Quarterly report pursuant to Section 13 or 15(d)

Business Acquisition Business Acquisition

v2.4.0.8
Business Acquisition Business Acquisition
 6 Months Ended
Jun. 30, 2014
Business Combinations [Abstract]  
Business Acquisition
NOTE 3—BUSINESS ACQUISITION
On May 30, 2014, the Company purchased 100% of the equity interest in prAna Living LLC (“prAna”) for $188,467,000 net of acquired cash of $4,946,000. PrAna is a lifestyle apparel brand sold through approximately 1,400 select specialty and online retailers across North America, as well as through five company-owned retail stores, an e-commerce site and direct-mail catalogs. The acquisition of prAna strengthens and diversifies the Company's brand portfolio and generally offsets some of the more seasonal sales effects found within existing Columbia brands. The acquisition was funded with cash on hand.
PrAna contributed net sales of $5,547,000 and net loss, including amortization of acquired assets, of $1,065,000 to the Company from May 31, 2014 to June 30, 2014. In addition, the Company incurred transaction costs of $3,374,000 during the three and six months ended June 30, 2014. These acquisition and integration costs are included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2014.
Purchase price allocation
Acquired assets and liabilities were recorded at estimated fair value as of the acquisition date. The excess of the purchase price over the estimated fair value of identifiable net assets resulted in the recognition of goodwill of $54,819,000, all of which was assigned to the United States segment, and is attributable to future growth opportunities and any intangible assets that did not qualify for separate recognition. The goodwill is expected to be deductible for tax purposes.
The following table summarizes the preliminary estimated fair value of the net assets acquired and liabilities assumed as of May 30, 2014, the acquisition date (in thousands):
 
 
May 30, 2014
Cash
 
$
4,946

Accounts receivable
 
10,021

Inventories
 
9,641

Other current assets
 
2,229

Property, plant and equipment
 
5,192

Acquired intangible assets

114,500

Other non-current assets
 
258

     Total assets acquired

146,787

 
 
 
Accounts payable
 
2,803

Other current liabilities
 
5,390

     Total liabilities assumed

8,193

 
 
 
Net identifiable assets acquired

138,594

Goodwill

54,819

Net assets acquired
 
$
193,413


The allocation of the purchase price is preliminary and is based upon valuation information available and estimates and assumptions made at June 30, 2014. The Company is still in the process of verifying data and finalizing information related to the valuation and recording of accounts receivable, inventories, property, plant and equipment, identified intangible assets, accrued liabilities and the resulting effects on the amount of recognized goodwill.
The following table sets forth the components of identifiable intangible assets and their estimated useful lives as of May 30, 2014, the acquisition date (in thousands, except for estimated useful lives, in years):
 
 
Estimated fair value
 
Estimated useful life, in years
Trade name
 
$
88,000

 
Indefinite
Customer relationships
 
23,000

 
3-10 years
Order backlog
 
3,500

 
Less than 1 year
Total
 
$
114,500

 
 

Summary of Unaudited Pro forma Information
The following table reflects the unaudited pro forma consolidated results of operations for the periods presented, as though the acquisition of prAna had occurred on January 1, 2013 (in thousands):
 
 
(Unaudited)
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Net sales
 
$
337,328

 
$
296,518

 
$
791,763

 
$
671,424

Net income (loss) attributable to Columbia Sportswear Company
 
(3,675
)
 
(8,405
)
 
21,691

 
2,590

Earnings (loss) per share attributable to Columbia Sportswear Company:
 
 
 
 
 
 
 
 
Basic
 
$
(0.11
)
 
$
(0.24
)
 
$
0.62

 
$
0.08

Diluted
 
(0.11
)
 
(0.24
)
 
0.61

 
0.07


The unaudited pro forma financial information is presented for illustrative purposes only and is not indicative of the results of operations that would have been realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results. The unaudited pro forma consolidated net income (loss) includes differences in the amount and timing of amortization of acquired intangible assets and the fair value adjustment for acquired inventory. As a result, under the assumed pro forma acquisition date of January 1, 2013, net income for the six months ended June 30, 2014 and 2013 includes pre-tax purchase accounting amortization of $1,908,000 and $7,008,000, respectively. The pro forma net income (loss) attributable to the Company excludes nonrecurring transaction costs of $3,374,000. The pro forma results also do not include, among other items, the effects of anticipated synergies from combining the two companies or differences in the combined Company's operating cost structure.