What changed in this filing

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Item 1. Financial Statements

2020-05-08 compared with 2020-02-05 · 159 added, 110 removed, 345 unchanged (44% of the section changed)

23 unchanged sentences

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many important factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements, including but not limited to the following:

general economic conditions, demand for our products, changes in consumer preferences, competition within our industry, our reliance on our network of independent dealers, our ability to manage our manufacturing levels and our fixed cost base, the successful introduction of our new products and the other important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on September 13, 2019.

the potential effects of the coronavirus (“COVID-19”) pandemic on the Company, general economic conditions, demand for our products, changes in consumer preferences, competition within our industry, our reliance on our network of independent dealers, our ability to manage our manufacturing levels and our fixed cost base, the successful introduction of our new products and the other important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on September 13, 2019 (our “2019 Annual Report”), our Quarterly Report on Form 10-Q for the fiscal quarter ended December 29, 2019, filed with the SEC on February 5, 2020 (our “Fiscal Second Quarter Quarterly Report”), and this Quarterly Report on Form 10-Q (this “Quarterly Report”).

Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements.

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Three Months Ended

Six Months Ended

Nine Months Ended

COST OF SALES

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Amortization of other intangible assets

Goodwill and other intangible asset impairment

Total operating expenses

OPERATING INCOME

OPERATING INCOME (LOSS)

OTHER EXPENSE:

Interest expense

INCOME BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE

EARNINGS PER SHARE:

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE (BENEFIT)

NET INCOME (LOSS)

NET INCOME (LOSS) PER SHARE:

WEIGHTED AVERAGE SHARES USED FOR COMPUTATION OF:

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Common stock, $.01 par value per share — authorized, 100,000,000 shares;

issued and outstanding, 18,872,166 shares at December 29, 2019 and 18,764,037 shares at June 30, 2019

issued and outstanding, 18,872,119 shares at March 29, 2020 and 18,764,037 shares at June 30, 2019

Additional paid-in capital

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(Dollars in thousands, except share data)

Six Months Ended December 29, 2019

Balance at June 30, 2019

Equity-based compensation activity

Balance at December 29, 2019

Three Months Ended December 29, 2019

Share-based compensation activity

Balance at September 29, 2019

Equity-based compensation activity

Share-based compensation activity

Balance at December 29, 2019

Six Months Ended December 30, 2018

Share-based compensation activity

Balance at March 29, 2020

Balance at June 30, 2018

Adoption of accounting standards

Equity-based compensation activity

Balance at December 30, 2018

Three Months Ended December 30, 2018

Share-based compensation activity

Balance at September 30, 2018

Equity-based compensation activity

Share-based compensation activity

Balance at December 30, 2018

Share-based compensation activity

Balance at March 31, 2019

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

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(Dollars in thousands)

Six Months Ended

Nine Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

Noncash lease expense

Inventory obsolescence reserve

Amortization of debt issuance costs

Share-based compensation

Change in interest rate cap fair value

Unrecognized tax benefits

Deferred income taxes

Net provision for doubtful accounts

(Gain) loss on disposal of fixed assets

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Income tax receivable and payable, net

Accounts payable

Accrued expenses and other current liabilities

Operating lease liabilities

Unrecognized tax benefits

Amortization of debt issuance costs

Goodwill and other intangible asset impairment

Changes in certain operating assets and liabilities

Net cash provided by operating activities

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Principal payments on long-term debt

Borrowings on revolving credit facility

Proceeds from insurance premium financing

Principal payments on insurance premium financing

Payments of debt issuance costs

Cash paid for withholding taxes on vested stock

Net cash provided by (used in) financing activities

Net cash provided by financing activities

NET CHANGE IN CASH AND CASH EQUIVALENTS

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Therefore, the fiscal quarter end will not always coincide with the date of the end of a calendar month.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements for the year ended June 30, 2019 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of December 29, 2019, its results of operations for the three and six months ended December 29, 2019 and December 30, 2018, its cash flows for the six months ended December 29, 2019 and December 30, 2018, and its statements of stockholders’ equity for the three and six months ended December 29, 2019 and December 30, 2018.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements for the year ended June 30, 2019 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of March 29, 2020, its results of operations for the three and nine months ended March 29, 2020 and March 31, 2019, its cash flows for the nine months ended March 29, 2020 and March 31, 2019, and its statements of stockholders’ equity for the three and nine months ended March 29, 2020 and March 31, 2019.

