Annual report pursuant to Section 13 and 15(d)

Acquisitions and Investments in Joint Ventures

v3.5.0.2
Acquisitions and Investments in Joint Ventures
12 Months Ended
Sep. 24, 2016
Business Combinations [Abstract]  
Acquisitions and Investments in Joint Ventures
Acquisitions and Investments in Joint Ventures
Fiscal 2016
Hydro-Organics Wholesale Inc.
On September 30, 2015, the Company purchased Hydro-Organics Wholesale, Inc., an organic fertilizer business, for approximately $7.8 million cash and approximately $2.6 million of estimated contingent future performance-based payments. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $10.7 million, of which $5.2 million was allocated to identified intangible assets and $5.5 million is included in goodwill in the Company’s condensed consolidated balance sheet as of September 24, 2016. Financial results for Hydro-Organics Wholesale Inc. have been included in the results of operations within the Garden segment since the date of acquisition.
DMC
On December 1, 2015, the Company purchased the pet bedding business and certain other assets of National Consumers Outdoors Corp., formerly known as Dallas Manufacturing Company (“DMC”), for approximately $61 million. During the fourth quarter of fiscal 2016, the Company finalized the allocation of the purchase price to the fair value of the net tangible and intangible assets acquired. The purchase price exceeded the estimated fair value of the net tangible assets acquired by approximately $33.8 million, of which $18.7 million was allocated to identified intangible assets and $15.1 million is included in goodwill in the Company’s condensed consolidated balance sheet as of September 24, 2016. Financial results for DMC have been included in the results of operations within the Pet segment since the date of acquisition. The following table summarizes the preliminary recording of fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments:
In thousands
Amounts Previously Recognized as of Acquisition Date (1)
 
Measurement Period Adjustments
 
Amounts Recognized as of Acquisition Date (as Adjusted)
Current assets, net of cash and cash equivalents acquired
$
41,170


$
156


$
41,326

Fixed assets
521


17


538

Goodwill


15,058


15,058

Other assets
33,810


(33,790
)

20

Other intangible assets, net


18,700


18,700

Current liabilities
(14,586
)

(40
)

(14,626
)
Net assets acquired, less cash and cash equivalents
$
60,915


$
101


$
61,016

(1) As previously reported in the Company's Form 10-Q for the periods ended December 26, 2016, March 26, 2016 and June 25, 2016
The acquisitions of IMS Trading Corp, Hydro-Organics Wholesale Inc. and DMC were not considered individually or collectively material to the Company's overall consolidated financial statements during the periods presented. The following unaudited pro forma information presents the combined net sales as if the acquisitions of IMS Trading Corp and DMC had occurred at the beginning of fiscal 2015. The pre-acquisition net sales of DMC and IMS Trading Corp have been added to the Company's historical results. The following pro forma net sales information has been prepared for comparative purposes only and is not necessarily indicative of the net sales of the Company as they would have been had the acquisitions occurred on the assumed dates, nor are they necessarily an indication of future net sales.
 
 
 
In thousands (unaudited)
 
 
 
Fiscal Year Ended
 
 
 
September 24, 2016
 
September 26, 2015
Pro forma net sales
 
 
$
1,856,691

 
$
1,815,997


The impact of DMC and IMS on pro forma operating income for fiscal 2015 was not material. The impact of IMS and DMC on the Company's operating income in fiscal 2016 was $10.6 million. The financial results of Hydro-Organics Wholesale, Inc are not material to the Company's consolidated operating results.

Fiscal 2015
Purishield LLC and Ceregenin LLC
On December 30, 2014, the Company invested $16 million in cash for a 50% interest in two newly formed entities. The two entities own rights to commercialize products which incorporate features covered by certain patents, technology and associated intellectual property rights in the fields of animal health and pesticide applications. The investment is being accounted for under the equity method of accounting.
During the fourth quarter of fiscal 2016, the Company determined that its equity method investments in these two entities were impaired as a result of changes in marketplace conditions, which impacted the time line of the expected cash flows and the recoverability of the investment. Accordingly, the Company recorded a non-cash charge of approximately $16.6 million, included in Other income (expense) in the consolidated statements of operations, to bring the carrying value of these investments to zero.
IMS Trading Corp
On July 31, 2015, the Company purchased substantially all of the assets of IMS Trading Corp. for approximately $23.2 million. IMS Trading Corp was a manufacturer, importer and distributor of rawhide, natural dog treats and pet products throughout the United States and internationally. The purchase price exceeded the fair value of the net tangible and intangible assets acquired by approximately $1.4 million, which is included in goodwill in our consolidated balance sheet as of September 24, 2016. Financial results for IMS Trading Corp. have been included in the results of operations within the Pet segment since the date of acquisition.
During the second fiscal quarter of 2016, the Company finalized the allocation of the purchase price to the fair value of the tangible and intangible assets acquired. The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments:
In thousands
Amounts Previously Recognized as of Acquisition Date (1)

Measurement Period Adjustments

Amounts Recognized as of Acquisition Date (as Adjusted)
Current assets, net of cash and cash equivalents acquired
$
20,458


$
315


$
20,773

Fixed assets
1,670




1,670

Goodwill


1,365


1,365

Other assets
5,356


(5,356
)


Other intangible assets, net


4,510


4,510

Current liabilities
(5,100
)



(5,100
)
Net assets acquired, less cash and cash equivalents
$
22,384


$
834


$
23,218

(1) As previously reported in the Company's Form 10-K for the period ended September 26, 2015 and the Company's Form 10-Q for the period ended December 26, 2015
Fiscal 2014
Envincio LLC
On April 1, 2014, the Company purchased certain assets of Envincio LLC, including brands, EPA registrations, inventory and trade receivables, for approximately $20.3 million. The purchase price exceeded the fair value of the net tangible and intangible assets acquired by approximately $3.3 million, which is recorded in goodwill. Financial results for Envincio have been included in the results of operations within the Pet segment since the date of acquisition.
The following table summarizes the recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments:
 
(In thousands)
 
Amounts
Recognized as  of
Acquisition Date
(as Adjusted)
Current assets, net of cash and cash equivalents acquired
 
$
6,650

Fixed assets
 
20

Goodwill
 
3,333

Intangible assets
 
11,450

Current liabilities
 
(1,170
)
Net assets acquired, less cash and cash equivalents
 
$
20,283