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:
−Removed: 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, 2020, filed with the Securities and Exchange Commission (“SEC”) on September 11, 2020 (our “2020 Annual Report”).
+Added: the potential effects of supply chain disruptions and production inefficiencies as a result of the coronavirus (“COVID-19”) pandemic on the Company, general economic conditions, demand for our products, inflation, changes in consumer preferences, competition within our industry, our reliance on our network of independent dealers, our ability to manage our manufacturing levels and our fixed cost base, the successful introduction of our new products and the other important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed with the Securities and Exchange Commission (“SEC”) on September 2, 2021 (our “2021 Annual Report”).
Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements.
6 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
COST OF SALES
3 unchanged sentences
Amortization of other intangible assets
−Removed: Goodwill and other intangible asset impairment
+Added: Goodwill impairment
Total operating expenses
−Removed: OPERATING INCOME (LOSS)
+Added: OPERATING INCOME
OTHER EXPENSE:
Interest expense
−Removed: INCOME (LOSS) BEFORE INCOME TAX EXPENSE
−Removed: INCOME TAX EXPENSE (BENEFIT)
−Removed: NET INCOME (LOSS)
−Removed: NET INCOME (LOSS) PER SHARE:
+Added: INCOME BEFORE INCOME TAX EXPENSE
+Added: INCOME TAX EXPENSE
+Added: NET INCOME PER SHARE:
WEIGHTED AVERAGE SHARES USED FOR COMPUTATION OF:
8 unchanged sentences
Cash and cash equivalents
−Removed: Accounts receivable, net of allowances of $ 83 and $ 247 , respectively
+Added: Accounts receivable, net of allowance of $ 212 and $ 115 , respectively
Income tax receivable
2 unchanged sentences
Total current assets
−Removed: Property, plant and equipment, net (Note 4)
+Added: Property, plant and equipment, net
Goodwill (Note 4)
6 unchanged sentences
Accounts payable
+Added: Income tax payable
Accrued expenses and other current liabilities (Note 5)
8 unchanged sentences
Common stock, $ .01 par value per share — authorized, 100,000,000 shares;
−Removed: issued and outstanding, 18,952,148 shares at April 4, 2021 and 18,871,637 shares at June 30, 2020
+Added: issued and outstanding, 18,961,205 shares at October 3, 2021 and 18,956,719 shares at June 30, 2021
Additional paid-in capital
9 unchanged sentences
Share-based compensation activity
+Added: Repurchase and retirement of common stock
Balance at October 3, 2021
−Removed: Share-based compensation activity
−Removed: Balance at January 3, 2021
−Removed: Share-based compensation activity
−Removed: Balance at April 4, 2021
Balance at June 30, 2020
Share-based compensation activity
−Removed: Balance at September 29, 2019
−Removed: Share-based compensation activity
−Removed: Balance at December 29, 2019
−Removed: Share-based compensation activity
−Removed: Balance at March 29, 2020
+Added: Balance at October 4, 2020
Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.
3 unchanged sentences
(Dollars in thousands)
−Removed: Nine Months Ended
+Added: Three Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES:
−Removed: Net income (loss)
−Removed: Adjustments to reconcile net income (loss) to net cash provided by operating activities:
+Added: Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
2 unchanged sentences
Amortization of debt issuance costs
−Removed: Deferred income taxes
−Removed: Goodwill and other intangible asset impairment
+Added: Goodwill impairment
Changes in certain operating assets and liabilities
−Removed: Net cash provided by operating activities
+Added: Net cash (used in) provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
−Removed: Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
3 unchanged sentences
Principal payments on long-term debt
−Removed: Net cash provided by (used in) financing activities
+Added: Repurchase and retirement of common stock
+Added: Net cash used in financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
17 unchanged sentences
MasterCraft International Sales Administration, Inc.;
−Removed: and Aviara, LLC (collectively “MasterCraft”);
−Removed: Nautic Star, LLC and NS Transport, LLC (collectively “NauticStar”);
−Removed: and Crest Marine, LLC (“Crest”).
+Added: Aviara Boats, LLC;
+Added: Nautic Star, LLC;
+Added: NS Transport, LLC;
+Added: and Crest Marine, LLC.
Holdings and its subsidiaries collectively are referred to herein as the “Company.”
1 unchanged sentence
Therefore, the fiscal quarter end will not always coincide with the date of the end of a calendar month.
−Removed: 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, 2020 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of April 4, 2021, its results of operations for the three and nine months ended April 4, 2021 and March 29, 2020, its cash flows for the nine months ended April 4, 2021 and March 29, 2020, and its statements of stockholders’ equity for the three and nine months ended April 4, 2021 and March 29, 2020.
+Added: The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements for the year ended June 30, 2021 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of October 3, 2021, its results of operations for the three months ended October 3, 2021 and October 4, 2020, its cash flows for the three months ended October 3, 2021 and October 4, 2020, and its statements of stockholders’ equity for the three months ended October 3, 2021 and October 4, 2020.
All adjustments are of a normal, recurring nature.
6 unchanged sentences
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.
−Removed: 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 three and nine months ended April 4, 2021 as compared with the significant accounting policies described in the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2020.
+Added: There were no significant changes in or changes to the application of the Company’s significant or critical accounting policies or estimation procedures for the three months ended October 3, 2021 as compared with those described in the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2021.
+Added: Change in Reportable Segments — Beginning with the first quarter of fiscal 2022, our chief operating decision maker (“CODM”) began to manage our business, allocate resources, and evaluate performance based on the changes that have been made in the Company’s management structure in connection with the transition of Aviara production to our Merritt Island facility.
+Added: As a result, the Company has realigned its reportable segments to MasterCraft, Crest, NauticStar, and Aviara.
+Added: The Company has recast segment information for all prior periods presented.
+Added: Refer to Note 10 – Segment Information for further information on the Company’s reportable segments.
Reclassifications — Certain historical amounts have been reclassified in these condensed consolidated financial statements and the accompanying notes herewith to conform to the current presentation.
−Removed: Supply Chain Disruption — As we navigate the unprecedented confluence of demand and disruption precipitated by the COVID-19 pandemic, our production rates going forward will depend, in large part, on our suppliers’ capacity.
−Removed: Demand for raw materials and components used in the production of our products has surged.
−Removed: At the same time, severe and unprecedented events, including the February 2021 ice storm which impacted much of the United States, have recently disrupted the global supply chain.
−Removed: As a result, some of the materials and components that we use, including certain resins, fiberglass, and plywood, are in short supply.
−Removed: New Accounting Pronouncements Issued But Not Yet Adopted
−Removed: Income Taxes — In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740).
−Removed: This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combination that result in a step-up in the
−Removed: tax basis of goodwill.
−Removed: The transition requirements are primarily prospective, and the effective date is for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted.
−Removed: We are currently evaluating the impact of the new guidance on our c onsolidated f inancial s tatements.
Recently Adopted Accounting Standards
−Removed: Fair Value Measurements — In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):
−Removed: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement .
−Removed: This guidance modifies the disclosure requirements on fair value measurements in Topic 820 by removing disclosures regarding transfers between Level 1 and Level 2 of the fair value hierarchy, by modifying the measurement uncertainty disclosure, and by requiring additional disclosures for Level 3 fair value measurements, among others.
−Removed: The Company adopted this guidance for its fiscal year beginning July 1, 2020 .
−Removed: The adoption of this standard did not have an impact on the consolidated financial statements.
−Removed: Current Expected Credit Loss — In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) :
−Removed: Measurement of Credit Losses on Financial Instruments , which updated the ASC to use an impairment model that is based on expected losses rather than incurred losses.
−Removed: The Company adopted this guidance for its fiscal year beginning July 1, 2020 .
−Removed: The adoption of this standard did not have an impact on the consolidated financial statements .
+Added: Income Taxes — In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes.
+Added: ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Income Taxes (Topic 740).
+Added: It also clarifies and amends existing guidance to improve consistent application.
+Added: The guidance is effective for fiscal years beginning after December 15, 2020 .
+Added: The adoption of this standard did not have an impact on the Company’s consolidated financial statements.
+Added: Reference Rate Reform — In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):
+Added: Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
+Added: ASU 2020-04 provides optional expedients and exceptions for applying U.S.
+Added: GAAP to contracts, hedging relationships, and other transactions, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.
+Added: An entity may apply ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022.
+Added: The adoption of this standard did not have an impact on the Company’s consolidated financial statements.
REVENUE RECOGNITION
+Added: Consistent with the Company’s change in reportable segments described in Note 10—Segment Information, the Company has changed its presentation of disaggregated revenue to align with the new segment structure.
The following tables present the Company’s revenue by major product category for each reportable segment.
−Removed: Three Months Ended April 4, 2021
−Removed: Three Months Ended March 29, 2020
+Added: Three Months Ended October 3, 2021
Major Product Categories:
1 unchanged sentence
Other revenue
−Removed: Nine Months Ended April 4, 2021
−Removed: Nine Months Ended March 29, 2020
+Added: Three Months Ended October 4, 2020
Major Product Categories:
3 unchanged sentences
As of June 30, 2021, the Company had $ 1.8 million of contract liabilities associated with customer deposits.
−Removed: During the nine months ended April 4, 2021, all of this amount was recognized as revenue.
−Removed: As of April 4, 2021, total contract liabilities associated with customer deposits were $ 1.9 million, were reported in Accrued expenses and other current liabilities on the condensed consolidated balance sheet, and are expected to be recognized as revenue during the remainder of the year ending June 30, 2021.
+Added: During the three months ended October 3, 2021, $ 1.3 million of this amount was recognized as revenue.
+Added: As of October 3, 2021, total contract liabilities associated with customer deposits were $ 4.3 million, were reported in Accrued expenses and other current liabilities on the condensed consolidated balance sheet, and are expected to be recognized as revenue during the remainder of the year ending June 30, 2022.
Inventories consisted of the following:
4 unchanged sentences
Total inventories
−Removed: PROPERTY, PLANT, AND EQUIPMENT
−Removed: Property, plant, and equipment, net consisted of the following:
−Removed: Land and improvements
−Removed: Buildings and improvements
−Removed: Machinery and equipment
−Removed: Furniture and fixtures
−Removed: Construction in progress
−Removed: Total property, plant, and equipment
−Removed: Less accumulated depreciation
−Removed: Property, plant, and equipment — net
−Removed: Merritt Island Facility
−Removed: During October 2020 we completed the purchase of certain real property located in Merritt Island, Florida, including a boat manufacturing facility, for a purchase price of $ 14.2 million (the “Merritt Island Facility”).
−Removed: The new Merritt Island Facility provides a dedicated manufacturing center for our Aviara brand, and allows for increased capacity for our MasterCraft brand.
+Added: Raw materials and supplies have increased to support higher production volumes and to increase safety stock to manage supply chain risk.
+Added: Work in process has increased due to supply chain disruptions.
GOODWILL AND OTHER INTANGIBLE ASSETS
−Removed: The carrying amounts of goodwill as of April 4, 2021 and June 30, 2020, attributable to each of the Company’s reportable segments, were as follows:
+Added: Beginning with the first quarter of fiscal 2022, the Company realigned its reportable segments to MasterCraft, Crest, NauticStar, and Aviara.
+Added: Refer to Note 10 – Segment Information for further information on the Company’s reportable segments.
+Added: As a result of the change in segments, in accordance with ASC 350, Intangibles-Goodwill and Other , the Company reallocated the goodwill recorded in the MasterCraft reporting unit to the two separate MasterCraft and Aviara reporting units using a relative fair value approach.
+Added: Prior to realigning our segments, we evaluated our goodwill for impairment and determined no impairment existed as the fair value of our MasterCraft reporting unit, which was the only reporting unit containing goodwill, was in excess of its carrying amount.
+Added: In conjunction with the reallocation of goodwill, we tested the goodwill at our MasterCraft and Aviara reporting units for impairment using an income-based approach, specifically a discounted cash flow model.
+Added: The cash flow model included significant judgements and assumptions related to revenue growth and discount rates.
+Added: Near-term operating losses generated by start-up inefficiencies have negatively impacted the fair value of Aviara, causing the carrying value of the reporting unit to be in excess of the fair value.
+Added: Consequently, a $ 1.1 million impairment charge was recognized in the three months ended October 3, 2021.
+Added: The carrying amounts of goodwill attributable to each of the Company’s reportable segments, were as follows:
+Added: Balance at June 30, 2021
Accumulated impairment losses
+Added: Goodwill, net at June 30, 2021
+Added: Goodwill reallocation
+Added: Goodwill, net at October 3, 2021
The following table presents the carrying amount of Other intangible assets, net:
7 unchanged sentences
Total other intangible assets
−Removed: Amortization expense related to Other intangible assets, net for the three and nine months ended both April 4, 2021 and March 29, 2020 was $ 1.0 million and $ 3.0 million, respectively.
−Removed: Estimated amortization expense for the fiscal year ended June 30, 2021 is $ 4.0 million.
−Removed: Prior Year Goodwill and Other Intangible Asset Impairment
−Removed: The past economic environment, including the significant share price and market volatility, as well as disruptions to supply chains resulting from the COVID-19 pandemic, triggered an interim impairment analysis for the Company’s intangible assets including goodwill.
−Removed: 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.
−Removed: The impairment charges recorded for each segment are detailed below and are included in Goodwill and other intangible asset impairment on the condensed consolidated statement of operations.
−Removed: The impairment recorded in fiscal 2020 was principally a result of a decline, in the fiscal third quarter, in market conditions, including our share price, and the then current outlook for sales and operating performance relative to the Company’s acquisition plans and impairment test performed as of June 30, 2019.
−Removed: Goodwill and other intangible asset impairment for the three and nine months ended March 29, 2020 was as follows:
+Added: Amortization expense related to Other intangible assets, net for both the three months ended October 3, 2021 and October 4, 2020 was $ 1.0 million.
+Added: Estimated amortization expense for the fiscal year ending June 30, 2022 is $ 4.0 million.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
1 unchanged sentence
Dealer incentives
−Removed: Compensation and related accruals
Contract liabilities
−Removed: Inventory repurchase contingent obligation
+Added: Compensation and related accruals
Self-insurance
+Added: Inventory repurchase contingent obligation
Total accrued expenses and other current liabilities
−Removed: Accrued warranty liability activity was as follows for the nine months ended:
+Added: Accrued warranty liability activity was as follows for the three months ended:
Balance at the beginning of the period
9 unchanged sentences
Long-term debt, net of current portion
−Removed: On October 1, 2018, the Company entered into a Fourth Amended and Restated Credit and Guaranty Agreement with a syndicate of certain financial institutions (the “Fourth Amended Credit Agreement”).
−Removed: 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”).
−Removed: The Fourth Amended Credit Agreement is secured by substantially all the assets of the Company.
−Removed: Holdings is a guarantor on the Fourth Amended Credit Agreement and the Fourth Amended Credit Agreement contains covenants that restrict the ability of Holdings’ subsidiaries to make distributions to Holdings.
−Removed: The Term Loans will mature and all remaining amounts outstanding thereunder will be due and payable on October 1, 2023.
−Removed: Amendment No.
−Removed: 3 to Fourth Amended Credit Agreement
−Removed: On May 7, 2020, the Company entered into Amendment No.
−Removed: 3 to the Fourth Amended Credit Agreement (the “Amendment No.
−Removed: The changes effected by Amendment No.
−Removed: 3 included, 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.
−Removed: Under Amendment No.
−Removed: 3, the Total Net Leverage Ratio covenant and Fixed Charge Coverage Ratio covenant of the Fourth Amended Credit Agreement were temporarily replaced with three separate covenants:
−Removed: (i) an Interest Coverage Ratio, (ii) a Minimum Liquidity threshold, and (iii) a Maximum Unfinanced Capital Expenditures limitation (the “Package of Financial Covenants”).
−Removed: The Package of Financial Covenants were in place through March 31, 2021, after which time the Total Net Leverage Ratio covenant and Fixed Charge Coverage Ratio covenant have been reinstated and the Package of Financial Covenants has sunset, and with the minimum liquidity covenant being tested on the last day of each fiscal month through May 31, 2021.
−Removed: In addition, the Total Net Leverage Ratio calculation was temporarily revised during this time to include all unrestricted cash balances, without limitation, until June 30, 2021.
−Removed: As of April 4, 2021, the Company was in compliance with all its financial covenants.
−Removed: Pursuant to Amendment No.
−Removed: 3, 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 a LIBOR rate, subject to a 50 basis point floor, plus an applicable margin ranging from 1.5 % to 3.25 %, in each case based on the Company’s Total Net Leverage Ratio.
−Removed: As of April 4, 2021 the applicable margin for loans accruing interest at the prime rate was 1.00 % and the applicable margin for loans accruing interest at LIBOR was 2.00 %.
−Removed: Amendment No.
−Removed: 4 and Joinder to Fourth Amended Credit Agreement
−Removed: On October 26, 2020, the Company entered into Amendment No.
−Removed: 4 and Joinder to the Fourth Amended Credit Ageement (the “Amendment No.
−Removed: In conjunction with the new Merritt Island Facility purchase (see Note 4), the assets were organized in a new wholly-owned subsidiary of the Company.
−Removed: The changes effected by Amendment No.
−Removed: 4 add this new subsidiary as a borrower under the Fourth Amended Credit Agreement.
−Removed: Revolving Credit Facility
−Removed: During October 2020 the Company borrowed $ 20.0 million under its $ 35.0 million Revolving Credit Facility to fund the purchase of the Merrit Island Facility.
−Removed: The Company subsequently repaid all outstanding amounts and, as of April 4, 2021, the availability under the Revolving Credit Facility was $ 35.0 million.
+Added: On June 28, 2021, the Company entered into a credit agreement with a syndicate of certain financial institutions (the “Credit Agreement”).
+Added: The Credit Agreement provides the Company with a $ 160.0 million senior secured credit facility, consisting of a $ 60.0 million term loan (the “Term Loan”) and a $ 100.0 million revolving credit facility (the “Revolving Credit Facility”).
+Added: The Credit Agreement refinanced and replaced the previously existing credit agreement.
+Added: The Credit Agreement is secured by a first priority security interest in substantially all of the Company’s assets.
+Added: The Credit Agreement contains a number of covenants that, among other things, restrict the Company’s ability to, subject to specified exceptions, incur additional debt;
+Added: incur additional liens and contingent liabilities;
+Added: sell or dispose of assets;
+Added: merge with or acquire other companies;
+Added: liquidate or dissolve;
+Added: engage in businesses that are not in a related line of business;
+Added: make loans, advances or guarantees;
+Added: pay dividends or make other distributions;
+Added: engage in transactions with affiliates;
+Added: and make investments.
+Added: The Company is also required to maintain a minimum fixed charge coverage ratio and a maximum net leverage ratio.
+Added: The Credit Agreement bears interest, at the Company’s option, at either the prime rate plus an applicable margin ranging from 0.25 % to 1.00 % or at an adjusted LIBOR rate plus an applicable margin ranging from 1.25 % to 2.00 %, in each case based on the Company’s net leverage ratio.
+Added: The Company is also required to pay a commitment fee for any unused portion of the revolving credit facility ranging from 0.15 % to 0.30 % based on the Company’s net leverage ratio.
+Added: Effective during the quarter, the applicable margin for loans accruing at the prime rate was 0.25 % and the applicable margin for loans accruing interest at LIBOR was 1.25 %.
+Added: As of October 3, 2021, the interest rate on the Company’s term loan and revolving credit facility was 1.38 %.
+Added: The Credit Agreement will mature and all remaining amounts outstanding thereunder will be due and payable on June 28, 2026.
+Added: As of October 3, 2021, the Company was in compliance with its financial covenants under the Credit Agreement.
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, the benefit of federal and state credits, and a permanent benefit associated with the foreign derived intangible income deduction, partially offset by a permanent add-back for Section 162(m) limitations.
−Removed: During the three months ended April 4, 2021 and March 29, 2020, the Company’s effective tax rates were 19.4 % and 23.9 %, respectively.
−Removed: During the nine months ended April 4, 2021 and March 29, 2020, the Company’s effective tax rates were 21.2 % and 23.7 %, respectively.
−Removed: The Company’s effective tax rate for the three and nine months ended April 4, 2021 is lower compared to the effective tax rate for the three and nine months ended March 29, 2020, primarily due to an increase in the benefit of federal and state tax credits, a reduction in the effective state tax rate, and an increase in the Company’s net permanent benefits, largely driven by changes in the foreign derived intangible income due to an increase in foreign sales and gross margin.
−Removed: NET INCOME (LOSS) PER SHARE
−Removed: The following table sets forth the computation of the Company’s net income (loss) per share:
−Removed: Three Months Ended
−Removed: Nine Months Ended
−Removed: Net income (loss)
−Removed: Weighted average shares — basic
−Removed: Dilutive effect of assumed exercises of stock options
−Removed: Dilutive effect of assumed restricted share awards/units
−Removed: Weighted average outstanding shares — diluted
−Removed: Basic net income (loss) per share
−Removed: Diluted net income (loss) per share
−Removed: For the three and nine months ended April 4, 2021, an immaterial number of shares were excluded from the computation of diluted earnings per share as the effect would have been anti-dilutive.
−Removed: The dilutive effect of 113,708 and 89,686 weighted average shares were excluded from the calculation of diluted net loss per share for the three and nine months ended March 29, 2020, respectively, as the effect would have been anti-dilutive because of the net loss for the periods.
+Added: During the three months ended October 3, 2021 and October 4, 2020, the Company’s effective tax rates were 24.0 % and 22.8 %, respectively.
+Added: The Company’s effective tax rate for the three months ended October 3, 2021 is higher compared to the effective tax rate for the three months ended October 4, 2020, primarily due to an increase in the effective state tax rate, an increase in the tax impact of uncertain state tax positions and a reduction in the benefit of federal and state tax credits, partially offset by an increase in the Company’s net permanent benefits, largely driven by changes in the foreign derived intangible income due to an increase in forecasted taxable income, foreign sales and gross margin.
SHARE-BASED COMPENSATION
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
Restricted stock awards
Performance stock units
−Removed: Stock options
Share-based compensation expense
Restricted Stock Awards
−Removed: During the nine months ended April 4, 2021, the Company granted 88,786 restricted stock awards (“RSAs”) to the Company’s non-executive directors, officers and certain other key employees.
−Removed: Generally, the shares of restricted stock granted during the nine months ended April 4, 2021, vest pro-rata over three years for officers and certain other key employees and over one year for non-executive directors.
+Added: During the three months ended October 3, 2021, the Company granted 72,677 restricted stock awards (“RSAs”) to the Company’s non-executive directors, officers and certain other key employees.
+Added: Generally, the shares of restricted stock granted during the three months ended October 3, 2021, 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.
−Removed: The weighted average grant date fair value of RSAs granted in the nine months ended April 4, 2021, was $ 20.06 per share.
−Removed: The following table summarizes the status of nonvested RSAs as of April 4, 2021, and changes during the nine months then ended.
+Added: The weighted average grant date fair value of RSAs granted in the three months ended October 3, 2021, was $ 26.04 per share.
+Added: The following table summarizes the status of nonvested RSAs as of October 3, 2021, and changes during the three months then ended.
Nonvested at June 30, 2021
−Removed: Nonvested at April 4, 2021
−Removed: As of April 4, 2021, there was $ 1.6 million of total unrecognized compensation expense related to nonvested RSAs.