All adjustments are of a normal, recurring nature.

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However, management believes that the disclosures in these condensed consolidated financial statements are adequate to make the information presented not misleading.

These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, which was filed with the SEC on September 13, 2019.

These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the SEC on September 13, 2019 (our “2019 Annual Report”).

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

With the exception of Accounting Standards Codification (“ASC”) 842 discussed below, there were no significant changes in or changes in the application of the Company’s significant or critical accounting policies or estimation procedures for the six months ended December 29, 2019 as compared with the significant accounting policies described in the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2019.

COVID-19 Pandemic — The outbreak of a novel coronavirus throughout the world, including the United States, during early calendar year 2020 has caused widespread business and economic disruption through mandated and voluntary business closings and restrictions on the movement and activities of people (“COVID-19 Pandemic”).

We are subject to risks and uncertainties as a result of the COVID-19 Pandemic.

The extent of the impact of the COVID-19 Pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the COVID-19 Pandemic is rapidly evolving in many countries, including the United States and other markets where the Company operates.

It is expected that many of the Company's customers, dealers, and suppliers could be impacted by these closings and restrictions which could materially and adversely affect demand for our products, our ability to obtain or deliver inventory, and our ability to collect accounts receivables as customers face higher liquidity and solvency risk.

Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 Pandemic, and it is possible that it could cause an economic downturn, recession, or depression.

Such economic disruption could have a material adverse effect on our business as retail demand for our products could decline which would in-turn reduce wholesale demand from our dealers.

Policymakers around the world have responded with fiscal and monetary policy actions to support the economy.

The magnitude and overall effectiveness of these actions remains uncertain.

To protect the health of its manufac turing employees and to balance wholesale production with retail demand, the Company suspended operations at its manufacturing facilities for all of its brands in lat e March 2020.

As a result of this action, the Company temporarily laid off nearly all of i ts hourly workforce.

After further evaluation, the Company intends to resume operations at its Owosso, Michigan facility (Crest Marine boats) on May 11, 2020 , its Amory, Mississippi facility (NauticStar boats) on May 11, 2020 , and its Vonore, Tennessee fac ility (MasterCraft and Aviara boats) on May 12, 2020.

As the Company resumes its operations, it will continue to evaluate and monitor the health and safety of its employees and will adhere to federal and local government mandates and guidelines.

The severity of the impact of the COVID-19 Pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration, spread, severity, and impact of the pandemic, the remedial actions and stimulus measures adopted by local and federal governments, the effects of the pandemic on the Company's customers, dealers and suppliers, and to the extent normal economic and operating conditions can resume, all of which are uncertain and cannot be predicted.

The Company's future results of operations, cash flows, and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, additional goodwill and intangible impairment charges (see Note 6), and the impact of any initiatives that the Company may undertake to address financial and operational challenges faced by it and its customers, dealers, and suppliers.

As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 Pandemic may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.

With the exception of Accounting Standards Codification (“ASC”) 842 discussed below, there were no significant changes in or changes in the application of the Company’s significant or critical accounting policies or estimation procedures for the nine months ended March 29, 2020 as compared with the significant accounting policies described in the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2019.

Recently Adopted Accounting Standards

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Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

As the Company's lease contracts generally do not include an implicit rate, the Company uses its incremental borrowing rate based on information available at commencement date in determining the present value of future payments.

The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

As the Company's lease contracts generally do not include an implicit rate, the Company uses its incremental

borrowing rate based on information available at commencement date in determining the present value of future payments.

The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar t erms and payments, and in economic environments where the leased asset is located.

The operating lease ROU asset also includes any initial direct costs and lease payments made prior to lease commencement and excludes lease incentives incurred.

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The following tables present the Company’s revenue from contracts with customers by major product category and reportable segment.

Three Months Ended December 29, 2019

Three Months Ended March 29, 2020

Major Product Categories:

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Other revenue

Six Months Ended December 29, 2019

Nine Months Ended March 29, 2020

Major Product Categories:

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Other revenue

Three Months Ended December 30, 2018

Three Months Ended March 31, 2019

Major Product Categories:

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Other revenue

Six Months Ended December 30, 2018

Nine Months Ended March 31, 2019

Major Product Categories:

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As of June 30, 2019, the Company had $0.8 million of contract liabilities associated with customer deposits.

During the six months ended December 29, 2019, all of this amount was recognized as revenue.

As of December 29, 2019, total contract liabilities associated with customer deposits were $0.7 million, were reported in Accrued expenses and other current liabilities on the condensed consolidated balance sheet, and are expected to be recognized as revenue during the remainder of the year ended June 30, 2020.

During the nine months ended March 29, 2020, all of this amount was recognized as revenue.

As of March 29, 2020, total contract liabilities associated with customer deposits were $0.4 million, were reported in Accrued expenses and other current liabilities on the condensed consolidated balance sheet, and are expected to be recognized as revenue during the remainder of the year ended June 30, 2020.

RELATED PARTY TRANSACTIONS

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Crest Supplier Relationship

Crest purchases fiberglass component parts from a supplier whose minority owner is the same member of the Crest management team that has a minority ownership interest in Real Estate.

During the three and six months ended December 29, 2019, the Company purchased $0.8 million and $1.6 million, respectively, of products from the supplier.

As of December 29, 2019 and June 30, 2019, the outstanding balance due to the supplier was $0.1 million.

Crest purchases fiberglass component parts from a supplier whose minority owner was the same member of the Crest management team that has a minority ownership interest in Real Estate.

On January 31, 2020 this minority ownership interest was divested and this supplier ceased being a related party.

During the period beginning July 1, 2019 and ending January 31, 2020, the Company purchased $1.8 million of products from the supplier.

Inventories consisted of the following:

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Dealer incentives

Floor plan interest

Compensation and related accruals

Floor plan interest

Inventory repurchase contingent obligation

Insurance premium financing

Self-insurance

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Total accrued expenses and other current liabilities

The following activity related to warranty liabilities was recorded in A ccrued expenses and other current liabilities during the six months ended December 29, 2019 and December 30, 2018:

Six Months Ended

The following activity related to warranty liabilities was recorded in Accrued expenses and other current liabilities during the nine months ended March 29, 2020 and March 31, 2019:

Nine Months Ended

Balance at the beginning of the period

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GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying amounts of goodwill as of December 29, 2019 and June 30, 2019, attributable to each of the Company’s reportable segments, were as follows:

The current economic environment, including the significant declines in share price, market volatility and the disruption to the Company’s supply chain resulting from the COVID-19 Pandemic, triggered an interim impairment analysis for the Company’s intangible assets including goodwill.

Holistically, the Company evaluated the events and changes in circumstances since the most recent quantitative impairment test performed as of June 30, 2019 and determined that is more likely than not that our trade names and goodwill at certain reporting units were impaired.

Determining the fair value of trade names and goodwill required the use of significant judgement, including estimation of cash flows, which are dependent on internal forecasts, estimation of long-term growth rate for each reporting unit, and determination of the weighted average cost of capital.

A number of significant assumptions and estimates are involved in the application of the discounted cash flow model to forecast operating cash flows, including market growth and market share, sales volumes and prices, production costs, discount rate, and estimated capital needs.

Management considers historical experience and all available information at the time that the fair values of the Company’s reporting units are estimated.

Inputs used to estimate these fair values included significant unobservable inputs that reflect the Company’s assumptions about the inputs that market participants would use and, therefore, the fair value assessments are classified within Level 3 of the fair value hierarchy.

If the carrying amount of trade names or goodwill exceed their fair value, then they are considered impaired and an impairment loss is recognized in an amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the carrying amount of the trade name or goodwill allocated to that reporting unit.

As a result of this analysis, the Company recorded impairment charges totaling $56.4 million during the three months ended March 29, 2020 related to the NauticStar and Crest segments.

The charges recorded to each segment are detailed below, and are included in Goodwill and other intangible asset impairment on the condensed consolidated statements of operations.

The impairment was principally a result of a decline, in the fiscal third quarter, in market conditions, including our share price, and the outlook for sales and operating performance relative to the Company’s acquisition plans and impairment test performed as of June 30, 2019.

Goodwill and other intangible asset impairment for the three and nine months ended March 29, 2020 was as follows:

While the extent and duration of the economic impact from the COVID-19 pandemic remain unclear, changes in assumptions and estimates may affect the fair value of goodwill and other intangibles and could result in additional impairment charges in future periods.

The carrying amounts of goodwill as of March 29, 2020 and June 30, 2019, attributable to each of the Company’s reportable segments, were as follows:

Balance as of March 29, 2020

Accumulated Impairment Losses

The following table presents the carrying amount of Other intangible assets, net as of December 29, 2019 and June 30, 2019.

Balance as of June 30, 2019

Accumulated Impairment Losses

The following table presents the carrying amount of Other intangible assets, net as of March 29, 2020 and June 30, 2019.

Accumulated Amortization / Impairment

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Total other intangible assets

Amortization expense related to Other intangible assets, net for the three and six months ended December 29, 2019 was $1.0 million and $2.0 million, respectively.

Amortization expense related to Other intangible assets, net for the three and six months ended December 30, 2018 was $1.0 million and $1.5 million, respectively.

Amortization expense related to Other intangible assets, net for the three and nine months ended March 29, 2020 was $1.0 and $3.0 million, respectively.

Amortization expense related to Other intangible assets, net for the three and nine months ended March 31, 2019 was $1.0 and $2.5, respectively.

Estimated amortization expense for the fiscal year ended June 30, 2020 is $4.0 million.

During the fiscal fourth quarter of the year ended June 30, 2019, the Company recorded a $28.0 million impairment of goodwill and a $3.0 million impairment of trade name in our NauticStar segment.

If actual performance or assumptions underlying the fair value of recorded goodwill for any reportable segment falls short of expected results, additional material impairment charges may be required.

During the three and six m onths ended December 29, 2019, the Company assessed all reporting units for triggering events that could indicate the need to perform an impairment test and concluded there were no such triggering events during the period s .

LONG-TERM DEBT

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The Fourth Amended Credit Agreement provides the Company with a $190.0 million senior secured credit facility, consisting of a $75.0 million term loan, and an $80.0 million term loan (together, the “Term Loans”), and a $35.0 million revolving credit facility (the “Revolving Credit Facility”).

The Fourth Amended Credit Agreement bears interest, at the Company’s option, at either the prime rate plus an applicable margin ranging from 0.5% to 1.5% or at an adjusted LIBOR rate plus an applicable margin ranging from 1.5% to 2.5%, in each case based on the Company’s senior leverage ratio.

Based on the Company’s senior leverage ratio as of December 29, 2019, the applicable margin for loans accruing interest at the prime rate is 0.75% and the applicable margin for loans accruing interest at LIBOR is 1.75%.

As of December 29, 2019, the Company had no borrowings outstanding on its $35.0 million Revolving Credit Facility.

The Company’s unamortized debt issuance costs related to the Revolving Credit Facility were $0.4 million and $0.5 million as of December 29, 2019 and June 30, 2019, respectively.

As of December 29, 2019, the Company was in compliance with its financial covenants under the Fourth Amended Credit Agreement.

the Company’s Total Net Leverage Ratio, as defined under the Fourth Amended Credit Agreement .

Based on the Company’s Total Net Leverage Ratio as of March 29, 2020 , the applicable margin for loans accruing interest at the prime rate is 0.75% and the appl icable margin for loans accruing interest at LIBOR is 1.75% .

As of March 19, 2020, the Company drew $35.0 million on its revolving credit agreement as a precautionary measure in order to increase its cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 Pandemic.

As of March 29, 2020, the Company had $35.0 million of borrowings outstanding on its Revolving Credit Facility.

The Company’s unamortized debt issuance costs related to the Revolving Credit Facility were $0.4 million and $0.5 million as of March 29, 2020 and June 30, 2019, respectively.

All amounts outstanding under the Fourth Amended Credit Agreement mature in October 2023.

As of March 29, 2020, the Company was in compliance with its financial covenants under the Fourth Amended Credit Agreement.

Amendment to Fourth Amended Credit Agreement

On May 7, 2020, the Company entered into Amendment No.

3 to the Fourth Amended Credit Agreement (the “Amendment”).

The changes effected by the Amendment include, among others, the temporary removal and replacement of the Company’s financial covenants, the addition of a 50 basis point floor on LIBOR, modifications to the range of applicable LIBOR and prime interest rate margins, and a revision of the Total Net Leverage Ratio calculation.

Under the Amendment, the Total Net Leverage Ratio covenant and Fixed Charge Coverage Ratio covenant of the Fourth Amended Credit Agreement are temporarily replaced with three separate covenants:

(i) an Interest Coverage Ratio, (ii) a Minimum Liquidity threshold, and (iii) a Maximum Unfinanced Capital Expenditures limitation (the “Package of Financial Covenants”).

The Package of Financial Covenants are in place through the quarter ended March 31, 2021, at which time the Total Net Leverage Ratio covenant and Fixed Charge Coverage Ratio covenant will be reinstated and the Package of Financial Covenants will sunset, and with the minimum liquidity covenant being tested on the last day of each fiscal month through May 31, 2021.

In addition, the Total Net Leverage Ratio calculation was temporarily revised to include all unrestricted cash balances, without limitation, until June 30, 2021.

Pursuant to the Amendment, the applicable interest, at the Company’s option, is at either the prime rate plus an applicable margin ranging from 0.5% to 2.25% or at an adjusted LIBOR rate plus an applicable margin ranging from 1.5% to 3.25%, in each case based on the Company’s Total Net Leverage Ratio.

Insurance Premium Financing

On March 27, 2020, the Company executed an insurance premium financing agreement of $1.1 million with a premium finance company in order to finance certain of its annual insurance premiums.

Beginning on April 1, 2020, the financing agreement is payable in eleven monthly installments of principal and interest of approximately $0.1 million.

The agreement bears interest at 3.6%.

The balance of the insurance premium financing as of March 29, 2020 was $0.9 million and is recorded in Accrued expenses and other current liabilities.

The Company has lease agreements for certain personal and real property.

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In addition, the decision to exercise the Purchase Option resulted in the remeasurement of the related lease balances which added $1.3 million of additional finance lease assets and finance lease liabilities to the September 29, 2019 condensed consolidated balance sheet.

In accordance with the Purchase Option, on October 24, 2019 the Company completed the purchase of the Crest Facility for $4.1 million.

In accordance with the Purchase Option, on Oct ober 24, 2019 the Company completed the purchase of the Crest Facility for $4.1 million.

Upon completion of this purchase, t he Company recognized approximately $4.

1 million in Property, plant and equipment, net and derecognized appro ximately $4.1 million of both Finance lease assets and Accrued expenses and other current liabilities on the condensed consolidated balance sheet.

1 million in Property, plant and equipment, net and derecognized approximately $4.1 million o f both Finance lease assets and Accrued expenses and other current liabilities on the condensed consolidated balance sheet.

The purchase price of the Crest Facility was determined by appraisal and negotiation between the Company and Real Estate.

The Company funded the purchase by utilizing cash from operations.

A summary of the Company's lease assets and lease liabilities as of December 29, 2019 is as follows:

A summary of the Company's lease assets and lease liabilities as of March 29, 2020 is as follows:

Classification

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Total lease liabilities

A summary of the Company's total lease cost for the three and six months ended December 29, 2019 is as follows:

A summary of the Company's total lease cost for the three and nine months ended March 29, 2020 is as follows:

Classification

Three Months Ended

Six Months Ended

Nine Months Ended

Operating lease cost

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Includes total variable lease cost and total short-term lease cost, both of which were immaterial.

The Company's maturity analysis of its operating lease liabilities as of December 29, 2019 is as follows:

The Company's maturity analysis of its operating lease liabilities as of March 29, 2020 is as follows:

Remainder of 2020

1 unchanged sentence

Present value of lease payments

The total weighted-average discount rate and remaining lease term for the Company's operating leases were 4.73% and 2.60 years, respectively, as of December 29, 2019.

For the six months ended December 29, 2019, total operating cash flows related to operating leases were $0.3 million.

Future minimum rental payments under all non-cancelable operating leases with remaining lease terms in excess of one year at June 30, 2019, were as follows:

The total weighted-average discount rate and remaining lease term for the Company's operating leases were 4.73% and 2.36 years, respectively, as of March 29, 2020.

For the nine months ended March 29, 2020, total operating cash flows related to operating leases were $0.4 million.

Future minimum rental payments under all non-cancelable operating leases with remaining lease terms in excess of one year at June 30, 2019, were as foll ows:

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (H.R.

748) (the “CARES Act”).

Among the changes to the U.S.

federal income tax rules, the CARES Act restored net operating loss carryback rules that were eliminated by the Tax Cuts and Jobs Act (the “Tax Reform Act”), modified the limit on the deduction for net interest expense and accelerated the timeframe for refunds of AMT credits.

The Company has evaluated the impact of the CARES Act and has not identified any material effect on its results of operations, financial condition, or cash flows.

The Company’s consolidated interim effective tax rate is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items.

The differences between the Company’s effective tax rates and the statutory federal tax rate of 21.0% primarily relate to the inclusion of the state tax rate in the overall effective rate offset by a permanent benefit associated with the foreign derived intangible income deduction.

During the three months ended December 29, 2019 and December 30, 2018, the Company’s effective tax rates were 24.4% and 19.7%, respectively.

During the six months ended December 29, 2019 and December 30, 2018, the Company’s effective tax rates were 24.2% and 20.2%, respectively.

The Company’s effective tax rates for the three and six months ended December 29, 2019 are higher compared to the effective tax rates for the three and six months ended December 30, 2018, primarily due to favorable discrete adjustments which reduced the effective tax rates for the three and six months ended December 30, 2018.

EARNINGS PER SHARE

The following table sets forth the computation of the Company’s earnings per share:

During the three months ended March 29, 2020 and March 31, 2019, the Company’s effective tax rates were 23.9% and 23.1%, respectively.

During the nine months ended March 29, 2020 and March 31, 2019, the Company’s effective tax rates were 23.7% and 21.4%, respectively.

The Company’s effective tax rates for the three and nine months ended March 29, 2020 are higher compared to the effective tax rates for the three and nine months ended March 31, 2019, primarily due to favorable discrete adjustments which reduced the effective tax rates for the three and nine months ended March 31, 2019.

NET INCOME (LOSS) PER SHARE

The following table sets forth the computation of the Company’s net income (loss) per share:

Three Months Ended

Six Months Ended

Nine Months Ended

Net income (loss)

Weighted average shares — basic

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Weighted average outstanding shares — diluted

Basic earnings per share

Diluted earnings per share

For the three and six months ended December 29, 2019 and December 30, 2018, the weighted average shares that were anti-dilutive, and therefore excluded from the computation of diluted earnings per share, included:

Basic net income per share

Diluted net income (loss) per share

For the three and nine months ended March 29, 2020 and March 31, 2019, the weighted average shares that were anti-dilutive, and therefore excluded from the computation of diluted net income (loss) per share, included:

Three Months Ended

Six Months Ended

Nine Months Ended

Restricted stock awards

Performance stock units

S HARE -BASED COMPENSATION

SHARE-BASED COMPENSATION

The following table presents the components of share-based compensation expense by award type.

Three Months Ended

Six Months Ended

Nine Months Ended

Restricted stock awards

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Share-based compensation expense

Forfeiture of Equity Awards

In conjunction with the resignation of an executive officer in October 2019, aproximately $0.5 million of share-based compensation expense was reversed during the three months ended December 29, 2019 for nonvested Restricted Stock Awards (“RSAs”) and Performance Stock Units (“PSUs”) that were forfeited.

Adjustment to Share-Based Compensation

Based upon current economic trends, the probability of attaining the performance criteria of the Performance Stock Units (PSUs”) has been lowered.

As a result, the amount of share-based compensation expense has been lowered by approximately $0.4 million on a cumulative basis from original estimates during the three months ended March 29, 2020.

Restricted Stock Awards

During the six months ended December 29, 2019, the Company granted 138,457 RSAs to the Company’s non-executive directors, officers and certain other key employees.

Generally, the shares of restricted stock granted during the six months ended December 29, 2019, vest pro-rata over three years for officers and certain other key employees and over one year for non-executive directors.

During the nine months ended March 29, 2020, the Company granted 138,457 RSAs to the Company’s non-executive directors, officers and certain other key employees.

Generally, the shares of restricted stock granted during the nine months ended March 29, 2020, vest pro-rata over three years for officers and certain other key employees and over one year for non-executive directors.

The Company determined the fair value of the shares awarded by using the close price of our common stock as of the date of grant.

The weighted average grant date fair value of RSAs granted in the six months ended December 29, 2019, was $17.41 per share.

The following table summarizes the status of nonvested RSAs as of December 29, 2019, and changes during the six months then ended.

The weighted average grant date fair value of RSAs granted in the nine months ended March 29, 2020, was $17.41 per share.

The following table summarizes the status of nonvested RSAs as of March 29, 2020, and changes during the nine months then ended.

Nonvested at June 30, 2019

Nonvested at December 29, 2019

As of December 29, 2019, there was $2.0 million of total unrecognized compensation expense related to nonvested RSAs.

Nonvested at March 29, 2020

As of March 29, 2020, there was $1.6 million of total unrecognized compensation expense related to nonvested RSAs.

The Company expects this expense to be recognized over a weighted average period of 1.7 years.

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The probability of achieving the performance criteria is assessed quarterly.

Following the determination of the Company’s achievement with respect to the performance criteria, the amount of shares awarded is subject to further adjustment based on the application of a total shareholder return (“TSR”) modifier.

The grant date fair value is determined

based on both the assess ment of the probability of the Company’s achieving the performance criteria and an estimate of the expected TSR modifier.

The TSR modifier estimate is determined using a Monte Carlo Simulation model, which considers the likelihood of numerous possible outc omes of long-term market performance.

Following the determination of the Company’s achievement with respect to the performance criteria, the number of shares awarded is subject to further adjustment based on the application of a total shareholder return (“TSR”) modifier.

The grant date fair value is determined based

on both the probability assessment of the Company achieving the performance criteria and an estim ate of the expected TSR modifier.

The TSR modifier estimate is determined using a Monte Carlo Simulation model, which considers the likelihood of numerous possible outcomes of long-term market performance.

Compensation expense related to nonvested PSUs is recognized ratably over the performance period.

The following table summarizes the status of nonvested PSUs as of December 29, 2019, and changes during the six months then ended.

The following table summarizes the status of nonvested PSUs as of March 29, 2020, and changes during the nine months then ended.

Nonvested at June 30, 2019

Nonvested at December 29, 2019

As of December 29, 2019, there was $1.1 million of total unrecognized compensation expense related to nonvested PSUs.

Nonvested at March 29, 2020

As of March 29, 2020, there was $0.3 million of total unrecognized compensation expense related to nonvested PSUs.

The Company expects this expense to be recognized over a weighted average period of 2.0 years.

14 unchanged sentences

Crest’s boats are primarily used for general recreational boating.

The following tables present financial information for the Company’s reportable segments for the three and six months ended December 29 , 2019 and December 30 , 2018 and total assets at December 29 , 2019 and June 30, 201 9 .

Three Months Ended December 29, 2019

The following tables present financial information for the Company’s reportable segments for the three and nine months ended March 29, 2020 and March 31, 2019 and total assets at March 29, 2020 and June 30, 2019.

Three Months Ended March 29, 2020

Operating income (loss)

1 unchanged sentence

Purchases of property, plant and equipment

Six Months Ended December 29, 2019

Nine Months Ended March 29, 2020

Operating income (loss)

1 unchanged sentence

Purchases of property, plant and equipment

Three Months Ended December 30, 2018

Three Months Ended March 31, 2019

Operating income

1 unchanged sentence

Purchases of property, plant and equipment

Six Months Ended December 30, 2018

Nine Months Ended March 31, 2019

Operating income

2 unchanged sentences

Crest was acquired on October 1, 2018.

March 29, 2020

On October 1, 2018, we acquired Crest, a manufacturer of pontoon boats.

For accounting purposes, Crest meets the definition of a business and has been accounted for as a business combination.

We finalized the purchase price allocation and recorded measurement period adjustments to the initial allocation as disclosed in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the SEC on September 13, 2019.

Beginning October 1, 2018, our consolidated results of operations include the results of Crest.

The unaudited pro forma financial results shown in the table below for the three and six months ended December 30, 2018, combine the consolidated results of the Company and Crest giving effect to the Crest acquisition as if it had been completed on July 1, 2017.

The unaudited pro forma financial results do not give effect to any of our other acquisition activity that occurred after July 1, 2017, and do not include any anticip ated synergies or other assumed benefits of the Crest acquisition.

The unaudited pro forma financial results shown in the table below for the three and nine months ended March 31, 2019, combine the consolidated results of the Company and Crest giving effect to the Crest acquisition as if it had been completed on July 1, 2017.

The unaudited pro forma financial results do not give effect to any of our other acquisition activity that occurred after July 1, 2017, and do not include any anticipated synergies or other assumed benefits of the Crest acquisition.

This unaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the Crest acquisition been completed as of July 1, 2017.

The unaudited pro forma financial results include certain adjustments for acquisition-related costs, debt service costs and additional amortization expense based upon definite-life amortizable assets acquired.

The provision for income tax es has also been adjusted for all periods, based upon the foregoing adjustments to historical results.

The unaudited pro forma financial results include certain adjustments for acquisition-related costs, debt service costs

and additional amortization expense based upon definite-life amortizable assets acquired.

The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historica l results.

Three Months Ended

Six Months Ended

Nine Months Ended

Basic earnings per share

1 unchanged sentence

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-Q

Item 1. Financial Statements