What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-08-25 compared with 2021-08-26 · 221 added, 285 removed, 1090 unchanged (32% of the section changed)

18 unchanged sentences

In making this assessment, the Company used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013) .

The Company acquired Maverick Boat Group, Inc.

on December 31, 2020.

As permitted by guidelines established by the Securities and Exchange Commission for newly acquired business, management excluded Maverick Boat Group, Inc.

from the scope of its annual report on internal controls over financial reporting for the fiscal year ended June 30, 2021.

Maverick Boat Group, Inc.

contributed approximately 27% to consolidated total assets as of June 30, 2021 and 8% to consolidated net sales for the fiscal year ended June 30, 2021.

The Company is in the process of integrating this business into its overall internal controls over financial reporting process and plans to include it in the scope for the fiscal year ended June 30, 2022.

Based on such assessment the Company's management has concluded that, as of June 30, 2022, its internal control over financial reporting is effective based on those criteria.

10 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2021 and 2020, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended June 30, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated August 26, 2021 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Maverick Boat Group, Inc.

during the fiscal year ended June 30, 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2021, Maverick Boat Group, Inc.’s internal control over financial reporting associated with approximately 27% of consolidated total assets and 8% of consolidated net sales included in the consolidated financial statements of the Company as of and for the fiscal year ended June 30, 2021.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Maverick Boat Group, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated August 25, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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We have audited the accompanying consolidated balance sheets of Malibu Boats, Inc.

and subsidiaries (the Company) as of June 30, 2021 and 2020, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended June 30, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended June 30, 2021, in conformity with U.S.

and subsidiaries (the Company) as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended June 30, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated August 25, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of July 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases .

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of certain assumptions underlying the product warranty liability for certain brands

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The Company’s estimated future costs to repair or replace defective products includes assumptions regarding the anticipated warranty costs per boat by brand.

We identified the evaluation of the anticipated warranty costs per boat that are used to estimate the product warranty liability for Malibu, Axis and Cobalt branded boats as a critical audit matter.

We identified the evaluation of the anticipated warranty costs per boat that are used to estimate the product warranty liability for Malibu and Axis branded boats as a critical audit matter.

A higher degree of subjective auditor judgment was required to evaluate the Company’s estimate of the anticipated warranty costs per boat, due to the nature of the audit evidence.

Specifically, for Axis and Malibu model years prior to 2016, historical claims experience only exists for a warranty term of two and three years, respectively.

For Cobalt model years prior to 2018, historical claims experience only exists for a

warranty term of three years.

This historical claims experience is shorter in duration than the five-year warranty term associated with the Company’s current warranty program.

This historical claim experience is shorter in duration than the five-year warranty term associated with the Company’s current warranty program.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s warranty accrual process.

This included controls over the development of the assumptions used to estimate the warranty cost per boat for warranty years four and five, for which little or no historical claims experience exists.

This included controls over the development of the assumptions used to estimate the warranty cost per boat for warranty year five, for

which little claims experience exists.

We performed sensitivity analyses to assess the potential for possible changes to these assumptions on the product warranty liability.

We assessed the Company’s historical claims experience and the relationship between the historical warranty costs per boat incurred by warranty year.

We further assessed the Company’s assumptions underlying the anticipated warranty costs per boat for warranty years four and five by considering warranty claims received after year-end but before the consolidated financial statements were issued, to identify trends not considered by the Company when it developed its assumptions.

We also compared the Company’s prior year product warranty liability related to claims expected to be incurred in the current year to actual claims received in the current year to evaluate the historical accuracy of the Company’s estimates.

Evaluation of the acquisition date fair value of intangible assets

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company acquired Maverick Boat Group, Inc.

(Maverick Boat Group) in a business combination on December 31, 2020.

In connection with the acquisition, Maverick Boat Group’s dealer relationships and trade name were identified as intangible assets with acquisition date fair values of $47.9 million and $54.7 million, respectively.

We identified the evaluation of certain assumptions used to determine the acquisition date fair value of the Maverick Boat Group dealer relationships and trade name as a critical audit matter.

Specifically, the projected net sales, projected dealer attrition rate, and discount rate used to value the dealer relationships required subjective auditor judgment due to limited observable market data.

In addition, the projected net sales and discount rate used to value the trade name required subjective auditor judgment due to the limited observable market data.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition date valuation process, including controls related to the development of the projected net sales, projected dealer attrition rate, and discount rate assumptions.

We performed sensitivity analyses over the assumptions to assess the impact of changes in those assumptions on the acquisition date fair values.

We evaluated the projected net sales by comparing them to the historical net sales of Maverick Boat Group, the historical net sales of other boat manufacturers, and third-party industry revenue growth forecasts.

We assessed the Company’s projected dealer attrition rate by comparing the estimate to (1) historical dealer attrition experienced by Maverick Boat Group, and (2) the Company’s attrition rate for other boat brands that sell their boats to similar dealer distributors.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rates by using third party data to develop an independent estimate of the (1) internal rate of return for the transaction, (2) weighted average cost of capital, and (3) after-tax rate of return, and comparing those amounts to the amounts used by the Company to determine the discount rate assigned to the intangible assets.

We further assessed the Company’s assumptions underlying the anticipated warranty costs per boat for warranty year five by considering warranty claims received after year-end but before the consolidated financial statements were issued, to identify trends not considered by the Company when it developed its assumptions.

We have served as the Company’s auditor since 2015.

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Operating income 213,823 149,775 85,310

Other expense, net:

Other income, net ( 1,015 ) ( 2,310 ) ( 149 )

Other expense (income), net:

Other expense (income), net 983 ( 1,015 ) ( 2,310 )

Interest expense 2,875 2,529 3,888

Other expense, net 1,514 1,578 6,315

Net income before provision for income taxes 148,261 83,732 91,797

Income tax provision 33,979 19,076 22,096

Other expense (income), net 3,858 1,514 1,578

Income before provision for income taxes 209,965 148,261 83,732

Provision for income taxes 46,535 33,979 19,076

Net income 163,430 114,282 64,656

4 unchanged sentences

Net income $ 163,430 $ 114,282 $ 64,656

Other comprehensive income (loss)

Other comprehensive (loss) income

Change in cumulative translation adjustment ( 1,868 ) 1,493 ( 304 )

Other comprehensive income (loss) 1,493 ( 304 ) ( 844 )

Other comprehensive (loss) income ( 1,868 ) 1,493 ( 304 )

Comprehensive income 161,562 115,775 64,352

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Additional paid in capital 85,294 111,308

Accumulated other comprehensive loss ( 1,639 ) ( 3,132 )

Accumulated other comprehensive loss, net of tax ( 3,507 ) ( 1,639 )

Accumulated earnings 421,184 263,552

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(In thousands, except number of Class B shares)

Additional Paid In Capital Non-controlling Interest in LLC Accumulated Earnings (Deficit) Accumulated Other Comprehensive Loss Total Stockholders Equity

Additional Paid In Capital Accumulated Other Comprehensive Loss, net of tax Accumulated Earnings Non-controlling Interest in LLC Total Stockholders' Equity

Class A Common Stock Class B Common Stock

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Issuance of equity for exercise of options 12 — — — 377 — — — 377

Repurchase and retirement of common stock ( 483 ) ( 5 ) — — ( 13,828 ) — — — ( 13,833 )

Cumulative-effect transition adjustment for ASC 842 — — — — — — ( 1,703 ) — ( 1,703 )

Increase in payable pursuant to the tax receivable agreement — — — — ( 1,041 ) — — — ( 1,041 )

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Exchange of LLC Units for Class A Common Stock 100 1 — — 879 — — ( 879 ) 1

Cancellation of Class B Common Stock for Exchange of LLC Units — — ( 2 ) — — — — — —

Distributions to LLC Unit holders — — — — — — — ( 1,370 ) ( 1,370 )

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Issuance of equity for exercise of options 11 — — — 375 — — — 375

Repurchase and retirement of common stock ( 483 ) ( 5 ) — — ( 13,828 ) — — — ( 13,833 )

Cumulative-effect transition adjustment for ASC 842 — — — — — — ( 1,703 ) — ( 1,703 )

Increase in payable pursuant to the tax receivable agreement — — — — ( 2,142 ) — — — ( 2,142 )

1 unchanged sentence

Exchange of LLC Units for Class A Common Stock 130 1 — — 1,373 — — ( 1,373 ) 1

Cancellation of Class B Common Stock for Exchange of LLC Units — — ( 5 ) — — — — — —

Distributions to LLC Unit holders — — — — — — — ( 2,341 ) ( 2,341 )

5 unchanged sentences

Issuance of equity for exercise of options 113 1 — — 3,286 — — — 3,287

Increase in payable pursuant to the tax receivable agreement — — — — ( 2,142 ) — — — ( 2,142 )

Increase in deferred tax asset from step-up in tax basis — — — — 2,755 — — — 2,755

Exchange of LLC Units for Class A Common Stock 130 1 — — 1,373 ( 1,373 ) — — 1

Cancellation of Class B Common Stock for Exchange of LLC Units — — ( 5 ) — — — — — —

Repurchase and retirement of common stock ( 555 ) ( 6 ) — — ( 34,636 ) — — — ( 34,642 )

Distributions to LLC Unit holders — — — — — — — ( 3,076 ) ( 3,076 )

43 unchanged sentences

Proceeds received from exercise of stock options 3,287 375 377

Net cash provided by (used in) by financing activities 57,346 ( 47,323 ) 2,375

Net cash (used in) provided by financing activities ( 60,380 ) 57,346 ( 47,323 )

Effect of exchange rate changes on cash ( 580 ) 127 ( 29 )

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generally accepted accounting principles ("GAAP").

