| Accounting Standards Update and Change in Accounting Principle |
Restatement of Previously Issued Consolidated Financial Statements The Company has restated its consolidated financial statements for the fiscal years ended December 31, 2024, 2023 and 2022 below. Additionally, the "As Reported" Consolidated Balance Sheet in this Note C for the years ended December 31, 2022 has been recast to reflect the effect of the sale of EBP Lifestyle Brands Holdings, Inc. during the fourth quarter of 2024. Additionally, based on the consolidated financial information included within the Company's previously filed financial statements in the Original Filing, the Company was in compliance with the 2022 Credit Facility’s financial covenants in each of these periods. However, in retrospectively testing financial covenant compliance under the 2022 Credit Facility in each of the Affected Periods in reliance on the restated consolidated financial information provided in this Form 10-K/A, the Company would not have been in compliance with such financial covenants as of the years ended December 31, 2024 and 2023. As a result, the 2022 Term Loan and 2022 Revolving Credit facility that were previously classified as long-term debt in the consolidated balance sheet at each of these periods in the As Reported financial information have been reclassified to current portion of long-term debt in the accompanying balance sheets in this footnote for the periods in which the Company was not in compliance with the financial covenants in the 2022 Credit Facility. Additionally, because the 2029 Notes and 2032 Notes may have been subject to acceleration had the lenders under the 2022 Credit Facility exercised their acceleration rights during such historical periods, the 2029 Notes and 2032 Notes are also being reclassified to current portion of long-term debt in such accompanying balance sheets. The impact of the correction of the misstatements and errors described in Note B on the Consolidated Statements of Cash Flows were driven by changes in the related Consolidated Balance Sheet and Consolidated Statement of Operations line items. Below is a summary description of the significant errors:
| | | | | | | | | | Consolidated Balance Sheets | | ADJ 1 | | Accounts Receivable - amounts were recorded at Lugano as accounts receivable which did not represent activity associated with a valid revenue transaction. | | | | | ADJ 2 | | Inventory and Other Current Assets - amounts were recorded at Lugano as purchases of inventory or vendor prepayments which did not represent valid purchases. Invalid inventory transactions were also recorded in connection with barter purchases of jewelry or gems from customers in exchange for reducing accounts receivable transactions, and in connection with invalid revenue transactions. Other current assets increased as a result of the revised Lugano tax provision and a tax receivable that was recorded in each of the years presented in the consolidated financial statements. | | | | | ADJ 3 | | Goodwill and Intangible Assets - the purchase price allocation of the assets acquired and liabilities assumed in the acquisition of Lugano in September 2021 was based upon materially incorrect financial information. As a result, the Company re-performed the purchase price allocation, which resulted in a change in the fair value of the intangible assets acquired and the calculation of goodwill. Additionally, due to the adjustments to historical financial information that resulted from the Lugano Investigation, the Company determined that a triggering event had occurred as of December 31, 2021 and December 31, 2022 and performed impairment testing of the goodwill and definite lived intangibles at Lugano as of these dates. | | | | | ADJ 4 | | Accrued expenses - Unrecorded liabilities related to inventory transactions at Lugano and accrued interest associated with the Lugano Financing Arrangements have been recorded in the consolidated balance sheets. | | | | | ADJ 5 | | Financing arrangements - Lugano entered into various financing arrangements with third parties that were not previously recorded in the historical financial statements of Lugano as debt. In connection with the Lugano Investigation, the Company determined that certain cash recorded as reduction of accounts receivable or purchases of inventory actually represented unrecorded financing arrangements made with third parties to purportedly jointly invest with Lugano in the purchase of a specified jewelry piece. These arrangements represent debt that has been recorded on the Company's consolidated balance sheets, and an amount of accrued interest associated with the arrangements has also been recorded. Refer to Note I - Debt for further description of the financing arrangements. | | | | | ADJ 6 | | Noncontrolling interest - the correction of the misstatements resulted in a decrease in the balance of noncontrolling interest at Lugano, and reduced the noncontrolling income that previously had been recorded related to Lugano. |
| | | | | | | | | | Consolidated Statement of Operations | | ADJ 7 | | Net revenues - net revenues at Lugano were overstated in each of the periods presented as a result of the recording of invalid revenue transactions or the misrepresentation of funds received as revenue. | | | | | ADJ 8 | | Cost of revenues - cost of revenues at Lugano was overstated in each of the periods presented as a result of the recording of the cost of revenues associated with invalid revenue transactions and the misapplication of funds paid as inventory purchases. | | | | | ADJ 9 | | Interest expense, net - interest expense associated with the Lugano financing arrangements described above have been recorded in the consolidated statement of operations in each of the periods presented. | | | | | ADJ 10 | | Other income (expense), net - reflects the expense recognized at Lugano related to losses resulting from the accounting for the transactions associated with the Lugano financing arrangements. | | | | | ADJ 11 | | Income tax provision (benefit) - the income tax provision (benefit) at Lugano has been recalculated in each of the periods presented as a result of the effect of the aforementioned adjustments to the consolidated statement of operations. |
The table below presents a summary of the impact of the cumulative effect of the misstatements on the opening balance of accumulated deficit and non-controlling interest as of the first period presented: | | | | | | | | | | | | | (in thousands) | Accumulated
Deficit | | Non-
Controlling
Interest | | Balance — January 1, 2022, as reported | $ | (314,267) | | | $ | 128,718 | | | Adjustment due to error corrections | (163,733) | | | (109,649) | | | Balance — January 1, 2022, as restated | $ | (478,000) | | | $ | 19,069 | |
The tables below present the effect of these adjustments on the affected line items in the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows as reported in the Company’s Annual Report on Form 10-K as of and for the years ended December 31, 2024, 2023 and 2022. | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2024 | | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Assets | | | | | | | | | Current assets: | | | | | | | | | Cash and cash equivalents | | | $ | 59,727 | | | (68) | | | $ | 59,659 | | | Accounts receivable, net | ADJ 1 | | 444,386 | | | (237,214) | | | 207,172 | | | Inventories, net | ADJ 2 | | 962,408 | | | (391,160) | | | 571,248 | | | Prepaid expenses and other current assets | ADJ 2 | | 101,129 | | | 25,563 | | | 126,692 | | | | | | | | | | | Total current assets | | | 1,567,650 | | | (602,879) | | | 964,771 | | | Property, plant and equipment, net | | | 244,746 | | | — | | | 244,746 | | | Goodwill | ADJ 3 | | 982,253 | | | (86,337) | | | 895,916 | | | Intangible assets, net | ADJ 3 | | 1,049,186 | | | (65,790) | | | 983,396 | | | Other non-current assets | | | 208,587 | | | 6 | | | 208,593 | | | | | | | | | | | Total assets | | | $ | 4,052,422 | | | $ | (755,000) | | | $ | 3,297,422 | | | | | | | | | | | Liabilities and stockholders’ equity | | | | | | | | | Current liabilities: | | | | | | | | | Accounts payable | | | 104,304 | | | (1,065) | | | 103,239 | | | Accrued expenses | ADJ 4 | | 197,829 | | | 120,647 | | | 318,476 | | | | | | | | | | | Due to related parties (refer to Note Q) | | | 18,036 | | | — | | | 18,036 | | | Current portion, long-term debt | | | 15,000 | | | 1,759,290 | | | 1,774,290 | | | Subsidiary financing arrangements | ADJ 5 | | — | | | 169,765 | | | 169,765 | | | Other current liabilities | | | 49,617 | | | — | | | 49,617 | | | | | | | | | | | Total current liabilities | | | 384,786 | | | 2,048,637 | | | 2,433,423 | | | Deferred income taxes | | | 119,948 | | | (11,857) | | | 108,091 | | | Long-term debt (Refer to Note I) | | | 1,759,290 | | | (1,759,290) | | | — | | | Other non-current liabilities | | | 225,334 | | | — | | | 225,334 | | | | | | | | | | | Total liabilities | | | 2,489,358 | | | 277,490 | | | 2,766,848 | | | | | | | | | | | | | | | | | | | | | | | | | | | Stockholders’ equity | | | | | | | | Trust preferred shares, 50,000 authorized; 17,497 shares issued and outstanding at December 31, 2024 | | | | | | | | Series A preferred shares, no par value, 4,551 shares issued and outstanding at December 31, 2024 | | | 109,159 | | | — | | | 109,159 | | Series B preferred shares, no par value, 6,192 shares issued and outstanding at December 31, 2024 | | | 147,906 | | | — | | | 147,906 | | Series C preferred shares, no par value, 6,754 shares issued and outstanding at December 31, 2024 | | | 161,767 | | | — | | | 161,767 | | Trust common shares, no par value, 500,000 authorized; 76,135 shares issued and 75,236 shares outstanding at December 31, 2024 | | | 1,289,010 | | | — | | | 1,289,010 | | | Treasury shares, at cost | | | (18,910) | | | — | | | (18,910) | | | Accumulated other comprehensive income (loss) | | | (5,815) | | | 478 | | | (5,337) | | | Accumulated deficit | | | (386,324) | | | (618,651) | | | (1,004,975) | | | Total stockholders’ equity attributable to Holdings | | | 1,296,793 | | | (618,173) | | | 678,620 | | | Noncontrolling interest | ADJ 6 | | 266,271 | | | (414,317) | | | (148,046) | | | | | | | | | | | Total stockholders’ equity | | | 1,563,064 | | | (1,032,490) | | | 530,574 | | | Total liabilities and stockholders’ equity | | | $ | 4,052,422 | | | $ | (755,000) | | | $ | 3,297,422 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2024 | | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Net revenues | ADJ 7 | | $ | 2,198,233 | | | $ | (410,220) | | | $ | 1,788,013 | | | Cost of revenues | ADJ 8 | | 1,197,873 | | | (160,279) | | | 1,037,594 | | | Gross profit | | | 1,000,360 | | | (249,941) | | | 750,419 | | | Operating expenses: | | | | | | | | | Selling, general and administrative expense | | | 587,521 | | | — | | | 587,521 | | | Management fees | | | 74,767 | | | — | | | 74,767 | | | Amortization expense | ADJ 3 | | 99,760 | | | (4,943) | | | 94,817 | | | Impairment expense | | | 8,182 | | | — | | | 8,182 | | | Operating income (loss) | | | 230,130 | | | (244,998) | | | (14,868) | | | Other income (expense): | | | | | | | | | Interest expense, net | ADJ 9 | | (106,683) | | | (16,119) | | | (122,802) | | | Amortization of debt issuance costs | | | (4,018) | | | — | | | (4,018) | | | Loss on sale of Crosman | | | (24,218) | | | — | | | (24,218) | | | Other income (expense), net | ADJ 10 | | (3,902) | | | (139,402) | | | (143,304) | | | Income (loss) from continuing operations before income taxes | | | 91,309 | | | (400,519) | | | (309,210) | | | Provision for income taxes | ADJ 11 | | 49,012 | | | (30,400) | | | 18,612 | | | Income (loss) from continuing operations | | | 42,297 | | | (370,119) | | | (327,822) | | | Loss from discontinued operations, net of income tax | | | (6,905) | | | — | | | (6,905) | | | Gain on sale of discontinued operations, net of income tax | | | 11,957 | | | — | | | 11,957 | | | Net income (loss) | | | 47,349 | | | (370,119) | | | (322,770) | | | Less: Net income (loss) from continuing operations attributable to noncontrolling interest | | | 37,426 | | | (148,451) | | | (111,025) | | | Less: Net loss from discontinued operations attributable to noncontrolling interest | | | (2,884) | | | — | | | (2,884) | | | Net income (loss) attributable to Holdings | | | $ | 12,807 | | | $ | (221,668) | | | $ | (208,861) | | | | | | | | | | | Amounts attributable to common shares of Holdings: | | | | | | | | | