The Company completed three acquisitions in the second quarter of 2021 and completed seven acquisitions in the six months ended June 27, 2021 (the "2021 Acquisitions"). For the second quarter and six months ended June 27, 2021, net sales included in the Company's condensed consolidated statements of income related to the 2021 Acquisitions were $56.7 million and $62.1 million, respectively, and operating income was $6.0 million for each of these periods. One of the 2021 Acquisitions accounted for $32.2 million in net sales and $1.9 million in operating income for the second quarter and six months ended June 27, 2021. Acquisition-related costs associated with the businesses acquired in the second quarter and first six months of 2021 were immaterial. Assets acquired and liabilities assumed in the individual acquisitions were recorded on the Company’s condensed consolidated balance sheet at their estimated fair values as of the respective dates of acquisition. For each acquisition, the Company completes its allocation of the purchase price to the fair value of acquired assets and liabilities within a one year measurement period. No acquisitions were completed in the second quarter of 2020 and three acquisitions were completed in the six months ended June 28, 2020. Net sales included in the Company's condensed consolidated statements of income in the second quarter and six months ended June 28, 2020 related to acquisitions completed in the first six months of 2020 were $3.3 million and $3.8 million, respectively, and operating income was immaterial for the same periods.

For each acquisition, the excess of the purchase consideration over the fair value of the net assets acquired is recorded as goodwill, which generally represents the combined value of the Company’s existing purchasing, manufacturing, sales, and systems resources with the organizational talent and expertise of the acquired companies’ respective management teams to maximize efficiencies, market share growth and net income.

In connection with certain acquisitions, if certain financial results for the acquired businesses are achieved, the Company is required to pay additional cash consideration. The Company records a liability for the estimated fair value of the contingent consideration related to each of these acquisitions as part of the initial purchase price based on the present value of the expected future cash flows and the probability of future payments at the date of acquisition. As of June 27, 2021, the aggregate fair value of the estimated contingent consideration payments was $9.8 million, $4.2 million of which is included in "Accrued liabilities" and $5.6 million is included in “Other long-term liabilities” on the condensed consolidated balance sheet. At December 31, 2020, the aggregate fair value of the estimated contingent consideration payments was $6.9 million, $1.6 million of which was included in the line item "Accrued liabilities" and $5.3 million was included in "Other long-term liabilities". The liabilities for contingent consideration expire at various dates through December 2023. The contingent consideration arrangements are subject to a maximum payment amount of up to $19.5 million in the aggregate. In the second quarter and six months ended June 27, 2021, the Company made $1.0 million in cash payments related to contingent consideration liabilities and recorded a $0.9 million non-cash charge and a corresponding increase to accrued liabilities. The non-cash charge is included in selling general and administrative expense in the condensed consolidated statement of income, representing changes in the expected amount of consideration to be paid.

Company

Segment

Description

Sea-Dog Corporation & Sea-Lect Plastics
(collectively, "Sea-Dog")

Distribution & Manufacturing

Distributor of a variety of marine and powersports hardware and accessories to distributors, wholesalers, retailer, and manufacturers, and manufacturer that provides plastic injection molding, design, product development and expert tooling to companies and government entities, based in Everett, Washington

Hyperform, Inc.

Manufacturing

Manufacturer of high-quality, non-slip foam flooring, operating under the SeaDek brand name, for the marine original equipment manufacturer ("OEM") market and aftermarket as well as serving the pool and spa, powersports and utility markets under the SwimDek and EndeavorDek brand names, with manufacturing facilities in Rockledge, Florida and Cocoa, Florida

Alpha Systems, LLC

Manufacturing & Distribution

Manufacturer and distributor of component products and accessories for the recreational vehicle ("RV"), marine, manufactured housing and industrial end markets, such as adhesives, sealants, rubber roofing, roto/blow molding, injection molding, flooring, insulation, shutters, skylights, and various other products and accessories, operating out of nine facilities in Elkhart, Indiana

Inclusive of four immaterial acquisitions not discussed above, total cash consideration for the 2021 Acquisitions was approximately $253.3 million. One of the 2021 Acquisitions accounted for $147.1 million in cash and $10.2 million in common stock as consideration, $26.8 million in fixed assets, $90.4 million in intangible assets, $18.2 million in accounts payable and accrued liabilities, $11.5 million in operating lease right-of-use assets and liabilities, and $28.9 million in goodwill. The preliminary purchase price allocations are subject to valuation activities being finalized, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its estimates. Changes to preliminary purchase accounting estimates recorded in the second quarter and six months ended June 27, 2021 related to the 2021 Acquisitions were immaterial.

