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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: October 3, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                    to                                                  

 

Commission File Number 001-37502

 

 

 

MASTERCRAFT BOAT HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

06-1571747

(State or Other Jurisdiction

 

(I.R.S. Employer

of Incorporation or Organization)

 

Identification No.)

 

100 Cherokee Cove Drive, Vonore, TN 37885

(Address of Principal Executive Office) (Zip Code)

 

(423) 884-2221

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

MCFT

 

NASDAQ

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.          Yes               No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).          Yes               No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).          Yes               No

As of November 5, 2021, there were 18,945,744 shares of the Registrant’s common stock, par value $0.01 per share, issued and outstanding.

 

 

 


 

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

 

 

 

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Unaudited Condensed Consolidated Statements of Operations

4

 

Unaudited Condensed Consolidated Balance Sheets

5

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

6

 

Unaudited Condensed Consolidated Statements of Cash Flows

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

26

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Securities and Use of Proceeds

27

Item 3.

Defaults Upon Senior Securities

27

Item 4.

Mine Safety Disclosures

27

Item 5.

Other Information

27

Item 6.

Exhibits, Financial Statement Schedules

28

 

 

 

SIGNATURES

 

29

 

2


 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements can generally be identified by the use of statements that include words such as “could,” “may,” “might,” “will,” “expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,” “plan,” “project” and other similar words or phrases. Forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on assumptions that we have made considering our industry experience and our perceptions of historical trends, current conditions, expected future developments and other important factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many important factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements, including but not limited to the following: the potential effects of supply chain disruptions and production inefficiencies as a result of the coronavirus (“COVID-19”) pandemic on the Company, general economic conditions, demand for our products, inflation, changes in consumer preferences, competition within our industry, our reliance on our network of independent dealers, our ability to manage our manufacturing levels and our fixed cost base, the successful introduction of our new products and the other important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed with the Securities and Exchange Commission (“SEC”) on September 2, 2021 (our “2021 Annual Report”). Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New important factors that could cause our business not to develop as we expect may emerge from time to time, and it is not possible for us to predict all of them.

 

3


 

 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

 

October 3,

 

 

October 4,

 

 

 

2021

 

 

2020

 

NET SALES

 

$

144,010

 

 

$

103,745

 

COST OF SALES

 

 

113,888

 

 

 

77,515

 

GROSS PROFIT

 

 

30,122

 

 

 

26,230

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Selling and marketing

 

 

4,282

 

 

 

2,907

 

General and administrative

 

 

9,670

 

 

 

8,932

 

Amortization of other intangible assets

 

 

1,026

 

 

 

987

 

Goodwill impairment

 

 

1,100

 

 

 

-

 

Total operating expenses

 

 

16,078

 

 

 

12,826

 

OPERATING INCOME

 

 

14,044

 

 

 

13,404

 

OTHER EXPENSE:

 

 

 

 

 

 

 

 

Interest expense

 

 

382

 

 

 

1,019

 

INCOME BEFORE INCOME TAX EXPENSE

 

 

13,662

 

 

 

12,385

 

INCOME TAX EXPENSE

 

 

3,276

 

 

 

2,818

 

NET INCOME

 

$

10,386

 

 

$

9,567

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE:

 

 

 

 

 

 

 

 

Basic

 

$

0.55

 

 

$

0.51

 

Diluted

 

$

0.55

 

 

$

0.51

 

WEIGHTED AVERAGE SHARES USED FOR COMPUTATION OF:

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

18,850,301

 

 

 

18,774,336

 

Diluted earnings per share

 

 

19,004,119

 

 

 

18,866,826

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

 

4


 

 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

 

 

 

October 3,

 

 

June 30,

 

 

 

2021

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,651

 

 

$

39,252

 

Accounts receivable, net of allowance of $212 and $115, respectively

 

 

19,105

 

 

 

12,080

 

Income tax receivable

 

 

935

 

 

 

355

 

Inventories, net (Note 3)

 

 

75,536

 

 

 

53,481

 

Prepaid expenses and other current assets

 

 

5,524

 

 

 

5,059

 

Total current assets

 

 

112,751

 

 

 

110,227

 

Property, plant and equipment, net

 

 

62,335

 

 

 

60,495

 

Goodwill (Note 4)

 

 

28,493

 

 

 

29,593

 

Other intangible assets, net (Note 4)

 

 

58,873

 

 

 

59,899

 

Deferred income taxes

 

 

15,379

 

 

 

15,130

 

Deferred debt issuance costs, net

 

 

482

 

 

 

507

 

Other long-term assets

 

 

551

 

 

 

609

 

Total assets

 

$

278,864

 

 

$

276,460

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

 

28,642

 

 

 

23,861

 

Income tax payable

 

 

 

 

 

726

 

Accrued expenses and other current liabilities (Note 5)

 

 

43,869

 

 

 

46,836

 

Current portion of long-term debt, net of unamortized debt issuance costs (Note 6)

 

 

2,868

 

 

 

2,866

 

Total current liabilities

 

 

75,379

 

 

 

74,289

 

Long-term debt, net of unamortized debt issuance costs (Note 6)

 

 

81,559

 

 

 

90,277

 

Unrecognized tax positions

 

 

4,294

 

 

 

3,830

 

Other long-term liabilities

 

 

239

 

 

 

276

 

Total liabilities

 

 

161,471

 

 

 

168,672

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 18,961,205 shares at October 3, 2021 and 18,956,719 shares at June 30, 2021

 

 

189

 

 

 

189

 

Additional paid-in capital

 

 

118,149

 

 

 

118,930

 

Accumulated deficit

 

 

(945

)

 

 

(11,331

)

Total stockholders' equity

 

 

117,393

 

 

 

107,788

 

Total liabilities and stockholders' equity

 

$

278,864

 

 

$

276,460

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

 

5


 

 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Total

 

Balance at June 30, 2021

 

 

18,956,719

 

 

$

189

 

 

$

118,930

 

 

$

(11,331

)

 

$

107,788

 

Share-based compensation activity

 

 

62,865

 

 

 

1

 

 

 

705

 

 

 

 

 

 

706

 

Repurchase and retirement of common stock

 

 

(58,379

)

 

 

(1

)

 

 

(1,486

)

 

 

 

 

 

(1,487

)

Net income

 

 

 

 

 

 

 

 

 

 

 

10,386

 

 

 

10,386

 

Balance at October 3, 2021

 

 

18,961,205

 

 

$

189

 

 

$

118,149

 

 

$

(945

)

 

$

117,393

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Total

 

Balance at June 30, 2020

 

 

18,871,637

 

 

$

189

 

 

$

116,182

 

 

$

(67,501

)

 

$

48,870

 

Share-based compensation activity

 

 

80,701

 

 

 

 

 

 

486

 

 

 

 

 

 

486

 

Net income

 

 

 

 

 

 

 

 

 

 

 

9,567

 

 

 

9,567

 

Balance at October 4, 2020

 

 

18,952,338

 

 

$

189

 

 

$

116,668

 

 

$

(57,934

)

 

$

58,923

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

6


 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Dollars in thousands)

 

 

 

Three Months Ended

 

 

 

October 3,

 

 

October 4,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

10,386

 

 

$

9,567

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,354

 

 

 

2,739

 

Share-based compensation

 

 

896

 

 

 

640

 

Unrecognized tax benefits

 

 

464

 

 

 

458

 

Amortization of debt issuance costs

 

 

59

 

 

 

159

 

Goodwill impairment

 

 

1,100

 

 

 

 

Changes in certain operating assets and liabilities

 

 

(30,087

)

 

 

(6,737

)

Other, net

 

 

273

 

 

 

546

 

Net cash (used in) provided by operating activities

 

 

(13,555

)

 

 

7,372

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(3,618

)

 

 

(2,042

)

Net cash used in investing activities

 

 

(3,618

)

 

 

(2,042

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Principal payments on revolving credit facility

 

 

(20,000

)

 

 

(10,000

)

Borrowings on revolving credit facility

 

 

12,000

 

 

 

 

Principal payments on long-term debt

 

 

(750

)

 

 

(2,355

)

Repurchase and retirement of common stock

 

 

(1,487

)

 

 

 

Other, net

 

 

(191

)

 

 

(436

)

Net cash used in financing activities

 

 

(10,428

)

 

 

(12,791

)

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(27,601

)

 

 

(7,461

)

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD

 

 

39,252

 

 

 

16,319

 

CASH AND CASH EQUIVALENTS — END OF PERIOD

 

$

11,651

 

 

$

8,858

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash payments for interest

 

$

282

 

 

$

828

 

Cash payments for income taxes

 

 

5,170

 

 

 

280

 

SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Capital expenditures in accounts payable and accrued expenses

 

 

815

 

 

 

242

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

 

7


 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unless stated otherwise dollars in thousands, except per share data)

 

1.ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES

Organization — MasterCraft Boat Holdings, Inc. (“Holdings”) was formed on January 28, 2000, as a Delaware holding company and operates primarily through its wholly owned subsidiaries, MasterCraft Boat Company, LLC; MasterCraft Services, LLC; MasterCraft Parts, Ltd.; MasterCraft International Sales Administration, Inc.; Aviara Boats, LLC; Nautic Star, LLC; NS Transport, LLC; and Crest Marine, LLC. Holdings and its subsidiaries collectively are referred to herein as the “Company.”

Basis of PresentationThe Company’s fiscal year begins July 1 and ends June 30, with the interim quarterly reporting periods consisting of 13 weeks. Therefore, the fiscal quarter end will not always coincide with the date of the end of a calendar month.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements for the year ended June 30, 2021 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of October 3, 2021, its results of operations for the three months ended October 3, 2021 and October 4, 2020, its cash flows for the three months ended October 3, 2021 and October 4, 2020, and its statements of stockholders’ equity for the three months ended October 3, 2021 and October 4, 2020. All adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the SEC for financial information have been condensed or omitted pursuant to such rules and regulations. The June 30, 2021 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP for complete financial statements. However, management believes that the disclosures in these condensed consolidated financial statements are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our 2021 Annual Report on Form 10-K.

Due to the seasonality of the Company’s business, the interim results are not necessarily indicative of the results that may be expected for the remainder of the fiscal year.

There were no significant changes in or changes to the application of the Company’s significant or critical accounting policies or estimation procedures for the three months ended October 3, 2021 as compared with those described in the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2021.

Change in Reportable Segments — Beginning with the first quarter of fiscal 2022, our chief operating decision maker (“CODM”) began to manage our business, allocate resources, and evaluate performance based on the changes that have been made in the Company’s management structure in connection with the transition of Aviara production to our Merritt Island facility.  As a result, the Company has realigned its reportable segments to MasterCraft, Crest, NauticStar, and Aviara.  The Company has recast segment information for all prior periods presented.  Refer to Note 10 – Segment Information for further information on the Company’s reportable segments.

Reclassifications — Certain historical amounts have been reclassified in these condensed consolidated financial statements and the accompanying notes herewith to conform to the current presentation.


8


 

 

 

Recently Adopted Accounting Standards

 

Income Taxes —In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Income Taxes (Topic 740). It also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2020. The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

 

Reference Rate Reform — In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. An entity may apply ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022. The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

 

2.

REVENUE RECOGNITION

Consistent with the Company’s change in reportable segments described in Note 10—Segment Information, the Company has changed its presentation of disaggregated revenue to align with the new segment structure.  The following tables present the Company’s revenue by major product category for each reportable segment.

 

 

 

 

Three Months Ended October 3, 2021

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Major Product Categories:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boats and trailers

 

$

87,929

 

 

$

32,369

 

 

$

13,235

 

 

$

5,855

 

 

$

139,388

 

Parts

 

 

3,828

 

 

 

236

 

 

 

120

 

 

 

 

 

 

4,184

 

Other revenue

 

 

258

 

 

 

175

 

 

 

5

 

 

 

 

 

 

438

 

Total

 

$

92,015

 

 

$

32,780

 

 

$

13,360

 

 

$

5,855

 

 

$

144,010

 

 

 

 

Three Months Ended October 4, 2020

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Major Product Categories:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boats and trailers

 

$

64,809

 

 

$

17,610

 

 

$

12,216

 

 

$

3,773

 

 

$

98,408

 

Parts

 

 

4,545

 

 

 

391

 

 

 

123

 

 

 

 

 

 

5,059

 

Other revenue

 

 

237

 

 

 

38

 

 

 

3

 

 

 

 

 

 

278

 

Total

 

$

69,591

 

 

$

18,039

 

 

$

12,342

 

 

$

3,773

 

 

$

103,745

 

 

Contract Liabilities

 

As of June 30, 2021, the Company had $1.8 million of contract liabilities associated with customer deposits. During the three months ended October 3, 2021, $1.3 million of this amount was recognized as revenue. As of October 3, 2021, total contract liabilities associated with customer deposits were $4.3 million, were reported in Accrued expenses and other current liabilities on the condensed consolidated balance sheet, and are expected to be recognized as revenue during the remainder of the year ending June 30, 2022.  

 

9


 

 

 

3.

INVENTORIES

Inventories consisted of the following:

 

 

 

October 3,

 

 

June 30,

 

 

 

2021

 

 

2021

 

Raw materials and supplies

 

$

52,438

 

 

$

37,089

 

Work in process

 

 

18,198

 

 

 

10,171

 

Finished goods

 

 

7,344

 

 

 

8,362

 

Obsolescence reserve

 

 

(2,444

)

 

 

(2,141

)

Total inventories

 

$

75,536

 

 

$

53,481

 

 

Raw materials and supplies have increased to support higher production volumes and to increase safety stock to manage supply chain risk.  Work in process has increased due to supply chain disruptions.

 

 

4.GOODWILL AND OTHER INTANGIBLE ASSETS

Beginning with the first quarter of fiscal 2022, the Company realigned its reportable segments to MasterCraft, Crest, NauticStar, and Aviara.  Refer to Note 10 – Segment Information for further information on the Company’s reportable segments.  As a result of the change in segments, in accordance with ASC 350, Intangibles-Goodwill and Other, the Company reallocated the goodwill recorded in the MasterCraft reporting unit to the two separate MasterCraft and Aviara reporting units using a relative fair value approach.  

Prior to realigning our segments, we evaluated our goodwill for impairment and determined no impairment existed as the fair value of our MasterCraft reporting unit, which was the only reporting unit containing goodwill, was in excess of its carrying amount.  In conjunction with the reallocation of goodwill, we tested the goodwill at our MasterCraft and Aviara reporting units for impairment using an income-based approach, specifically a discounted cash flow model.  The cash flow model included significant judgements and assumptions related to revenue growth and discount rates. Near-term operating losses generated by start-up inefficiencies have negatively impacted the fair value of Aviara, causing the carrying value of the reporting unit to be in excess of the fair value. Consequently, a $1.1 million impairment charge was recognized in the three months ended October 3, 2021.

The carrying amounts of goodwill attributable to each of the Company’s reportable segments, were as follows:

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Balance at June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

29,593

 

 

$

36,238

 

 

$

36,199

 

 

$

-

 

 

$

102,030

 

Accumulated impairment losses

 

 

-

 

 

 

(36,238

)

 

 

(36,199

)

 

 

-

 

 

 

(72,437

)

Goodwill, net at June 30, 2021

 

 

29,593

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

29,593

 

Goodwill reallocation

 

 

(1,100

)

 

 

-

 

 

 

-

 

 

 

1,100

 

 

 

-

 

Impairment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,100

)

 

 

(1,100

)

Goodwill, net at October 3, 2021

 

$

28,493

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

28,493

 

 

10


 

 

 

The following table presents the carrying amount of Other intangible assets, net:

 

 

 

October 3,

 

 

June 30,

 

 

 

2021

 

 

2021

 

 

 

Gross Amount

 

 

Accumulated Amortization / Impairment

 

 

Other intangible assets, net

 

 

Gross Amount

 

 

Accumulated Amortization / Impairment

 

 

Other intangible assets, net

 

Amortized intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealer networks

 

$

39,500

 

 

$

(14,725

)

 

$

24,775

 

 

$

39,500

 

 

$

(13,711

)

 

$

25,789

 

Software

 

 

245

 

 

 

(147

)

 

 

98

 

 

 

245

 

 

 

(135

)

 

 

110

 

 

 

 

39,745

 

 

 

(14,872

)

 

 

24,873

 

 

 

39,745

 

 

 

(13,846

)

 

 

25,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortized intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names

 

 

49,000

 

 

 

(15,000

)

 

 

34,000

 

 

 

49,000

 

 

 

(15,000

)

 

 

34,000

 

Total other intangible assets

 

$

88,745

 

 

$

(29,872

)

 

$

58,873

 

 

$

88,745

 

 

$

(28,846

)

 

$

59,899

 

 

Amortization expense related to Other intangible assets, net for both the three months ended October 3, 2021 and October 4, 2020 was $1.0 million. Estimated amortization expense for the fiscal year ending June 30, 2022 is $4.0 million.

 

5.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

 

 

 

October 3,

 

 

June 30,

 

 

 

2021

 

 

2021

 

Warranty

 

$

23,088

 

 

$

22,329

 

Dealer incentives

 

 

6,275

 

 

 

10,634

 

Contract liabilities

 

 

4,300

 

 

 

1,848

 

Compensation and related accruals

 

 

3,933

 

 

 

6,046

 

Freight

 

 

997

 

 

 

778

 

Self-insurance

 

 

949

 

 

 

865

 

Inventory repurchase contingent obligation

 

 

602

 

 

 

471

 

Other

 

 

3,725

 

 

 

3,865

 

Total accrued expenses and other current liabilities

 

$

43,869

 

 

$

46,836

 

 

Accrued warranty liability activity was as follows for the three months ended:

 

 

 

October 3,

 

 

October 4,

 

 

 

2021

 

 

2020

 

Balance at the beginning of the period

 

$

22,329

 

 

$

20,004

 

Provisions

 

 

2,564

 

 

 

1,833

 

Payments made

 

 

(2,861

)

 

 

(2,103

)

Aggregate changes for preexisting warranties

 

 

1,056

 

 

 

799

 

Balance at the end of the period

 

$

23,088

 

 

$

20,533

 

 

11


 

 

 

6.LONG-TERM DEBT

Long-term debt is as follows:

 

 

 

October 3,