Company Quick10K Filing
LCI Industries
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 25 $2,261
10-Q 2019-11-05 Quarter: 2019-09-30
10-Q 2019-08-06 Quarter: 2019-06-30
10-Q 2019-05-07 Quarter: 2019-03-31
10-K 2019-02-27 Annual: 2018-12-31
10-Q 2018-11-07 Quarter: 2018-09-30
10-Q 2018-08-07 Quarter: 2018-06-30
10-Q 2018-05-10 Quarter: 2018-03-31
10-K 2018-02-28 Annual: 2017-12-31
10-Q 2017-11-07 Quarter: 2017-09-30
10-Q 2017-08-08 Quarter: 2017-06-30
10-Q 2017-05-09 Quarter: 2017-03-31
10-K 2017-02-28 Annual: 2016-12-31
10-Q 2016-11-08 Quarter: 2016-09-30
10-Q 2016-08-09 Quarter: 2016-06-30
10-Q 2016-05-10 Quarter: 2016-03-31
10-K 2016-02-29 Annual: 2015-12-31
10-Q 2015-11-09 Quarter: 2015-09-30
10-Q 2015-08-07 Quarter: 2015-06-30
10-Q 2015-05-11 Quarter: 2015-03-31
10-K 2015-03-02 Annual: 2014-12-31
10-Q 2014-11-07 Quarter: 2014-09-30
10-Q 2014-08-08 Quarter: 2014-06-30
10-Q 2014-05-09 Quarter: 2014-03-31
10-K 2014-02-28 Annual: 2013-12-31
10-Q 2013-11-08 Quarter: 2013-09-30
10-Q 2013-08-08 Quarter: 2013-06-30
10-Q 2013-05-09 Quarter: 2013-03-31
10-K 2013-03-12 Annual: 2012-12-31
10-Q 2012-11-09 Quarter: 2012-09-30
10-Q 2012-08-09 Quarter: 2012-06-30
10-Q 2012-05-09 Quarter: 2012-03-31
10-K 2012-03-14 Annual: 2011-12-31
10-Q 2011-11-08 Quarter: 2011-09-30
10-Q 2011-08-08 Quarter: 2011-06-30
10-Q 2011-05-09 Quarter: 2011-03-31
10-K 2011-03-11 Annual: 2010-12-31
10-Q 2010-11-09 Quarter: 2010-09-30
10-Q 2010-08-06 Quarter: 2010-06-30
10-Q 2010-05-10 Quarter: 2010-03-31
10-K 2010-03-11 Annual: 2009-12-31
8-K 2020-01-28 Other Events, Exhibits
8-K 2019-12-19 Enter Agreement, M&A, Off-BS Arrangement, Regulation FD, Exhibits
8-K 2019-12-02 Earnings, Regulation FD, Exhibits
8-K 2019-11-25 Other Events, Exhibits
8-K 2019-11-22 Regulation FD, Exhibits
8-K 2019-11-21 Enter Agreement, Regulation FD, Exhibits
8-K 2019-11-18 Other Events, Exhibits
8-K 2019-11-14 Officers, Regulation FD, Exhibits
8-K 2019-11-14 Other Events, Exhibits
8-K 2019-11-11 Enter Agreement, Leave Agreement, Exhibits
8-K 2019-11-05 Regulation FD, Exhibits
8-K 2019-11-05 Earnings, Exhibits
8-K 2019-10-22
8-K 2019-10-21
8-K 2019-10-08 Officers, Exhibits
8-K 2019-10-01 Officers, Regulation FD, Exhibits
8-K 2019-09-12 Other Events, Exhibits
8-K 2019-08-30 Other Events, Exhibits
8-K 2019-08-27 Earnings, Regulation FD, Exhibits
8-K 2019-08-27 Other Events, Exhibits
8-K 2019-08-23 Other Events, Exhibits
8-K 2019-08-06 Earnings, Exhibits
8-K 2019-08-06 Regulation FD, Exhibits