Company

Segment

Description

Maple City Woodworking Corporation

Manufacturing

Manufacturer of hardwood cabinet doors and fascia for the RV market based in Goshen, Indiana

SEI Manufacturing, Inc.

Manufacturing

Manufacturer of towers, T-Tops, hardtops, rails, gates and other aluminum exterior products for the marine market located in Cromwell, Indiana

Inland Plywood Company

Manufacturing

Supplier, laminator, and wholesale distributor of treated, untreated, and laminated plywood, medium density overlay panels, and other specialty products, primarily serving the marine market as well as the RV and industrial markets headquartered in Pontiac, Michigan with an additional facility in Cocoa, Florida

Synergy RV Transport

Distribution

Transportation and logistics service provider primarily for OEMs and dealers in the RV market located in Goshen, Indiana

Front Range Stone

Manufacturing

Fabricator and installer of natural stone, quartz, solid surface, and laminate countertops, primarily serving big box home improvement retailers, home builders and commercial contractors in the industrial market based in Englewood, Colorado

Geremarie Corporation

Manufacturing

Designer, manufacturer, and fabricator of a full suite of high-precision aluminum components serving the marine industry, in addition to the medical, aerospace, defense, commercial and industrial markets located in Lake Zurich, Illinois

Taco Metals, LLC

Manufacturing

Manufacturer of boating products including rub rail systems, canvas and tower components, sport fishing and outrigger systems, helm chairs and pedestals, and specialty hardware for OEMs in the recreational boating industry and the related aftermarket headquartered in Miami, Florida, with manufacturing facilities in Tennessee and Florida, and distribution centers in Tennessee, Florida, South Carolina, and Massachusetts

Inclusive of four immaterial acquisitions not discussed above, total cash consideration for the 2020 Acquisitions was approximately $306.3 million, plus contingent consideration over a one to three-year period based on future results in connection with certain acquisitions. One of the 2020 Acquisitions accounted for $129.7 million in cash consideration, $49.3 million in fixed assets, $49.1 million in intangible assets and $32.6 million in goodwill. Purchase accounting adjustments are complete for Maple City Woodworking Corporation and SEI Manufacturing, Inc. Preliminary purchase price allocations, predominantly related to property, plant, and equipment and identifiable intangible assets, are still in the process of final valuation procedures on the remainder of the 2020 Acquisitions. All purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its estimates. Changes to preliminary purchase accounting estimates recorded in the second quarter and six months ended June 27, 2021 related to the 2020 Acquisitions were immaterial and relate primarily to the valuation of intangible and fixed assets.

The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of acquisition for the 2021 Acquisitions and the 2020 Acquisitions:


(thousands)	2021 Acquisitions		2020 Acquisitions
Consideration
Cash, net of cash acquired	$	253,336	$	306,335
Working capital holdback and other, net(1)	2,860		(53)
Common stock issuance(2)	10,211		—
Contingent consideration(3)	3,000		4,763
Total consideration	$	269,407	$	311,045

Assets Acquired
Trade receivables	$	15,824	$	15,320
Inventories	39,386		25,395
Prepaid expenses & other	1,025		725
Property, plant & equipment	46,986		65,083
Operating lease right-of-use assets	16,026		20,029
Identifiable intangible assets	137,985		130,981
Liabilities Assumed
Current portion of operating lease obligations	(3,650)		(2,721)
Accounts payable & accrued liabilities	(22,406)		(12,405)
Operating lease obligations	(12,376)		(17,308)
Deferred tax liabilities	—		(4,322)
Total fair value of net assets acquired	218,800		220,777
Goodwill(4)	50,607		90,268
	$	269,407	$	311,045

We estimate the value of customer relationships using the multi-period excess earnings method, which is a variation on the income approach, calculating the present value of incremental after-tax cash flows attributable to the asset. Non-compete agreements are valued using a discounted cash flow approach, which is a variation of an income approach, with and without the individual counterparties to the non-compete agreements. Trademarks and patents are valued using the relief-from-royalty method, which applies an estimated royalty rate to forecasted future cash flows, discounted to present value.

The following pro forma information for the second quarter and six months ended June 28, 2020 assumes the 2021 Acquisitions and the 2020 Acquisitions occurred as of the beginning of the year immediately preceding each such acquisition. The pro forma information contains the actual operating results of the 2021 Acquisitions and 2020 Acquisitions combined with the results prior to their respective acquisition dates, adjusted to reflect the pro forma impact of the acquisitions occurring as of the beginning of the year immediately preceding each such acquisition.

The pro forma information includes financing and interest expense charges based on incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $0.6 million and $3.1 million for the second quarter and six months ended June 27, 2021, respectively and $5.2 million and $10.5 million for the second quarter and six months ended June 28, 2020, respectively.