Certain reclassifications have been made to the prior period presentation to conform to the current period presentation.

Units and shares are presented as whole numbers while all dollar amounts are presented in thousands, unless otherwise noted.

Acquisition of Maverick Boat Group, Inc.

and Related Financing

On December 31, 2020, MBG Holdco, Inc., a wholly-owned subsidiary of Boats, LLC, acquired all of the outstanding shares of Maverick Boat Group from its existing stockholders for a purchase price of $ 150,675 .

The purchase price was subject to customary adjustments for the amounts of cash, indebtedness and working capital in the business at the closing date and subject to adjustment for certain capital expenditures made by Maverick Boat Group prior to closing at the Company’s request.

With two manufacturing facilities located in Fort Pierce, Florida, Maverick Boat Group designs and manufactures center console, dual console, flats and bay boats under four brand names Cobia, Pathfinder, Maverick, and Hewes.

The Company paid the purchase price with cash on hand and $ 90,000 of borrowings under its credit facilities following an amendment to increase the amount available under its credit facilities as described below.

On December 30, 2020, Boats, LLC, as the borrower, entered into the Third Incremental Facility Amendment and Third Amendment (the “Third Amendment”) to its existing Second Amended and Restated Credit Agreement dated as of June 28, 2017, by and among Boats LLC, the LLC and certain subsidiaries of Boats LLC parties thereto, as guarantors, the lenders parties thereto and Truist Bank (successor by merger to SunTrust Bank), as administrative agent, swingline lender and issuing bank (as amended, the “Credit Agreement”).

The Third Amendment added a $ 25,000 incremental term loan facility with a maturity date of July 1, 2024 and increased the borrowing capacity available under the revolving credit facility by $ 50,000 from $ 120,000 to $ 170,000 .

The $ 25,000 incremental term loans made pursuant to the Third Amendment is subject to quarterly amortization at a rate of 5.0 % per annum through December 31, 2022 and at a rate of 7.5 % per annum thereafter and accrues interest at the same rate as other loans under the Credit Agreement.

Refer to Notes 4, 10 and 19 for further information.

Principles of Consolidation

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As of June 30, 2022 and 2021, the allowance for doubtful receivables was $ 0 .

Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical

experience applied to an aging of accounts.

Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.

Trade receivables are written off when deemed uncollectible.

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The useful life of the non-compete agreement is based on a ten-year agreement entered into by the Company and former owner of the Licensee as part of the acquisition.

In addition, we have indefinite lived intangible assets for acquired trade names.

In addition, the Company has indefinite lived intangible assets for acquired trade names.

Management, assisted by third-party valuation specialists, determined the estimated fair values of separately identifiable intangible assets at the date of acquisition under the income approach.

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Examples of such programs include rebates, seasonal discounts, promotional co-op arrangements and other allowances.

Dealer rebates and sales promotion expenses are estimated based on current programs and

historical achievement and/or usage rates.

Dealer rebates and sales promotion expenses are estimated based on current programs and historical achievement and/or usage rates.

Actual results may differ from these estimates if market conditions dictate the need to enhance or reduce sales promotion and incentive programs or if dealer achievement or other items vary from historical trends.

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The Company accounts for both incentive payments directly to dealers and payment to third party lenders in this manner.

Dealer incentives are included in accrued expenses on our consolidated balance sheet.

Dealer incentives are included in accrued expenses on the Company's consolidated balance sheets.

Changes in the Company’s accrual for dealer rebates were as follows:

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The term of the tax receivable agreement will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the tax receivable agreement for an amount based on the agreed payments remaining to be made under the agreement.

In certain mergers, asset sales or other forms of business combinations or other changes of

control, the Company (or its successor) would owe to the pre-IPO owners of the LLC (or any permitted assignees) a lump-sum payment equal to the present value of all forecasted future payments that would have otherwise been made under the tax receivable agreement that would be based on certain assumptions, including a deemed exchange of all LLC Units and that the Company would have had sufficient taxable income to fully utilize the deductions arising from the increased tax basis and other tax benefits related to entering into the tax receivable agreement.

In certain mergers, asset sales or other forms of business combinations or other changes of control, the Company (or its successor) would owe to the pre-IPO owners of the LLC (or any permitted assignees) a lump-sum payment equal to the present value of all forecasted future payments that would have otherwise been made under the tax receivable agreement that would be based on certain assumptions, including a deemed exchange of all LLC Units and that the Company would have had sufficient taxable income to fully utilize the deductions arising from the increased tax basis and other tax benefits related to entering into the tax receivable agreement.

Malibu Boats, Inc.

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If the Company later determines that realization is more likely than not for deferred tax assets with a valuation allowance, the related valuation allowance will be reduced.

Conversely, if the Company determines that it is more likely than not that the Company will not be able to realize a portion of our deferred tax assets, the Company will increase the valuation allowance.

Conversely, if the Company determines that it is more likely than not that the Company will not be able to realize a portion of its deferred tax assets, the Company will increase the valuation allowance.

The Company recognizes a tax benefit associated with an uncertain tax position when, in its judgment, it is more likely than not that the position will be sustained based upon the technical merits of the position.

3 unchanged sentences

The Company's income tax provision includes the net impact of changes in the liability for unrecognized tax benefits.

The Company closed the IRS examination of its June 30, 2015 return during the fourth quarter of fiscal 2019, resulting in an immaterial adjustment to its tax liability.

The Company has filed federal and state income tax returns that remain open to examination for fiscal years 2019 through 2021, while its subsidiaries, Malibu Boats Holdings, LLC and Malibu Boats Pty Ltd., remain open to examination for years 2018 through 2021.

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this occurs when control of promised goods (boats, parts, or other) is transferred to the customer, which is upon shipment.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.

Company generally manufactures products based on specific orders from dealers and often ships completed products only after receiving credit approval from financial institutions.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services.

The Company generally manufactures products based on specific orders from dealers and often ships completed products only after receiving credit approval from financial institutions.

The amount of consideration the Company receives and revenue it recognizes varies with changes in marketing incentives and rebates it offers to its dealers and their customers.

1 unchanged sentence

From time to time, however, the Company may accept returns in limited circumstances and at the Company’s discretion under its warranty policy, which generally limits returns to instances of manufacturing defects.

The Company may be obligated, in the event of default by a dealer, to accept returns of unsold boats under its repurchase commitment to floor financing providers, who are able to obtain such boats through foreclosure.

The Company may be obligated, in the event of default by a dealer, to accept returns of unsold boats

under its repurchase commitment to floor financing providers, who are able to obtain such boats through foreclosure.

The Company accrues returns when a repurchase and return, due to the default of one of its dealers, is determined to be probable and the amount of the return is reasonably estimable.

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The Company earns royalties on boats shipped with the Company's proprietary wake surfing technology under licensing agreements with various marine manufacturers.

Royalty income is recognized when products are used or sold with our patented technology by other boat manufacturers and industry suppliers.

The usage of our technology satisfies the performance obligation in the contract.

Royalty income is recognized when products are used or sold with the Company's patented technology by other boat manufacturers and industry suppliers.

The usage of the Company's technology satisfies the performance obligation in the contract.

See Note 2 for more information.

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Stock options granted to executives on June 29, 2017, November 6, 2017, August 22, 2018 and January 14, 2019 were valued using the Black-Scholes option pricing model.

Stock awards granted on

November 3, 2020 and November 22, 2019 based on total shareholder return were valued using a Monte Carlo simulation.

Stock awards granted on November 3, 2021, November 3, 2020 and November 22, 2019 based on total shareholder return were valued using a Monte Carlo simulation.

The fair value of restricted stock unit awards granted under the Company's Long Term Incentive Plan ("Incentive Plan") are measured based on the market price of the Company’s stock on the grant date.

5 unchanged sentences

dollars that result in unrealized gains or losses are referred to as translation adjustments.

Cumulative translation adjustments are reflected as a component of "Accumulated other comprehensive loss," in the stockholders' equity section of the accompanying consolidated balance sheets and periodic changes are included in comprehensive income.

Cumulative translation adjustments are reflected as a component of "Accumulated other comprehensive loss, net of tax," in the stockholders' equity section of the accompanying consolidated balance sheets and periodic changes are included in comprehensive income.

Comprehensive Income

6 unchanged sentences

In addition, the COVID-19 pandemic has impacted and may continue to impact the operations of the Company’s dealers and suppliers.

During the first half of fiscal 2021, the Company constrained its production levels in an attempt to allow its supply chain to more fully recover from the impacts of COVID-19 in preparation of higher wholesale manufacturing volumes that it planned for the second half of fiscal 2021.

During the first half of fiscal 2021, the Company constrained its production levels to allow its supply chain to more fully recover from the impacts of COVID-19 in preparation of higher wholesale manufacturing volumes that it planned for the second half of fiscal 2021.

While the Company’s net sales for fiscal year 2021 were impacted by lower production levels, retail sales improved during fiscal year 2021 as consumers turned to boating as a form of outdoor, socially-distanced recreation during the COVID-19 pandemic.

The increase in retail sales during fiscal year 2021 combined with our lower wholesale shipment levels during the second half of fiscal year 2020 and constrained production in the first half of fiscal year 2021 resulted in lower inventory levels at the Company’s dealers as of June 30, 2021 compared to last year.

The future impact of COVID-19 on the Company’s financial condition and results of operations will depend on a number of factors, including factors that we may not be able to forecast at this time.

The increase in retail sales during fiscal year 2021 combined with the Company's lower wholesale shipment levels during the second half of fiscal year 2020 and constrained production in the first half of fiscal year 2021 resulted in lower inventory levels at the Company’s dealers throughout fiscal year 2021 and continued into fiscal year 2022.

Fiscal year 2022 retail demand continued at a strong pace, albeit at lower levels than the record fiscal year 2021 levels, and in spite of limited inventory.

Increases in fiscal year 2022 wholesale production combined with lower retail demand levels, as compared to fiscal year 2021, have combined to increase inventory levels modestly at our Malibu and Cobalt segment dealers at the end of fiscal year 2022.

Saltwater Fishing segment dealers remain low on inventory.

Dealer inventories continue to be well below historical levels and a full recovery to historical inventory levels will depend on the ability of our supply chain to provide materials to us timely and the level of retail demand during the upcoming year.

Additionally, the Company experienced supply chain disruptions throughout fiscal year 2022 that it believes were driven by numerous factors, including labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices to the Company’s suppliers, in part due to inflationary pressures.

Such supply chain disruptions along with increased costs for raw materials, parts and components, shipping and labor, are having industry-wide impacts affecting the Company and its suppliers, dealers and customers.

The future impact of COVID-19 and ongoing supply chain disruptions on the Company’s financial condition and results of operations may result in further constrained production and increased costs and will depend on a number of factors, including factors that the Company may not be able to forecast at this time.

Recent Accounting Pronouncements

On July 1, 2018, the Company adopted the new accounting standard, ASC Topic 606, Revenue from Contracts with Customers , and all the related amendments (“ASC 606”) and applied the provisions of the standard to all contracts using the modified retrospective method.

The cumulative effect of adopting the new revenue standard was immaterial and no adjustment has been recorded to the opening balance of retained earnings.

Substantially all of the Company’s revenue continues to be recognized at a point in time when the product is either shipped or received from the Company's facilities and control of the product is transferred to the customer.

New controls and processes designed to meet the requirements of the standard were implemented, and the required new disclosures are presented in Note 2.

The adoption of ASC Topic 606 did not have a material impact on the amounts reported in the Company's consolidated financial position, results of operations or cash flows.

On July 1, 2019, the Company adopted the new accounting standard, ASC Topic 842, Leases , which superseded the requirements in ASC Topic 840, Leases .

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The adoption of ASC Topic 842 did not have a material impact on the Company’s consolidated results of operations, equity or cash flows as of the adoption date.

Under the optional transition approach, comparative information was not restated, but will continue to be reported under the standards in effect for those periods.

optional transition approach, comparative information was not restated, but will continue to be reported under the standards in effect for those periods.

See Note 11 for further information regarding the Company’s leases.

In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , and in November 2018 issued a subsequent amendment,

ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses .

Measurement of Credit Losses on Financial Instruments , and in November 2018 issued a subsequent amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses .

ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

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Boat and trailer sales also includes optional boat features.

Sales returns consist of boats returned by dealers under our warranty program.

Sales returns consist of boats returned by dealers under the Company's warranty program.

Rebates, free flooring and discounts are incentives that the Company provides to its dealers based on sales of eligible products.

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Non-controlling Interest

The non-controlling interest on the consolidated statement of operations and comprehensive income represents the portion of earnings or loss attributable to the economic interest in the Company's subsidiary, Malibu Boats Holdings, LLC, held by the non-controlling LLC Unit holders.

The non-controlling interest on the consolidated statements of operations and comprehensive income represents the portion of earnings or loss attributable to the economic interest in the Company's subsidiary, Malibu Boats Holdings, LLC, held by the non-controlling LLC Unit holders.

Non-controlling interest on the consolidated balance sheets represents the portion of net assets of the Company attributable to the non-controlling LLC Unit holders, based on the portion of the LLC Units owned by such Unit holders.

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During the fiscal year ended June 30, 2022, the Company caused the LLC to issue a total of 225,989 LLC Units to the Company in connection with (i) the Company's issuance of Class A Common Stock to a non-employee director for her services, (ii) the issuance of Class A Common Stock for the vesting of awards granted under the Malibu Boats, Inc.

Long-Term Incentive Plan (the "Incentive Plan"), (iii) the issuance of restricted Class A Common Stock granted under the Incentive Plan, (iv) the issuance of Class A Common Stock to LLC Unit holders in exchange of their LLC Units and (v) the issuance of Class A Common Stock for the exercise of options granted under the Incentive Plan.

Long-Term Incentive Plan (the "Incentive Plan"), (iii) the issuance of restricted Class A Common Stock granted under the Incentive Plan and (iv) the issuance of Class A Common Stock for the exercise of options granted under the Incentive Plan.

During fiscal year 2022, 16,932 LLC Units were canceled in connection with the vesting of share-based equity awards to satisfy employee tax withholding requirements and the retirement of 16,932 treasury shares in accordance with the LLC Agreement.

Also during fiscal year 2022, 554,995 LLC Units were redeemed and canceled by the LLC in connection with the purchase and retirement of 554,995 treasury shares under the Company's stock repurchase program.

Distributions and Other Payments to Non-controlling Unit Holders

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If the Company authorizes a distribution, such distribution will be made to the members of the LLC (including the Company) pro rata in accordance with the percentages of their respective LLC units.

Acquisition of Certain Assets of AmTech, LLC and BTR, LLC

On February 1, 2022, Malibu Electronics, LLC, a newly-formed, wholly-owned, direct subsidiary of Boats LLC, entered into an asset purchase agreement to acquire certain assets of AmTech, LLC, an Alabama limited liability company, and real property of BTR, LLC, an Alabama limited liability company.

Boats LLC acquired the assets related to the manufacturing and distribution of wiring harnesses that had previously been sold by Amtech, LLC to Boats LLC and its subsidiaries.

The acquisition continues the vertical integration strategy of the Company by acquiring its primary supplier of wiring harnesses for Malibu and Axis boats.

The Company accounted for the transaction in accordance with ASC Topic 805, Business Combinations .

Maverick Boat Group

8 unchanged sentences

Cash consideration paid $ 150,675

Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value:

Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:

Accounts receivable 3,204

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The weighted average useful life of identifiable definite-lived intangible assets acquired was 20 years.

$ 49,189 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition.

Goodwill of $ 49,189 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition.

Acquisition-related costs of $ 2,648 , w hich were incurred by the Company in the fiscal year ended June 30, 2021 related to the Maverick Boat Group acquisition, were expensed in the period incurred, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive income.

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The following unaudited pro forma consolidated results of operations for the fiscal years ended June 30, 2022, 2021 and 2020, assumes that the acquisition of Maverick Boat Group occurred as of July 1, 2019.

The unaudited pro forma financial information combines historical results of Malibu and Maverick Boat Group, with adjustments for depreciation and amortization attributable to fair value estimates on acquired tangible and intangible assets for the respective periods.

Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings.

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2020 or the results that may occur in the future:

Fiscal Year Ended June 30,

Net sales $ 982,535 $ 774,126

Net income 116,598 69,907

Net income attributable to Malibu Boats, Inc.

112,104 66,671

Basic earnings per share $ 5.40 $ 3.23

Diluted earnings per share $ 5.34 $ 3.20

On October 15, 2018, the Company completed its acquisition of the assets of Pursuit.

The aggregate purchase price for the transaction was $ 100,073 , funded with cash and borrowings under the Company's credit agreement.

The aggregate purchase price was subject to certain adjustments, including customary adjustments for the amount of working capital in the business at the closing date.

The Company accounted for the transaction in accordance with ASC Topic 805, Business Combinations .

The total consideration given to the former owners of Pursuit has been allocated to the assets acquired and liabilities assumed based on estimates of fair value as of the date of the acquisition.

The measurements of fair value were determined based upon estimates utilizing the assistance of third party valuation specialists.

The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Pursuit assumed at the acquisition date:

Consideration:

Cash consideration paid $ 100,073

Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value:

Inventories $ 8,332

Other current assets 350

Property, plant and equipment 17,454

Identifiable intangible assets 57,900

Current liabilities ( 3,488 )

Fair value of assets acquired and liabilities assumed 80,548

Goodwill 19,525

Total purchase price $ 100,073

The fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:

Estimates of Fair Value Estimated Useful Life (in years)

Definite-lived intangibles:

Dealer relationships $ 25,400 20

Total definite-lived intangibles 25,400

Indefinite-lived intangible:

Trade name 32,500

Total other intangible assets $ 57,900

The value allocated to inventories reflects the estimated fair value of the acquired inventory based on the expected sales price of the inventory, less an estimated cost to complete and a reasonable profit margin.

The fair value of the identifiable intangible assets were determined based on the following approaches:

Dealer Relationships - The value associated with Pursuit's dealer relationships is attributed to its long standing dealer distribution network.

The estimate of fair value assigned to this asset was determined using the income approach, which requires an estimate or forecast of the expected future cash flows from the dealer relationships through the application of the multi-period excess earnings approach.

The estimated remaining useful life of dealer relationships is approximately twenty years .

Trade Name - The value attributed to Pursuit's trade name was determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows.

The trade name has an indefinite life.

The fair value of the definite-lived intangible assets are being amortized using the straight-line method to general and administrative expenses over their estimated useful lives.

Indefinite-lived intangible assets are not amortized, but instead are evaluated for potential impairment on an annual basis in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other .

The weighted average useful life of identifiable definite-lived intangible assets acquired was 20 years.

Goodwill of $ 19,525 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition.

The indefinite-lived intangible asset and goodwill acquired are expected to be deductible for income tax purposes.

Acquisition-related costs of $ 2,848 incurred by the Company for fiscal year ended June 30, 2019, related to the Pursuit acquisition, were expensed in the period incurred, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive income.

Pro Forma Financial Information (unaudited):

The following unaudited pro forma consolidated results of operations for the fiscal years ended June 30, 2021, 2020 and 2019, assumes that the acquisition of Pursuit occurred as of July 1, 2018.

The unaudited pro forma financial information combines historical results of Malibu and Pursuit, with adjustments for depreciation and amortization attributable to fair value estimates on acquired tangible and intangible assets for the respective periods.

The unaudited pro forma financial information combines historical results of Malibu and Maverick Boat Group, with adjustments for interest on debt financing, depreciation and amortization attributable to fair value estimates on acquired tangible and intangible assets for the respective periods.

Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings.

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Diluted earnings per share $ 7.51 $ 5.34 $ 3.20

Inventories, net

Inventories are stated at the lower of cost or net realizable value, determined on the first in, first out (“FIFO”) basis.

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Total inventories $ 157,002 $ 116,685

Property, Plant, and Equipment

Property, Plant, and Equipment, net

Property, plant, and equipment acquired outside of acquisition are stated at cost.

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Depreciation expense was $ 19,365 , $ 15,636 and $ 12,249 for the fiscal years ended June 30, 2022, 2021 and 2020, respectively, substantially all of which was recorded in cost of sales.

During fiscal year 2021 the Company disposed of various assets with a net book value of $ 383 and recorded a loss of $ 374 related to these disposals.

During fiscal year 2022, the Company disposed of various assets with a net book value of $ 3 and recorded a gain of $ 6 related to these disposals.

During fiscal year 2021, the Company disposed of various assets with a net book value of $ 383 and recorded a loss of $ 374 related to these disposals.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets, net

The changes in the carrying amount of goodwill for the fiscal years ended June 30, 2022 and 2021 were as follows:

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Goodwill as of June 30, 2020 $ 11,957 $ 19,525 $ 19,791 $ 51,273

Addition related to the acquisition of Maverick Boat Group — 49,189 — 49,189

Effect of foreign currency changes on goodwill

( 131 ) — — ( 131 )

Goodwill as of June 30, 2021 12,528 68,714 19,791 101,033

Addition related to the acquisition of Maverick Boat Group — 49,189 — 49,189

Addition related to the acquisition of Malibu Electronics 329 — — 329

Effect of foreign currency changes on goodwill

( 558 ) — — ( 558 )

Goodwill as of June 30, 2022 $ 12,299 $ 68,714 $ 19,791 $ 100,804

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The Company's Malibu and Axis brand boats have a limited warranty for a period up to five years .

The Company's Cobalt brand boats have (1) a structural warranty of up to ten years which covers the hull, deck joints, bulkheads, floor, transom, stringers, and motor mount, and (2) a five year bow-to-stern warranty on all components manufactured or purchased (excluding hull and deck structural components), including canvas and upholstery.

hull and deck structural components), including canvas and upholstery.

Gelcoat is covered up to three years for Cobalt and one year for Malibu and Axis.

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Cobia brand boats have (1) a limited warranty for a period of up to ten years on structural components such as the hull, deck and defects in the gelcoat surface of the hull bottom and (2) a bow to stern warranty of three years (excluding hull and deck structural components).

For each boat brand, there are certain materials, components or parts of the boat that are not covered by our warranty and certain components or parts that are separately warranted by the manufacturer or supplier (such as the engine).

Engines that we manufacture for Malibu and Axis models have a limited warranty of up to five years or five-hundred hours.

For each boat brand, there are certain materials, components or parts of the boat that are not covered by the Company's warranty and certain components or parts that are separately warranted by the manufacturer or supplier (such as the engine).

Engines that the Company manufactures for Malibu and Axis models have a limited warranty of up to five years or five-hundred hours.

The Company’s standard warranties require it or its dealers to repair or replace defective products during the warranty period at no cost to the consumer.

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Accordingly, the Company has little historical claims experience for warranty years four and five , and as such, these estimates give rise to a higher level of estimation uncertainty.

Future warranty claims may differ from our estimate of the warranty liability, which could lead to changes in the Company’s warranty liability in future periods.

Future warranty claims may differ from the Company's estimate of the warranty liability, which could lead to changes in the Company’s warranty liability in future periods.

Changes in the Company’s product warranty liability, which are included in accrued expenses in the accompanying consolidated balance sheets, were as follows:

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Warranty Expense 21,280 21,973 14,339

Additions for Pursuit acquisition — — 1,872

Additions for Maverick Boat Group acquisition — 883 —

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Long-Term Debt

As of June 30, 2021, the Company currently has a revolving credit facility with borrowing capacity of up to $ 170,000 and term loans with an aggregate principal amount outstanding of $ 99,375 .

As of June 30, 2022, the Company had a revolving credit facility with borrowing capacity of up to $ 170,000 and term loans with an aggregate principal amount outstanding of $ 23,125 .

As of June 30, 2022, the Company had $ 97,000 outstanding under its revolving credit facility and $ 1,379 in outstanding letters of credit with $ 71,621 available for borrowing.

The revolving credit facility matures on July 1, 2024, the incremental term loan made on December 30, 2020 in a principal amount of $ 25,000 , of which $ 24,375 is outstanding as of June 30, 2021, (the “Incremental Term Loan”) matures on July 1, 2024 and the remaining $ 75,000 of outstanding term loans (the “Existing Term Loans,” and together with the Incremental Term Loans, the “Term Loans”) mature on July 1, 2022.

On December 30, 2020, Boats LLC entered into the Third Amendment to its Credit Agreement.

The revolving

credit facility matures on July 1, 2024 and a term loan made on December 30, 2020 in a principal amount of $ 25,000 , of which $ 23,125 was outstanding as of June 30, 2022, (the “Incremental Term Loan”) matures on July 1, 2024.

The Company had additional term loans in a principal amount of $ 75,000 , of which $ 72,000 was due on July 1, 2022 (the “Existing Term Loans,” and together with the Incremental Term Loans, the “Term Loans”).

In June 2022, the Company used proceeds from drawing on the revolving credit facility to repay the Existing Term Loans in full.

The Incremental Term Loan remained outstanding as of June 30, 2022.

On December 30, 2020, Boats LLC entered into the Third Amendment (the “Third Amendment”) to its Second Amended and Restated Credit Agreement dated as of June 28, 2017, by and among Boats LLC, the LLC and certain subsidiaries of Boats LLC parties thereto, as guarantors, the lenders parties thereto and Truist Bank (successor by merger to SunTrust Bank), as administrative agent, swingline lender and issuing bank (as amended, the “Credit Agreement”).

The Third Amendment added a $ 25,000 Incremental Term Loan facility with a maturity date of July 1, 2024 and increased the borrowing capacity of the revolving credit facility by $ 50,000 from $ 120,000 to $ 170,000 .

The Incremental Term Loan is subject to quarterly amortization at a rate of 5.0 % per annum through December 31, 2022 and at a rate of 7.5 % per annum through June 30, 2024 and accrues interest at the same interest rate applicable to other loans under the Credit Agreement as described below.

The obligations of Malibu Boats LLC (“Boats LLC”) under the Credit Agreement are guaranteed by the LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of Boats LLC, and all such obligations are secured by substantially all of the assets of the LLC, Boats LLC and such subsidiary guarantors.

The obligations of Boats LLC under the Credit Agreement are guaranteed by the LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of Boats LLC, and all such obligations are secured by substantially all of the assets of the LLC, Boats LLC and such subsidiary guarantors.

Malibu Boats, Inc.

is not a party to the Credit Agreement.

All borrowings under the Credit Agreement bear interest at a rate equal to either, at the Company's option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5 %, or one-month LIBOR plus 1 % (the “Base Rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 1.25 % to 2.25 % with respect to LIBOR borrowings and 0.25 % to 1.25 % with respect to Base Rate borrowings.

Borrowings under the Credit Agreement bear interest at a rate equal to either, at the Company's option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5 %, or one-month London Inter-bank Offered Rate ("LIBOR") plus 1 % (the “base rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 1.25 % to 2.25 % with respect to LIBOR borrowings and 0.25 % to 1.25 % with respect to base rate borrowings.

The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries calculated on a consolidated basis.

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The Credit Agreement permits prepayment of the term loan without any penalties.

The Existing Term Loans require an amortization payment of approximately $ 3,000 on March 31, 2022, reflected as current maturities of long-term obligations, and the balance of the Existing Term Loans is due on the scheduled maturity date of July 1, 2022.

The Incremental Term Loan of $ 25,000 is subject to quarterly amortization at a rate of 5.0 % per year through December 31, 2022, resulting in $ 1,250 being reflected as current maturities of long-term obligations, 7.5 % per year through June 30, 2024 and the balance of the Incremental Term Loan is due on the scheduled maturity date of July 1, 2024.

The Existing Term Loans required an amortization payment of approximately $ 3,000 on March 31, 2022 and the remaining balance of the Existing Term Loans is due on the scheduled maturity date of July 1, 2022, each reflected as current maturities of long-term obligations.

The Incremental Term Loan of $ 25,000 is subject to quarterly amortization at a rate of 5.0 % per year through December 31, 2022 and 7.5 % per year through June 30, 2024, resulting in $ 1,563 being reflected as current maturities of long-term obligations with the balance of the Incremental Term Loan due on the scheduled maturity date of July 1, 2024.

The Credit Agreement also requires prepayments from the net cash proceeds received by Boats LLC or any guarantors from certain asset sales and recovery events, subject to certain reinvestment rights, and from excess cash flow, subject to the terms and conditions of the Credit Agreement.

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For example, the Credit Agreement generally prohibits the LLC, Boats LLC and the subsidiary guarantors from paying dividends or making distributions, including to the Company.

parties or payments pursuant to stock option and other benefit plans up to $ 3,000 in any fiscal year, and (iv) share repurchase payments up to $ 35,000 in any fiscal year subject to one-year carry forward and compliance with other financial covenants.

The credit facility permits, however, (i) distributions based on a member’s allocated taxable income, (ii) distributions to fund payments that are required under the LLC’s tax receivable agreement, (iii) purchase of stock or stock options of the LLC from former officers, directors or employees of loan parties or payments pursuant to stock option and other benefit plans up to $ 3,000 in any fiscal year, and (iv) share repurchase payments up to $ 35,000 in any fiscal year subject to one-year carry forward and compliance with other financial covenants.

In addition, the LLC may make dividends and distributions of up to $ 10,000 in any fiscal year, subject to compliance with other financial covenants.

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These costs, in addition to the unamortized balance related to costs associated with the Company's previous credit facility of $ 671 , are being amortized over the term of the Credit Agreement into interest expense using the effective interest method and presented as a direct offset to the total debt outstanding on the consolidated balance sheet.

The Company used proceeds from an offering on August 24, 2017 to repay $ 50,000 on its Existing Term Loans under the Credit Agreement and exercised its option to apply the prepayment to principal installments through December 31, 2021, and a portion of principal installments due on March 31, 2022.

The $ 50,000 repayment resulted in a write off of deferred financing costs of $ 829 in fiscal year 2018, which was included in amortization expense on the consolidated statement of operations and comprehensive income.

On July 8, 2022, the Company entered into a Third Amended and Restated Credit Agreement that amended and restated the Credit Agreement.

Refer to Note 21 related to Subsequent Events.

Covenant Compliance

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Other information concerning the Company's operating leases accounted for under ASC Topic 842 is as follows:

Classification As of June 30, 2021 As of As of June 30, 2020

As of June 30,

Classification 2022 2021

Right-of-use assets Other assets $ 10,659 $ 12,606

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Total lease liabilities $ 12,183 $ 14,225

Classification Fiscal Year Ended June 30, 2021 Fiscal Year Ended June 30, 2020

Fiscal Year Ended June 30,

Classification 2022 2021 2020

Operating lease costs (1)

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Selling and marketing, and general and administrative 857 854 863

Sublease income Other income, net 38 38

Sublease income Other expense (income), net ( 38 ) ( 38 ) ( 38 )

Cash paid for amounts included in the measurement of operating lease liabilities Cash flows from operating activities 2,517 2,617 2,606

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The weighted average remaining lease term for the fiscal year ended June 30, 2022 and 2021 was 5.53 years and 6.44 years, respectively.

As of June 30, 2021 and 2020, the weighted average discount rate determined based on the Company's incremental borrowing rate is 3.63 % and 3.65 %, respectively.

As of June 30, 2022 and 2021, the weighted average discount rate determined based on the Company's incremental borrowing rate is 3.63 %, respectively.

Future annual minimum lease payments for the following fiscal years as of June 30, 2022 are as follows:

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The Tax Receivable Agreement further provides that, upon certain mergers, asset sales or other forms of business combinations or other changes of control, the Company (or its successor) would owe to the pre-IPO owners of the LLC a lump-sum payment equal to the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement that would be based on certain assumptions, including a deemed exchange of LLC Units and that the Company would have sufficient taxable income to fully utilize the deductions arising from the increased tax basis and other tax benefits related to entering into the Tax Receivable Agreement.

The Company also is entitled to terminate the Tax Receivable Agreement, which, if terminated, would obligate the Company to make early termination payments to the pre-IPO owners of the LLC.

The Company also is entitled to terminate the Tax Receivable Agreement, which, if terminated, would obligate the Company to make early termination payments to the pre-IPO owners of

In addition, a pre-IPO owner may elect to unilaterally terminate the Tax Receivable Agreement with respect to such pre-IPO owner, which would obligate the Company to pay to such existing owner certain payments for tax benefits received through the taxable year of the election.

When estimating the expected tax rate to use in order to determine the tax benefit expected to be recognized from the Company’s increased tax basis as a result of exchanges of LLC Units by the pre-IPO owners of the LLC, the Company continuously monitors changes in its overall tax posture, including changes resulting from new legislation and changes as a result of new jurisdictions in which the Company is subject to tax.

As an example, the Company increased the state tax rate used in computing its future tax obligations as a result of its acquisition of assets for its wire harnessing facility in Alabama, which added Alabama as a new jurisdiction.

As of June 30, 2022 and 2021, the Company recorded deferred tax assets of $ 115,952 and $ 114,242 , respectively, associated with basis differences in assets upon acquiring an interest in Malibu Boats Holdings, LLC and pursuant to making an election under Section 754 of the Internal Revenue Code of 1986 (the "Internal Revenue Code"), as amended.

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Non-controlling interest ( 0.6 ) ( 0.7 ) ( 0.9 )

Other, net — — 0.4

Total income tax expense on continuing operations 22.2 % 22.9 % 22.8 %

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On an annual basis, the Company performs a comprehensive analysis of all forms of positive and negative evidence to determine whether realizability of deferred tax assets is more likely than not.

During each interim period, the Company updates

its annual analysis for significant changes in the positive and negative evidence.

During each interim period, the Company updates its annual analysis for significant changes in the positive and negative evidence.

At June 30, 2022 and 2021, the Company concluded that $ 15,633 and $ 15,279 , respectively, of valuation allowance against deferred tax assets was necessary.

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The Company closed the IRS examination of its June 30, 2015 return during the fourth quarter of fiscal year 2019, resulting in an immaterial adjustment to its tax liability.

A reconciliation of changes in the amount of unrecognized tax benefits for the fiscal years ended June 30, 2022, 2021, 2020 is as follows:

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Reductions due to statute settlements ( 286 ) ( 50 ) ( 64 )

Additions (reductions) for tax positions of prior years 3 ( 113 ) —

(Reductions) additions for tax positions of prior years ( 8 ) 3 ( 113 )

Balance as of June 30 $ 1,472 $ 1,452 $ 1,445

In fiscal year 2021, the Company settled $ 250 related to its state tax filing positions.

Also in fiscal year 2021, the Company reduced its uncertain tax positions $ 50 as a result of statute settlements, and recorded $ 304 in connection with its current year state filing positions.

In fiscal year 2022, the Company reduced its uncertain tax positions $ 286 as a result of statute settlements, and recorded $ 314 in connection with its current year state filing positions.

As of June 30, 2022, it is reasonably possible that $ 156 of the total unrecognized tax benefits recorded will reverse within the next twelve months.

Of the total unrecognized tax benefits recorded on the consolidated balance sheet, $ 1,226 would impact the effective tax rate once settled.

As discussed in Note 1 to the Consolidated Financial Statements, our policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes.

At June 30, 2021, we had $ 235 of accrued interest related to unrecognized tax benefits.

As discussed in Note 1 to the Consolidated Financial Statements, the Company's policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes.

At June 30, 2022, the Company had $ 244 of accrued interest related to unrecognized tax benefits.

The Company did not provide for U.S.

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Exchange of LLC Units for Class A Common Stock

During fiscal year 2019, five non-controlling LLC Unit holders exchanged LLC Units for the issuance of Class A Common Stock.

In connection with the exchange, two shares of Class B Common Stock was automatically transferred to the Company and retired.

As of June 30, 2019, the Company had a total of 15 shares of its Class B Common Stock issued and outstanding.

During fiscal year 2020, four non-controlling LLC Unit holders exchanged LLC Units for the issuance of Class A Common Stock.

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During fiscal year 2021, nine non-controlling LLC Unit holders exchanged LLC Units for the issuance of Class A Common Stock.

In connection with the exchange, five shares of Class B Common Stock were automatically transferred to the

Company and retired.

In connection with the exchange, five shares of Class B Common Stock was automatically transferred to the Company and retired.

As of June 30, 2021, the Company had a total of 10 shares of its Class B Common Stock issued and outstanding.

During fiscal year 2022, no non-controlling LLC Unit holders exchanged LLC Units for the issuance of Class A Common Stock.

As there were no exchanges, no shares of Class B Common Stock were automatically transferred to the Company and retired.

As of June 30, 2022, the Company had a total of 10 shares of its Class B Common Stock issued and outstanding.

Stock Repurchase Program

5 unchanged sentences

The Fiscal 2021 Repurchase Program expired on July 1, 2021.

On November 3, 2021, the board of directors of the Company authorized a stock repurchase program for the repurchase of up to $ 70,000 of Class A Common Stock and the LLC Units for the period from November 8, 2021 to November 8, 2022 (the “Fiscal 2022 Repurchase Program”).

During the fiscal year ended June 30, 2022, the Company repurchased 554,995 shares of Class A Common Stock for $ 34.6 million in cash including related fees and expenses.

As of June 30, 2022, an additional $ 35.4 million was available to repurchase shares of Class A Common Stock and LLC Units under the Fiscal 2022 Repurchase Program.

The Fiscal 2022 Repurchase Program expires on November 8, 2022.

Class A Common Stock and Class B Common Stock

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Liquidation Rights

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, holders of the Company's Class A Common Stock would be entitled to share ratably in the Company's assets that are legally available for distribution to stockholders after payment of its debts and other liabilities.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company's affairs, holders of the Company's Class A Common Stock would be entitled to share ratably in the Company's assets that are legally available for distribution to stockholders after payment of its debts and other liabilities.

If the Company has any preferred stock outstanding at such time, holders of the preferred stock may be entitled to distribution and/or liquidation preferences.

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The Company's board of directors may also designate the rights, preferences and privileges of the holders of each such series of preferred stock, any or all of which may be greater than or senior to those granted to the holders of common stock.

Though the actual effect of any such issuance on the rights of the holders of common stock will not be known until the Company's board of directors determines the specific rights of the holders of preferred stock, the potential effects of such an issuance include:

Though the actual effect of any such issuance on the rights of the holders of common stock will not be known until the

Company's board of directors determines the specific rights of the holders of preferred stock, the potential effects of such an issuance include:

• diluting the voting power of the holders of common stock;

2 unchanged sentences

• delaying, deterring or preventing a change-in-control or other corporate takeover.

In connection with the recapitalization we completed in connection with our IPO, the LLC Agreement was amended and restated to, among other things;

modify its capital structure by replacing the different classes of interests previously held by the LLC unit holders to a single new class of units called “LLC Units.” As a result of our IPO and the recapitalization we completed in connection with our IPO, the Company holds LLC Units in the LLC and is the sole managing member of the LLC.

In connection with the recapitalization the Company completed in connection with the Company's IPO, the LLC Agreement was amended and restated to, among other things;

modify its capital structure by replacing the different classes of interests previously held by the LLC unit holders to a single new class of units called “LLC Units.” As a result of the Company's IPO and the recapitalization the Company completed in connection with the Company's IPO, the Company holds LLC Units in the LLC and is the sole managing member of the LLC.

Holders of LLC Units do not have voting rights under the LLC Agreement.

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As of June 30, 2022, there were 479,227 shares available for future issuance under the Incentive Plan.

On August 22, 2018, the Company granted 50,000 options to certain key employees to purchase from the Company shares of Class A Common Stock at a price of $ 42.13 per share.

The term of the options commenced on August 22, 2018 and will expire on August 21, 2024, the day before the sixth anniversary of the grant date.

Under the terms of the agreements, the awards will vest ratably over four years on each anniversary of their grant date.

At August 22, 2018, the fair value of the option awards was $ 733 and was estimated using the Black-Scholes option-pricing model with the following assumptions:

risk-free rate of 2.7 %, expected volatility of 38.4 %, expected term of 4.25 years, and no dividends.

Stock-based compensation expense attributable to the service based options is amortized on a straight-line basis over the requisite service period.

costs associated with performance based option awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation .

On November 1, 2018, the Company granted 35,000 restricted stock units and 48,000 restricted stock awards to key employees under the Incentive Plan.

The grant date fair value of these awards was $ 3,474 based on a stock price of $ 41.85 per share on the date of grant.

Under the terms of the agreements, 71 % of the awards will vest ratably over four years beginning on November 6, 2019 and approximately 29 % of the awards will vest in tranches based on the achievement of annual or cumulative performance targets.

Compensation costs associated with performance based awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation.

On January 14, 2019, the Company granted 19,973 options to certain key employees to purchase from the Company shares of Class A Common Stock at a price of $ 37.55 per share.

The term of the options commenced on January 14, 2019 and will expire on January 13, 2025, the day before the sixth anniversary of the grant date.

Under the terms of the agreements, the awards will vest ratably over four years on each anniversary of their grant date.

At January 14, 2019, the fair value of the option awards was $ 263 and was estimated using the Black-Scholes option-pricing model with the following assumptions:

risk-free rate of 2.53 %, expected volatility of 39.0 %, expected term of 4.25 years, and no dividends.

Stock-based compensation expense attributable to the service based options is amortized on a straight-line basis over the requisite service period.

Compensation costs associated with performance based option awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation .

Risk-free interest rate.

The risk-free rate for the expected term of the option is based on the U.S.

Treasury yield curve at the date of grant.

Expected term.

The Company used the simplified method to estimate the expected term of stock options.

The simplified method assumes that employees will exercise share options evenly between the period when the share options are vested and ending on the date when the share options would expire.

Expected volatility.

The Company determined expected volatility based on its historical volatility calculated using daily observations of the closing price of its publicly traded common stock.

Expected dividend.

The Company has not estimated any dividend yield as the Company currently does not pay a dividend and does not anticipate paying a dividend over the expected term.

On November 22, 2019, under the Incentive Plan, the Company granted approximately 43,000 restricted service-based stock units and 28,000 restricted service based stock awards to key employees under the Incentive Plan.

The grant date fair value of these awards was $ 2,714 based on a stock price of $ 38.05 per share on the date of grant.

Under the terms of the agreements, approximately 60 % of the awards will vest ratably over three years beginning on November 6, 2019 and approximately 40 % of the awards will vest ratably over four years beginning on November 6, 2019.

Under the terms of the agreements, approximately 60 % of the awards will vest ratably over three years and approximately 40 % of the awards will vest ratably over four years .

Stock-based compensation expense attributable to the service based units and awards is amortized on a straight-line basis over the requisite service period.

11 unchanged sentences

On November 3, 2020, under the Incentive Plan, the Company granted approximately 33,000 restricted service based stock units and 25,000 restricted service based stock awards to key employees under the Incentive Plan.

The grant date fair value of

these awards was $ 3,145 based on a stock price of $ 54.47 per share on the date of grant.

The grant date fair value of these awards was $ 3,145 based on a stock price of $ 54.47 per share on the date of grant.

Approximately 58 % of the awards vest ratably over three years and approximately 42 % of the awards vest ratably over four years .

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Compensation costs are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation.

On November 3, 2021, under the Incentive Plan, the Company granted approximately 32,000 restricted service-based stock units and 23,000 restricted service-based stock awards to key employees under the Incentive Plan.

The grant date fair value of these awards was $ 4,149 based on a stock price of $ 74.25 per share on the date of grant.

Approximately 58 % of the awards vest ratably over three years and approximately 42 % of the awards vest ratably over four years .

Stock-based compensation expense attributable to the service-based units and awards is amortized on a straight-line basis over the requisite service period.

On November 3, 2021, under the Incentive Plan, the Company granted to key employees a target amount of approximately 18,000 restricted stock awards with a performance condition.

The number of shares that will ultimately be issued, if any, is based on the attainment of a specified amount of earnings during the fiscal year ending June 30, 2024.

The maximum number of shares that can be issued if an elevated earnings target is met is approximately 26,000 .

The grant date fair value of the awards was estimated to be $ 1,305 , based on a stock price of $ 74.25 .

Compensation costs associated with the performance awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation .

On November 3, 2021, under the Incentive Plan, the Company granted to key employees a target amount of approximately 18,000 stock awards with a market condition.

The number of shares that will ultimately be issued, if any, is based on a total shareholder return ("TSR") computation that involves comparing the movement in the Company's stock price to movement in a market index from the grant date through November 3, 2024.

The maximum number of shares that can be issued if an elevated TSR target is met is approximately 35,000 .

The grant date fair value of the awards were estimated to be $ 1,688 , which is estimated using a Monte Carlo simulation.

The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair market value for the stock award.

Compensation costs are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation .

On May 6, 2022, under the Incentive Plan, the Company granted approximately 27,000 restricted service-based stock units to key employees under the Incentive Plan.

The grant date fair value of these awards was $ 1,376 based on a stock price of $ 51.89 per share on the date of grant.

The grant vests ratably over three years on a bi-annual basis.

Stock-based compensation expense attributable to the service-based units and awards is amortized on a straight-line basis over the requisite service period.

The following table presents the number, grant date stock price per share, and weighted-average exercise price per share of the Company’s employee option awards:

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Equity awards issued to directors are fully vested at the date of grant.

Directors receiving restricted stock units as compensation for services have no rights as a stockholder of the Company, no dividend rights (except with respect to dividend

equivalent rights), and no voting rights until Class A Common Stock is actually issued to them upon separation from service or change in control as defined in the Incentive Plan.

Directors receiving restricted stock units as compensation for services have no rights as a stockholder of the Company, no dividend rights (except with respect to dividend equivalent rights), and no voting rights until Class A Common Stock is actually issued to them upon separation from service or change in control as defined in the Incentive Plan.

If dividends are paid by the Company to its stockholders, directors would be entitled to receive an equal number of restricted stock units based on their proportional interest.

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Basic net income per share of Class A Common Stock is computed by dividing net income attributable to the Company's earnings by the weighted average number of shares of Class A Common Stock outstanding during the period.

The weighted average number of shares of Class A Common Stock outstanding used in computing basic net income per share includes fully vested restricted stock units awarded to directors that are entitled to participate in distributions to common shareholders through receipt of additional units of equivalent value to the dividends paid to Class A Common Stock holde rs.

Diluted net income per share of Class A Common Stock is computed similarly to basic net income per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents using the treasury method, if dilutive.

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The reserve methodology used to record an estimated expense and loss reserve in each accounting period is based upon an analysis of likely repurchases based on current field inventory and likelihood of repurchase.

Subsequent to the inception of the repurchase commitment, the Company evaluates the likelihood of repurchase and

adjusts the estimated loss reserve accordingly.

Subsequent to the inception of the repurchase commitment, the Company evaluates the likelihood of repurchase and adjusts the estimated loss reserve accordingly.

When a potential loss reserve is recorded it is presented in accrued liabilities in the accompanying consolidated balance sheets.

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The net difference between the repurchase price and the resale price is recorded against the loss reserve and presented in cost of sales in the accompanying consolidated statements of operations and comprehensive income.

For fiscal year 2021, the Company did no t repurchase any boats under its repurchase agreements.

For fiscal year 2022, the Company did no t repurchase any units under its repurchase agreements.

For fiscal year 2021 , the Company did not repurchase any units under its repurchase agreements.

For fiscal year 2020 , the Company repurchased two units from a lender of one of its former dealers and those units were subsequently resold in fiscal year 2020 above their cost and at minimal margin loss.

For fiscal year 2019 , the Company repurchased eight units from a lender of two of its former dealers and those units were subsequently resold in fiscal year 2020 above their cost and at minimal margin loss.

Accordingly, the Company did not carry a reserve for repurchases as of June 30, 2022 and 2021, respectively.

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Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred.

Except as disclosed below, management does not believe there are any pending claims (asserted or unasserted) at June 30, 2021

or June 30, 2020 that will have a material adverse impact on the Company’s financial condition, results of operations or cash flows.

Except as disclosed below, management does not believe there are any pending claims (asserted or unasserted) at June 30, 2022 or June 30, 2021 that will have a material adverse impact on the Company’s financial condition, results of operations or cash flows.

Legal Proceedings

On January 12, 2018, the Company filed suit against Skier’s Choice, Inc., or "Skier’s Choice," in the U.S.

District Court for the Eastern District of Tennessee, seeking monetary and injunctive relief.

The Company's complaint alleges Skier’s Choice’s infringement of three utility patents - U.S.

9,260,161, 8,578,873, and 9,199,695 - related to wake surfing technology.

Skier’s Choice denied liability arising from the causes of action alleged in the Company's complaint and filed counterclaims alleging invalidity of the asserted patents.

On June 19, 2019, the Company filed a second action against Skier’s Choice in the U.S.

District Court for the Eastern District of Tennessee, seeking monetary and injunctive relief.

The Company’s complaint alleges Skier’s Choice’s surf systems on its Moomba and Supra lines of boats infringe U.S.

10,322,777, a patent related to wake surfing technology.

Skier’s Choice denied liability arising from the causes of action alleged in the Company's complaint and filed counterclaims alleging invalidity of the asserted patents.

On June 27, 2019, Skier’s Choice filed a motion to consolidate these two actions, and to continue deadlines in the earlier case for nine months, which the Company opposed.

On August 22, 2019, the motion for consolidation was referred by Judge Thomas Varlan to Magistrate Judge Bruce Guyton, and the two cases were stayed pending resolution of that motion.

On November 27, 2019, Judge Guyton ordered the two cases to be consolidated.

On January 7, 2020, the consolidated cases were reassigned to Judge Jon McCalla.

On January 23, 2020, Judge McCalla issued a Scheduling Order, scheduling trial on the consolidated cases to begin on September 29, 2020.

On July 23, 2020, the Company moved to dismiss its allegations of infringement of U.S.

9,199,695, which Skier’s Choice opposed.

On August 25, 2020, Judge McCalla issued a claim construction order and set a scheduling conference for August 27, 2020, for purposes of resetting the pretrial calendar and trial dates.

On September 11, 2020, the Court issued a Scheduling Order resetting the trial for the consolidated cases to begin on January 25, 2021.

On December 11, 2020, the Court issued an Order resetting the trial for the consolidated cases to begin on May 10, 2021.

During the trial, the Court found that Skier’s Choice did not infringe one claim of the ’873 Patent, and also found that Skier’s Choice did infringe one claim of the ’777 Patent.

On May 21, 2021, a jury returned a verdict finding that Skier’s Choice did not infringe three claims from the ’777 and ’161 Patents, and also found four claims from the ’777 and ’161 Patents to be invalid.

Malibu did not pursue an appeal of the verdict.

On June 4, 2021, Skier’s Choice filed a motion seeking an award of attorney’s fees and costs.

Malibu opposed Skier’s Choice’s motion.

The Company is a defendant in a product liability case alleging defective product design and failure to warn.

The case is Stephen Paul Batchelder and Margaret Mary Batchelder Individually, as Administrators of the Estate of Ryan Paul Batchelder, deceased, etc., et al Plaintiffs, v.

Batchelder Matters

The Company and its indirect subsidiary Boats LLC are defendants in the product liability case Batchelder et al.

Malibu Boats, LLC, f/k/a Malibu Boats, Inc.;

Malibu Boats West, Inc., et al, Defendants, In the Superior Court of Rabun County, Georgia, Civil Action Case No.

2016-CV-0114-C.

The case involves a personal injury accident involving the propeller of a boat manufactured by the Company.

Plaintiffs seek damages, including economic and punitive damages, alleging that the accident was caused by a design defect and a failure to warn.

The Company maintains product liability insurance that is applicable to this case.

The complaint was initially filed in the Superior Court of Rabun County, Georgia on May 9, 2016.

The trial commenced on August 16, 2021 and is continuing as of the date of this Annual Report on Form 10-K.

The Company believes that the allegations in the case are unfounded and denies that there was a design defect or that any defect in the boat was a legal cause of the injury.

Malibu Boats West, Inc., et.

al., Superior Court of Rabun County, Georgia, Civil Action Case No.

2016-CV-0114-C (the "Batchelder I Matter"), brought by, among others, Stephan Paul Batchelder and Margaret Mary Batchelder as Administrators of the Estate of Ryan Paul Batchelder, deceased (“Batchelder I Plaintiffs”).

The Batchelder I Plaintiffs also sued the manufacturer of the boat at issue in the case, Malibu Boats West, Inc.

West is not, and has never been, a subsidiary of the Company but was a separate legal entity whose assets were purchased by Boats LLC in 2006.

The case involves a personal injury accident in 2014 involving a 2000 model year boat that was manufactured by West.

On August 28, 2021, the jury rejected the Batchelder I Plaintiffs’ design defect claims and found that the driver of the boat was

75 % at fault for the accident.

Notwithstanding those findings, the jury found that Boats LLC and West negligently failed to warn of a hazard posed by the relevant boat and that such failure was a proximate cause of the death of the decedent.

The jury also found that Boats LLC is a legal successor of, and responsible for the liabilities of, West.

The jury awarded compensatory damages of $ 80 million and apportioned 15 % of such damages to Boats LLC and 10 % of such damages to West.

In addition, the jury awarded $ 80 million of punitive damages against Boats LLC and $ 40 million of punitive damages against West.

Based on the jury’s finding of successor liability, the trial court entered judgment for the full amount of the verdict against Boats LLC, with a potential maximum liability to Boats LLC of $ 140 million, plus post-judgment interest at a rate of 6.25 % per annum.

The Batchelder I Plaintiffs also filed motions, after the judgment, seeking orders requiring Boats LLC to pay pre-judgment interest and a portion of their attorney fees.

They claimed they are owed attorney fees of approximately $ 56 million.

The Company opposed both motions, arguing that the Batchelder I Plaintiffs have no right either to pre-judgment interest or to reimbursement of their attorneys’ fees, and in the alternative that the amount of attorneys’ fees sought was unreasonable.

The trial court denied the Batchelder I Plaintiffs’ motion for prejudgment interest and held that ruling on the Batchelder I Plaintiffs’ motion for attorneys’ fees would be premature, indicating that it would decide whether the Batchelder I Plaintiffs have the right to attorneys’ fees, and if so what amount is reasonable, if still necessary upon the resolution of the Company’s post-trial motions and any related appeals.

On July 17, 2022, the trial court denied Boats LLC’s post-trial motions.

Boats LLC has since filed a notice of appeal.

Pending resolution of the appeals process, the payment of any damages in this matter is expected to be stayed.

Based on the current status of the process, the Company believes a loss is reasonably possible and that the potential range of loss could be from $ 0 to $ 140 million, plus post-judgment interest at 6.25 % per annum.

The Company may also be required to pay an award of reasonable attorney’s fees to the Batchelder I Plaintiffs, which the Batchelder I Plaintiffs claim should be approximately $ 56 million.

As noted above, the trial court has postponed any ruling on the Batchelder I Plaintiffs' contested motion for attorney's fees pending the resolution of the Company's post-trial motions and any related appeals.

While the Company and Boats LLC maintain product liability insurance applicable to this case, such insurance coverage may be limited to $ 26 million.

Further, while Boats LLC has other claims that it may decide to pursue with respect to this matter, the Company cannot provide any assurance that it will pursue those claims or be successful if it does.

The Company did not carry a reserve for loss as of June 30, 2022.

The Company is also a defendant in a related product liability case, Stephan Paul Batchelder and Margaret Mary Batchelder, as Natural Guardians of Josh Patrick Batchelder, a minor;

Darin Batchelder, individually, and as Natural Guardian of Zach Batchelder, a minor;

and Kayla Batchelder (the “Batchelder II Plaintiffs”) v.

Malibu Boats, LLC v.

Dennis Michael Ficarra;

State Court of Rabun County, Civil Action File No.

2022-CV-0034.

The complaint was filed on February 9, 2022 as a purported renewal of earlier claims by the Batchelder II Plaintiffs that were dismissed without prejudice.

The case involves claims by the Batchelder II Plaintiffs of their own alleged bodily injury and emotional distress stemming from the same accident involving the alleged swamping of the boat manufactured and sold by West that is the subject of the Batchelder I Matter.

As noted above, West is not, and has never been, a subsidiary of the Company but was a separate legal entity whose assets were purchased by the Company in 2006.

Four Batchelder II Plaintiffs (including three children) seek damages for personal injury and punitive damages, alleging that the accident was caused by a design defect and a failure to warn.

The Batchelder II Plaintiffs were all dismissed without prejudice from the Batchelder I Matter shortly before the trial for the Batchelder I Matter, however, and thus the new complaint is a renewal action of the original complaint.

The Company believes that the allegations in this case are unfounded and denies that there was a design defect or a duty to warn, that the Batchelder II Plaintiffs suffered the alleged injuries, or that any defect in the boat or failure to warn was a legal cause of the alleged injuries.

The Company also contends that the incident was caused by the negligence of the driver of the boat and has filed a Third-Party Complaint against the driver, Dennis Ficarra, based on his negligence.

The Company is unable to provide any reasonable evaluation of the likelihood that a loss will be incurred or any reasonable estimate of the range of possible loss.

1 unchanged sentence

As of June 30, 2022, there were two non-employee members of the Company's board of directors that are also original shareholders of the Company and receive an annual retainer as compensation for services rendered.

On November 2, 2018, one non-employee member of the Company's board of directors that is also an original shareholder departed from the board.

For the fiscal years ended June 30, 2022, 2021 and 2020, $ 385 , $ 315 and $ 310 , respectively, was paid to these directors in both cash and equity for their services.

Of the amount paid, $ 51 was a prepayment for services through the 2021 and 2020 annual meetings for both of the years ended June 30, 2021 and 2020.

Of the amount paid, $ 74 and $ 51 was a prepayment for services through the 2022 and 2021 annual meetings for both of the years ended June 30, 2022 and 2021, respectively.

Segment Reporting

1 unchanged sentence

The Malibu segment participates in the manufacturing, distribution, marketing and sale of Malibu and Axis performance sports boats throughout the world.

The Saltwater Fishing segment participates in the manufacturing, distribution, marketing and sale throughout the world of Pursuit boats and the Maverick Boat Group brand boats (Maverick, Cobia, Pathfinder and Hewes).

The Saltwater Fishing segment participates in the manufacturing, distribution, marketing and sale throughout the world of Pursuit

boats and the Maverick Boat Group brand boats (Maverick, Cobia, Pathfinder and Hewes).

The Cobalt segment participates in the manufacturing, distribution, marketing and sale of Cobalt boats throughout the world.

The Company revised its segment reporting effective December 31, 2020, to account for its acquisition of Maverick Boat Group and to conform to changes in its internal management reporting based on the Company’s boat manufacturing operations.

Prior to this change in reporting segments, the Company had three reportable segments, Malibu, Cobalt and Pursuit.

The Company now aggregates Pursuit and Maverick Boat Group into one reportable segment as they have similar economic characteristics and qualitative factors.

As a result, the Company continues to have three reportable segments, Malibu, Saltwater Fishing and Cobalt.

All segment information in the accompanying consolidated financial statements has been revised to conform to the Company’s current reporting segments for comparison purposes.

There is no country outside of the United States from which we (a) derived net sales equal to 10% of total net sales, or (b) attributed assets equal to 10% of total assets.

There is no country outside of the United States from which the Company (a) derived net sales equal to 10% of total net sales, or (b) attributed assets equal to 10% of total assets.

Net sales are attributed to countries based on the location of the dealer.

1 unchanged sentence

Fiscal Year Ended June 30, 2022

Malibu Saltwater Fishing 1

Malibu Saltwater Fishing Cobalt Total

Net sales $ 607,543 $ 341,930 $ 265,404 $ 1,214,877

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Fiscal Year Ended June 30, 2020

Malibu Saltwater Fishing 1

Malibu Saltwater Fishing Cobalt Total

Net sales $ 354,769 $ 123,626 $ 174,768 $ 653,163

4 unchanged sentences

Total assets $ 194,502 $ 129,024 $ 153,820 $ 477,346

1 Represents the results of Maverick Boat Group since the acquisition on December 31, 2020 and Pursuit since the acquisition on October 15, 2018 .

1 Represents the results of Maverick Boat Group since the acquisition on December 31, 2020.

Quarterly Financial Reporting (Unaudited)

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Diluted net income per share $ 1.60 $ 1.61 $ 1.01 $ 1.01 $ 5.23

Subsequent Event

Third Amended and Restated Credit Agreement

On July 8, 2022, Malibu Boats, LLC as the borrower (the “Borrower”), a wholly owned indirect subsidiary of the Malibu Boats, Inc., a Delaware corporation (the “Company”), entered into a Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) that amended and restated its second amended and restated credit agreement dated as of June 28, 2017 (the “Prior Credit Agreement”), by and among the Borrower, Malibu Boats Holdings, LLC, parent of the Borrower and a wholly owned subsidiary of the Company (the “LLC”), and certain subsidiaries of the Borrower parties thereto, as guarantors (together with the Borrower and the LLC, collectively, the “Loan Parties”), the lenders parties thereto, and Truist Bank, as administrative agent (the “Administrative Agent”), swingline lender and issuing bank.

The Amended Credit Agreement provides the Borrower a revolving credit facility in an aggregate principal amount of up to $ 350.0 million (of which $ 121.7 million was drawn on July 8, 2022 to refinance the loans under the Prior Credit Agreement as well as to pay certain fees and expenses related to entering into the Amended Credit Agreement) with a maturity date of July 8, 2027.

The Borrower has the option to request that lenders increase the amount available under the revolving credit facility by, or obtain incremental term loans of, up to $ 200.0 million, subject to the terms of the Amended Credit Agreement and only if existing or new lenders choose to provide additional term or revolving commitments.

Borrowings under the Amended Credit Agreement bear interest at a rate equal to either, at the Borrower’s option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5 %, or one-month Term SOFR plus 1 % (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25 % to 2.00 % with respect to SOFR borrowings and 0.25 % to 1.00 % with respect to Base Rate borrowings.

The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries.

The Borrower will also be required to pay a commitment fee for the unused portion of the revolving credit

facility, which will range from 0.15 % to 0.30 % per annum, depending on the LLC’s and its subsidiaries’ consolidated leverage ratio.

The Company was not a party to the Prior Credit Agreement and is not a party to the Amended Credit Agreement.

As with the Prior Credit Agreement, the obligations of the Borrower under the Amended Credit Agreement are guaranteed by its parent, the LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of the Borrower, and all such obligations are secured by substantially all of the assets of the LLC, the Borrower and such subsidiary guarantors pursuant to the Third Amended and Restated Security Agreement, by and among the Borrower, the LLC, the subsidiary guarantors, and Truist Bank, as administrative agent, dated as of July 8, 2022, and other collateral documents.

The Amended Credit Agreement contains certain customary representations and warranties, and notice requirements for the occurrence of specific events such as the occurrence of any event of default or pending or threatened litigation.

The Amended Credit Agreement also requires compliance with certain customary financial covenants consisting of a minimum ratio of EBITDA to interest expense and a maximum ratio of total debt to EBITDA.

The Amended Credit Agreement contains certain customary restrictive covenants regarding indebtedness, liens, fundamental changes, investments, restricted payments, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation.

The Amended Credit Agreement also contains customary events of default.

Events of default under the Amended Credit Agreement include (subject to grace periods in certain instances):

(i) the failure by any Loan Party to timely make payments due under the Amended Credit Agreement;

(ii) material misrepresentations or misstatements in any representation or warranty by any Loan Party when made;

(iii) failure by any Loan Party to comply with the covenants under the Amended Credit Agreement and other related agreements;

(iv) certain defaults under a specified amount of other indebtedness of Loan Parties;

(v) insolvency or bankruptcy-related events with respect to the Loan Parties;

(vi) certain undischarged, non-appealable judgments against Loan Parties;

(vii) certain ERISA- related events reasonably expected to result in liability above a specified threshold to Loan Parties taken as a whole;

(viii) any loan documents or a material part of the liens under the loan documents ceasing to be, or being asserted by any Loan Party not to be, in full force and effect;

(ix) any obligations under the loan documents ceasing to constitute senior indebtedness;

and (x) the occurrence of a change of control.

If an event of default has occurred and continues beyond any applicable cure period, the Administrative Agent may (i) accelerate all outstanding obligations under the Amended Credit Agreement or (ii) terminate the commitments, amongst other remedies.

Additionally, the lenders are not obligated to fund any new borrowing under the Amended Credit Agreement while an event of default is continuing.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data