(100,836)		$	(258,951)

The unaudited pro forma financial information as presented above is for information purposes only and is not necessarily indicative of the actual results that would have been achieved had the GBG Acquisition occurred at the beginning of the earliest period presented or the results that may be achieved in future periods.