8-K 2019-08-01 Other Events, Exhibits
8-K 2019-07-23 Other Events, Exhibits
8-K 2019-06-28 Other Events, Exhibits
8-K 2019-06-11 Other Events, Exhibits
8-K 2019-05-28 Other Events, Exhibits
8-K 2019-05-23 Shareholder Vote
8-K 2019-05-23 Other Events, Exhibits
8-K 2019-05-13 Regulation FD, Exhibits
8-K 2019-05-07 Regulation FD, Exhibits
8-K 2019-05-07 Earnings, Exhibits
8-K 2019-04-23 Other Events, Exhibits
8-K 2019-03-29 Off-BS Arrangement, Exhibits
8-K 2019-03-15 Regulation FD, Exhibits
8-K 2019-03-07 Exhibits
8-K 2019-02-26 Other Events, Exhibits
8-K 2019-02-07 Earnings, Regulation FD, Exhibits
8-K 2019-02-07 Regulation FD, Exhibits
8-K 2019-01-24 Other Events, Exhibits
8-K 2019-01-22 Regulation FD, Exhibits
8-K 2018-12-14 Off-BS Arrangement, Exhibits
8-K 2018-11-30 Other Events, Exhibits
8-K 2018-11-16 Officers, Exhibits
8-K 2018-11-15 Other Events, Exhibits
8-K 2018-11-06 Regulation FD, Exhibits
8-K 2018-11-01 Regulation FD, Exhibits
8-K 2018-11-01 Earnings, Regulation FD, Exhibits
8-K 2018-10-18 Other Events, Exhibits
8-K 2018-08-30 Regulation FD, Exhibits
8-K 2018-08-16 Other Events, Exhibits
8-K 2018-08-02 Regulation FD, Exhibits
8-K 2018-08-02 Earnings, Regulation FD, Exhibits
8-K 2018-07-19 Other Events, Exhibits
8-K 2018-06-04 Other Events, Exhibits
8-K 2018-05-24 Officers, Shareholder Vote, Exhibits
8-K 2018-05-24 Other Events, Exhibits
8-K 2018-05-10 Regulation FD, Exhibits
8-K 2018-05-04 Earnings, Regulation FD, Exhibits
8-K 2018-05-04 Regulation FD, Exhibits
8-K 2018-04-20 Other Events, Exhibits
8-K 2018-03-08 Officers, Exhibits
8-K 2018-03-06 Other Events, Exhibits
8-K 2018-02-27 Officers, Exhibits
8-K 2018-02-20 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-02-16 Other Events, Exhibits
8-K 2018-02-08 Earnings, Regulation FD, Exhibits
8-K 2018-02-08 Regulation FD, Exhibits
8-K 2018-02-08 Regulation FD, Exhibits
8-K 2018-01-26 Other Events, Exhibits
8-K 2018-01-25 Other Events, Exhibits
8-K 2018-01-17 Other Events, Exhibits
LCII 2019-09-30
Part I - Financial Information
Item 1 - Financial Statements
Item 2 - Management's Discussion and Analysis Of
Item 3 - Quantitative and Qualitative
Item 4 - Controls and Procedures
Part II - Other Information
Item 1 - Legal Proceedings
Item 1A - Risk Factors
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Item 6 - Exhibits
EX-31.1 lcii-09302019xex311.htm
EX-31.2 lcii-09302019xex312.htm
EX-32.1 lcii-09302019xex321.htm
EX-32.2 lcii-09302019xex322.htm

LCI Industries Earnings 2019-09-30

LCII 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
DORM 2,830 1,016 266 1,006 367 114 160 2,792 36% 17.4 11%
DAN 2,809 7,346 5,427 8,605 1,182 237 650 5,042 14% 7.8 3%
LCII 2,261 1,330 577 2,362 510 136 258 2,446 22% 9.5 10%
ADNT 2,061 10,574 8,248 12,691 767 -1,778 -774 4,806 6% -6.2 -17%
MTOR 1,984 2,728 2,217 4,440 653 288 459 2,631 15% 5.7 11%
VNE 1,928 2,967 903 2,044 370 -452 -302 880 18% -2.9 -15%
DLPH 1,575 3,903 3,403 4,602 740 235 580 2,887 16% 5.0 6%
VC 1,527 2,192 1,715 2,882 314 93 214 1,437 11% 6.7 4%
THRM 1,364 752 287 1,014 290 32 99 1,435 29% 14.5 4%
AXL 1,359 7,548 5,976 5,240 963 -203 612 4,843 18% 7.9 -3%

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 2019

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

For the transition period from _________________ to _________________

Commission File Number: 001-13646
lcii-20190930_g1.jpg
LCI INDUSTRIES
(Exact name of registrant as specified in its charter)

Delaware13-3250533
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number)
3501 County Road 6 East46514
Elkhart,Indiana(Zip Code)
(Address of principal executive offices)
(574) 535-1125
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report) N/A

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueLCIINew York Stock Exchange

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

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

1


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

Large accelerated filer          Accelerated filer
Non-accelerated filer           Smaller reporting company
Emerging growth company

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

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

The number of shares outstanding of the registrant’s common stock, as of the latest practicable date (October 31, 2019) was 25,027,515 shares of common stock.

2



LCI INDUSTRIES

TABLE OF CONTENTS

Page
PART I  
  
 
  
 
  
 
 
  
 
  
 
  
 
  
 
  
 
  
PART II
  
 
  
 
  
 
  
 
EXHIBIT 31.1 - SECTION 302 CEO CERTIFICATION
  
EXHIBIT 31.2 - SECTION 302 CFO CERTIFICATION 
  
EXHIBIT 32.1 - SECTION 906 CEO CERTIFICATION 
  
EXHIBIT 32.2 - SECTION 906 CFO CERTIFICATION 


3



PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS

LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
 2019201820192018
(In thousands, except per share amounts)    
Net sales$586,221  $604,244  $1,807,461  $1,939,191  
Cost of sales450,748  478,343  1,390,741  1,522,101  
Gross profit135,473  125,901  416,720  417,090  
Selling, general and administrative expenses86,320  80,548  254,155  247,829  
Operating profit49,153  45,353  162,565  169,261  
Interest expense, net1,900  1,720  6,506  4,481  
Income before income taxes47,253  43,633  156,059  164,780  
Provision for income taxes11,444  9,821  38,357  36,408  
Net income$35,809  $33,812  $117,702  $128,372  
Net income per common share:    
Basic$1.43  $1.34  $4.71  $5.09  
Diluted$1.42  $1.33  $4.70  $5.03  
Weighted average common shares outstanding:    
Basic25,031  25,235  24,984  25,208  
Diluted25,156  25,504  25,053  25,509  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
 2019201820192018
(In thousands)    
Net income$35,809  $33,812  $117,702  $128,372  
Other comprehensive income (loss):
Net foreign currency translation adjustment819  (306) (1,850) (1,095) 
Unrealized loss on fair value of derivative instruments(19)   (2,061)   
Total comprehensive income$36,609  $33,506  $113,791  $127,277  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5


LCI INDUSTRIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 September 30,December 31,
 20192018
(In thousands, except per share amount)  
ASSETS  
Current assets  
Cash and cash equivalents$24,168  $14,928  
Restricted cash 3,309    
Accounts receivable, net of allowances of $2,559 and $1,895 at September 30, 2019 and December 31, 2018, respectively
185,821  121,812  
Inventories, net334,462  340,615  
Prepaid expenses and other current assets32,836  49,296  
Total current assets580,596  526,651  
Fixed assets, net343,883  322,876  
Goodwill203,505  180,168  
Other intangible assets, net177,310  176,342  
Operating lease right-of-use assets67,666    
Deferred taxes8,654  10,948  
Other assets33,199  26,908  
Total assets$1,414,813  $1,243,893  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities  
Accounts payable, trade$99,899  $78,354  
Current portion of operating lease obligations15,226    
Accrued expenses and other current liabilities140,947  99,228  
Total current liabilities256,072  177,582  
Long-term indebtedness261,631  293,528  
Operating lease obligations55,307    
Other long-term liabilities64,422  66,528  
Total liabilities637,432  537,638  
Stockholders’ equity
Common stock, par value $.01 per share281  280  
Paid-in capital209,053  203,246  
Retained earnings632,725  563,496  
Accumulated other comprehensive loss(6,516) (2,605) 
Stockholders’ equity before treasury stock835,543  764,417  
Treasury stock, at cost(58,162) (58,162) 
Total stockholders’ equity777,381  706,255  
Total liabilities and stockholders’ equity$1,414,813  $1,243,893  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended 
September 30,
 20192018
(In thousands)  
Cash flows from operating activities:  
Net income$117,702  $128,372  
Adjustments to reconcile net income to cash flows provided by operating activities:  
Depreciation and amortization55,882  49,739  
Stock-based compensation expense12,061  13,852  
Other non-cash items837  (959) 
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net(42,367) (51,733) 
Inventories, net24,410  (16,475) 
Prepaid expenses and other assets15,119  (9,506) 
Accounts payable, trade8,437  (12,930) 
Accrued expenses and other liabilities17,461  7,232  
Net cash flows provided by operating activities209,542  107,592  
Cash flows from investing activities:  
Capital expenditures(47,767) (92,522) 
Acquisitions of businesses, net of cash acquired(53,923) (156,701) 
Proceeds from note receivable  2,000  
Other investing activities364  (875) 
Net cash flows used in investing activities(101,326) (248,098) 
Cash flows from financing activities:  
Vesting of stock-based awards, net of shares tendered for payment of taxes(7,194) (14,114) 
Proceeds from revolving credit facility borrowings404,228  928,601  
Repayments under revolving credit facility borrowings(443,921) (738,601) 
Proceeds from other borrowings  4,509  
Payment of dividends(47,533) (44,114) 
Payment of contingent consideration related to acquisitions(4) (3,018) 
Other financing activities(401) (556) 
Net cash flows (used in) provided by financing activities(94,825) 132,707  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(842)   
Net increase (decrease) in cash, cash equivalents, and restricted cash12,549  (7,799) 
Cash, cash equivalents, and restricted cash at beginning of period14,928  26,049  
Cash, cash equivalents, and restricted cash at end of period$27,477  $18,250  
Supplemental disclosure of cash flow information:  
Cash paid during the period for interest$6,156  $4,244  
Cash paid during the period for income taxes, net of refunds$28,416  $33,844  
Purchase of property and equipment in accrued expenses$588  $467  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)


(In thousands, except shares and per share amounts)Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Treasury
Stock
Total
Stockholders’
Equity
Balance - December 31, 2018$280  $203,246  $563,496  $(2,605) $(58,162) $706,255  
Net income—  —  34,366  —  —  34,366  
Issuance of 137,040 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes1  (6,349) —  —  —  (6,348) 
Stock-based compensation expense—  3,733  —  —  —  3,733  
Other comprehensive loss—  —  —  (1,328) —  (1,328) 
Cash dividends ($0.60 per share)—  —  (14,999) —  —  (14,999) 
Dividend equivalents on stock-based awards—  304  (304) —  —    
Balance - March 31, 2019281  200,934  582,559  (3,933) (58,162) 721,679  
Net income—  —  47,527  —  —  47,527  
Issuance of 27,965 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes—  (795) —  —  —  (795) 
Stock-based compensation expense—  4,115  —  —  —  4,115  
Other comprehensive loss—  —  —  (3,383) —  (3,383) 
Cash dividends ($0.65 per share)—  —  (16,267) —  —  (16,267) 
Dividend equivalents on stock-based awards—  318  (318) —  —    
Balance - June 30, 2019281  204,572  613,501  (7,316) (58,162) 752,876  
Net income—  —  35,809  —  —  35,809  
Issuance of 1,429 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes—  (50) —  —  —  (50) 
Stock-based compensation expense—  4,213  —  —  —  4,213  
Other comprehensive income—  —  —  800  —  800  
Cash dividends ($0.65 per share)—  —  (16,267) —  —  (16,267) 
Dividend equivalents on stock-based awards—  318  (318) —  —    
Balance - September 30, 2019$281  $209,053  $632,725  $(6,516) $(58,162) $777,381  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

(In thousands, except shares and per share amounts)Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Treasury
Stock
Total
Stockholders’
Equity
Balance - December 31, 2017$277  $203,990  $475,506  $2,439  $(29,467) $652,745  
Net income—  —  47,336  —  —  47,336  
Issuance of 223,768 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes2  (14,087) —  —  —  (14,085) 
Stock-based compensation expense—  5,543  —  —  —  5,543  
Other comprehensive income—  —  —  1,110  —  1,110  
Cash dividends ($0.55 per share)—  —  (13,858) —  —  (13,858) 
Dividend equivalents on stock-based awards—  319  (319) —  —    
Balance - March 31, 2018279  195,765  508,665  3,549  (29,467) 678,791  
Net income—  —  47,224  —  —  47,224  
Issuance of 2,419 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes—  (29) —  —  —  (29) 
Stock-based compensation expense—  4,219  —  —  —  4,219  
Other comprehensive loss—  —  —  (1,899) —  (1,899) 
Cash dividends ($0.60 per share)—  —  (15,127) —  —  (15,127) 
Dividend equivalents on stock-based awards—  351  (351) —  —    
Balance - June 30, 2018279  200,306  540,411  1,650  (29,467) 713,179  
Net income—  —  33,812  —  —  33,812  
Issuance of 1,959 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes—    —  —  —    
Stock-based compensation expense—  4,090  —  —  —  4,090  
Other comprehensive loss—  —  —  (306) —  (306) 
Cash dividends ($0.60 per share)—  —  (15,129) —  —  (15,129) 
Dividend equivalents on stock-based awards—  352  (352) —  —    
Balance - September 30, 2018$279  $204,748  $558,742  $1,344  $(29,467) $735,646  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


9


LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. BASIS OF PRESENTATION

The Condensed Consolidated Financial Statements include the accounts of LCI Industries and its wholly-owned subsidiaries (“LCII” and collectively with its subsidiaries, the “Company”). LCII has no unconsolidated subsidiaries. LCII, through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, “Lippert Components” or “LCI”), supplies, domestically and internationally, a broad array of engineered components for the leading original equipment manufacturers (“OEMs”) in the recreation and transportation product markets, consisting of recreational vehicles (“RVs”) and adjacent industries including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; boats; trains; manufactured homes; and modular housing. The Company also supplies engineered components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors, and service centers. At September 30, 2019, the Company operated over 70 manufacturing and distribution facilities located throughout North America and Europe.

Most industries where the Company sells products or where its products are used historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, the Company’s sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions, consumer confidence on retail sales of RVs, and other products for which the Company sells its components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends may be different than in prior years. Additionally, sales of certain engineered components to the aftermarket channels of these industries tend to be counter-seasonal.

The Company is not aware of any significant events, except as disclosed in the Notes to Condensed Consolidated Financial Statements, which occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the Condensed Consolidated Financial Statements.

In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations for the interim periods presented. The Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q, and therefore do not include some information necessary to conform to annual reporting requirements. Results for interim periods should not be considered indicative of results for the full year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to product returns, sales and purchase rebates, accounts receivable, inventories, goodwill and other intangible assets, net assets of acquired businesses, income taxes, warranty and product recall obligations, self-insurance obligations, operating lease right-of-use assets and obligations, asset retirement obligations, long-lived assets, post-retirement benefits, stock-based compensation, segment allocations, contingent consideration, environmental liabilities, contingencies, and litigation. The Company bases its estimates on historical experience, other available information, and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other resources. Actual results and events could differ significantly from management estimates.

10

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Condensed Consolidated Financial Statements presented herein have been prepared by the Company in accordance with the accounting policies described in its December 31, 2018 Annual Report on Form 10-K and should be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report. All significant intercompany balances and transactions have been eliminated.

Restricted Cash

Restricted cash represents the Company’s funds held in an escrow account designated for the acquisition of Lewmar Marine Ltd. (see Note 3). The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported in the Condensed Consolidated Balance Sheets that aggregates to the amounts presented in the Condensed Consolidated Statements of Cash Flows.
September 30,
(In thousands)20192018
Cash and cash equivalents$24,168  $18,250  
Restricted cash 3,309  —  
Cash, cash equivalents, and restricted cash at end of period$27,477  $18,250  

Recent Accounting Pronouncements

Recently issued accounting pronouncements not yet adopted

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment, which amends Accounting Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test. Step 2 measures goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. This ASU is effective for interim and annual reporting periods, beginning after December 15, 2019, and early adoption is permitted. The Company will adopt this guidance in the first quarter of 2020 and does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This ASU is effective for interim and annual reporting periods, beginning after December 15, 2019, and early adoption is permitted. The Company will adopt this guidance in the first quarter of 2020 and does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

Recently adopted accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires, in most instances, a lessee to recognize on its balance sheet a liability to make lease payments (the lease liability) and also a right-of-use asset representing its right to use the underlying asset for the lease term. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted Topic 842 on January 1, 2019, using the cumulative-effect adjustment transition method, which applies the new standard at the effective date without adjusting the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the carryforward of historical lease classification, the assessment of whether a contract is or contains a lease, and initial direct costs for any leases that existed prior to adoption of the new standard. The Company also elected to keep leases with an initial term of 12 months or less off its Condensed Consolidated Balance Sheet and recognize the associated lease payments in its Condensed Consolidated Statements of Income on a straight-line basis over the lease term.

The adoption of Topic 842 resulted in the recognition of right-of-use assets of $66.4 million and operating lease obligations of $69.0 million at January 1, 2019. The adoption did not result in a cumulative effect adjustment to beginning retained earnings and is not expected to materially impact the Company’s Consolidated Statements of Income or Cash Flows. See Note 8 of the Notes to Condensed Consolidated Financial Statements for expanded disclosures required under Topic 842.

11

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Subsequent Event

SureShade

In October 2019, the Company acquired substantially all of the business assets (collectively referred to under the business name “SureShade”) of Rodan Enterprises, LLC, a designer and manufacturer of sunshade systems for the outdoor recreation industry in North America and Europe headquartered in Philadelphia, Pennsylvania. The purchase price was $14.0 million, which includes holdback payments of $1.4 million. The results of the acquired business will be included primarily in the Company’s OEM Segment. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet.

Acquisitions Completed During the Nine Months Ended September 30, 2019

Ciesse Holdings S.r.l.

In August 2019, the Company acquired 100 percent of the equity interests of Ciesse Holding S.r.l. and related entities (collectively, “Ciesse”), a supplier of railway interior products and systems, headquartered in Rignano sull’Arno, Italy. The purchase price was $5.4 million, net of cash acquired, paid at closing, and is subject to potential post-closing adjustments related to net working capital. The results of the acquired business have been included primarily in the Company’s OEM Segment and in the Consolidated Statements of Income since the acquisition date.

The accounting for the Ciesse business combination is incomplete. The estimated fair value of assets acquired and liabilities assumed is based on a preliminary allocation and will be finalized during the measurement period which will not exceed 12 months from the acquisition date. As the acquisition of Ciesse is not considered to have a material impact on the Company’s financial statements, proforma results of operations, and other disclosures are not presented.

Lewmar Marine Ltd.

In August 2019, the Company acquired 100 percent of the equity interests of Lewmar Marine Ltd. and related entities (collectively, “Lewmar”), a supplier of leisure marine equipment, headquartered in Havant, United Kingdom. The purchase price was $40.5 million, net of cash acquired, and is subject to potential post-closing adjustments related to net working capital. The results of the acquired business have been included primarily in the Company’s OEM Segment and in the Consolidated Statements of Income since the acquisition date. The Company is validating account balances and finalizing the valuation for the acquisition. The acquisition of this business was preliminarily recorded on the acquisition date as follows (in thousands):
Cash consideration, net of cash acquired$40,453  
Customer relationship and other identifiable intangible assets$15,000  
Net tangible assets3,348  
Total fair value of net assets acquired$18,348  
Goodwill (not tax deductible)$22,105  

The customer relationship intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products. As the acquisition of Lewmar is not considered to have a material impact on the Company’s financial statements, proforma results of operations and other disclosures are not presented.

Lavet S.r.l.

In June 2019, the Company acquired 100 percent of the equity interests of Lavet S.r.l. (“Lavet”), a manufacturer of window blind systems for European leisure vehicles, headquartered in Siena, Italy. The purchase price was $2.4 million, net of cash acquired, paid at closing, and is subject to potential post-closing adjustments related to net working capital. The results of
12

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
the acquired business have been included primarily in the Company’s OEM Segment and in the Consolidated Statements of Income since the acquisition date.

The accounting for the Lavet business combination is incomplete. The estimated fair value of assets acquired and liabilities assumed is based on a preliminary allocation and will be finalized during the measurement period which will not exceed 12 months from the acquisition date. As the acquisition of Lavet is not considered to have a material impact on the Company’s financial statements, proforma results of operations, and other disclosures are not presented.

Femto Engineering S.r.l.

In June 2019, the Company acquired 100 percent of the equity interests of Femto Engineering S.r.l. and related entities (collectively, “Femto”), an engineering company with focus on designing and manufacturing of plastic moldings, headquartered in San Casciano, Italy. The purchase price was $5.7 million, net of cash acquired, paid at closing, and is subject to potential post-closing adjustments related to net working capital. The results of the acquired business have been included primarily in the Company’s OEM Segment and in the Consolidated Statements of Income since the acquisition date.

The accounting for the Femto business combination is incomplete. The purchase price was preliminarily recorded in goodwill with allocations to the acquired real estate and assumed debt on the real estate at September 30, 2019. The estimated fair value of other assets acquired and liabilities assumed is based on a preliminary allocation and will be finalized during the measurement period which will not exceed 12 months from the acquisition date. As the acquisition of Femto is not considered to have a material impact on the Company’s financial statements, proforma results of operations, and other disclosures are not presented.

Acquisitions Completed During the Year Ended December 31, 2018

Smoker Craft Furniture

In November 2018, the Company acquired the business and certain assets of the furniture manufacturing operation of Smoker Craft Inc., a leading pontoon, aluminum fishing, and fiberglass boat manufacturer located in New Paris, Indiana. The purchase price was $28.1 million paid at closing. The results of the acquired business have been included primarily in the Company’s OEM Segment and in the Consolidated Statements of Income since the acquisition date. The Company is validating account balances and finalizing the valuation for the acquisition. The acquisition of this business was recorded on the acquisition date as follows (in thousands):
Cash consideration$28,091  
Customer relationship and other identifiable intangible assets$16,730  
Net tangible assets1,357  
Total fair value of net assets acquired$18,087  
Goodwill (tax deductible)$10,004  

The customer relationship intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

13

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
ST.LA. S.r.l.

In June 2018, the Company acquired 100 percent of the equity interests of ST.LA. S.r.l., a manufacturer of bed lifts and other RV components for the European caravan market, headquartered in Pontedera, Italy. The purchase price was $14.8 million, net of cash acquired, paid at closing. The results of the acquired business have been included primarily in the Company’s OEM Segment and in the Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded as of the acquisition date as follows (in thousands):
Cash consideration, net of cash acquired$14,845  
Customer relationships and other identifiable intangible assets$6,354  
Net tangible assets4,099  
Total fair value of net assets acquired$10,453  
Goodwill (not tax deductible)$4,392  

The customer relationships intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies, and an increase in the markets for the acquired products.

Goodwill

Goodwill by reportable segment was as follows:
(In thousands)OEM SegmentAftermarket SegmentTotal
Net balance – December 31, 2018$160,257  $19,911  $180,168