+Added: Nonvested at October 3, 2021
+Added: As of October 3, 2021, there was $ 2.7 million of total unrecognized compensation expense related to nonvested RSAs.
The Company expects this expense to be recognized over a weighted average period of 1.9 years.
8 unchanged sentences
Compensation expense related to nonvested PSUs is recognized ratably over the performance period.
−Removed: Supplemental PSUs
−Removed: On July 16, 2020, after consulting with outside compensation advisors and outside legal counsel, reviewing market data and benchmarking expected relative compensation to the market data, the Company’s Compensation Committee made the decision to grant additional PSUs under the Long-term Incentive Plan (“LTIP Program”) to certain of the Company’s officers, (the “Supplemental PSUs”).
−Removed: The “Performance Period” for the Supplemental PSUs is a two-year period commencing July 1, 2020 and ending June 30, 2022.
−Removed: The Supplemental PSUs were granted to attract and motivate key employees whose existing fiscal 2019 and fiscal 2020 PSU grants (the “Existing PSUs”) were unlikely to achieve minimum performance goals due to the unprecedented effects of the COVID-19 pandemic.
−Removed: The number of Supplemental PSUs that a grantee earns for the performance period will be determined by multiplying the target award by the product of (i) the Composite Payout Percentage and (ii) the Relative TSR Modifier.
−Removed: The “Composite Payout Percentage” is calculated based on the Company’s Total Market Share Percentage, Total Consumer Satisfaction Index Percentage and Total Dealer Inventory Turnover Percentage (each as defined in the Supplemental PSU Award Agreement).
−Removed: Following the determination of the Company’s achievement with respect to the Composite Payout Percentage over the Performance Period, the vesting of each award will be subject to adjustment based upon the application of a Relative TSR Modifier.
−Removed: The Supplemental PSUs are capped at 90 % of the Existing PSUs’ original fair value and would be reduced for any shares issuable upon satisfaction of the performance criteria pursuant to the Existing PSUs.
−Removed: As of April 4, 2021, the probability of achieving the performance goals for the Existing PSUs has improved, which would in turn reduce the potentially issuable shares under the Supplemental PSU to zero .
−Removed: The following table summarizes the status of nonvested PSUs as of April 4, 2021, and changes during the nine months then ended.
+Added: The following table summarizes the status of nonvested PSUs as of October 3, 2021, and changes during the three months then ended.
Nonvested at June 30, 2021
−Removed: Nonvested at April 4, 2021
−Removed: As of April 4, 2021, there was $ 1.4 million of total unrecognized compensation expense related to nonvested PSUs.
+Added: Nonvested at October 3, 2021
+Added: As of October 3, 2021, there was $ 3.2 million of total unrecognized compensation expense related to nonvested PSUs.
The Company expects this expense to be recognized over a weighted average period of 2.1 years.
+Added: EARNINGS PER SHARE AND COMMON STOCK
+Added: The following table sets forth the computation of the Company’s net income per share:
+Added: Three Months Ended
+Added: Weighted average shares — basic
+Added: Dilutive effect of assumed exercises of stock options
+Added: Dilutive effect of assumed restricted share awards/units
+Added: Weighted average outstanding shares — diluted
+Added: Basic net income per share
+Added: Diluted net income per share
+Added: For the three months ended October 3, 2021 and October 4, 2021, an immaterial number of shares were excluded from the computation of diluted earnings per share as the effect would have been anti-dilutive.
+Added: Stock Repurchase Program
+Added: On June 24, 2021, the board of directors of the Company authorized a stock repurchase program that allows for the repurchase of up to $ 50.0 million of our common stock during the three-year period ending June 24, 2024.
+Added: During the quarter ended October 3, 2021, the Company repurchased 58,379 shares of common stock for $ 1.5 million in cash, including related fees and expenses.
SEGMENT INFORMATION
−Removed: The Company designs, manufactures, and markets recreational performance sport boats, luxury day boats, and outboard boats under three operating and reportable segments:
−Removed: MasterCraft, NauticStar, and Crest.
−Removed: The Company’s segments are defined by the Company’s operational and reporting structures.
−Removed: The MasterCraft segment produces boats under two product brands, MasterCraft and Aviara.
−Removed: MasterCraft boats are produced at its Vonore, Tennessee facility.
+Added: Change in Reportable Segments
+Added: Beginning with the first quarter of fiscal 2022 and as discussed in Note 1, our CODM began to manage our business, allocate resources, and evaluate performance based on the reportable segments of MasterCraft, Crest, NauticStar, and Aviara.
+Added: Reportable Segments
+Added: Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the CODM in making decisions on how to allocate resources and assess performance.
+Added: For the three months ended October 3, 2021, the Company’s CODM regularly assessed the operating performance of the Company’s boat brands under four operating and reportable segments:
+Added: The MasterCraft segment produces boats at its Vonore, Tennessee facility.
These are premium recreational performance sport boats primarily used for water skiing, wakeboarding, wake surfing, and general recreational boating.
−Removed: Aviara boats are luxury day boats primarily used for general recreational boating.
−Removed: Production of Aviara boats began during the year ended June 30, 2019 and the Company began selling these boats in July 2019.
−Removed: The Company has transitioned Aviara production from the Vonore facility to the Merritt Island Facility as of the end of March, allowing for increased production capacity for our MasterCraft branded products.
−Removed: The NauticStar segment produces boats at its Amory, Mississippi facility.
−Removed: NauticStar’s boats are primarily used for saltwater fishing and general recreational boating.
The Crest segment produces pontoon boats at its Owosso, Michigan facility.
Crest’s boats are primarily used for general recreational boating.
−Removed: Each segment distributes its products through its own dealer network.
−Removed: The Chief Operating Decision Maker (“CODM”), which is our Chief Executive Officer, regularly reviews the operating performance of each segment including measures of performance based on operating income.
−Removed: Each segment has its own management structure which is responsible for the operations of the segment and which is directly accountable to the CODM.
+Added: The NauticStar segment produces boats at its Amory, Mississippi facility.
+Added: NauticStar’s boats are primarily used for saltwater fishing and general recreational boating.
+Added: The Aviara segment produces luxury day boats at its Merritt Island, Florida facility.
+Added: Aviara boats are primarily used for general recreational boating.
+Added: Beginning in fiscal 2022, the CODM has begun to assess Aviara’s performance on a stand-alone basis using criteria consistent with our other operating and reportable segments.
+Added: Each segment distributes its products through its own independent dealer network.
+Added: Each segment also has its own management structure which is responsible for the operations of the segment and is directly accountable to the CODM for the operating performance of the segment, which is regularly assessed by the CODM who allocates resources based on that performance, including using measures of performance based operating income.
The Company files a consolidated income tax return and does not allocate income taxes and other corporate-level expenses, including interest, to operating segments.
1 unchanged sentence
Selected financial information for the Company’s reportable segments was as follows:
−Removed: For the Three Months Ended April 4, 2021
−Removed: Operating income
−Removed: Depreciation and amortization
−Removed: Purchases of property, plant and equipment
−Removed: For the Nine Months Ended April 4, 2021
−Removed: Operating income (loss)
−Removed: Depreciation and amortization
−Removed: Purchases of property, plant and equipment
−Removed: For the Three Months Ended March 29, 2020
+Added: For the Three Months Ended October 3, 2021
Operating income (loss)
1 unchanged sentence
Purchases of property, plant and equipment
−Removed: For the Nine Months Ended March 29, 2020
+Added: For the Three Months Ended October 4, 2020
Operating income (loss)
2 unchanged sentences
The following table presents total assets for the Company’s reportable segments.
−Removed: April 4, 2021
−Removed: Eliminations (a)
−Removed: Represents the Company’s initial investment in NauticStar and Crest, which is included in total assets attributed to the MasterCraft segment.
+Added: October 3, 2021
+Added: June 30, 2021
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.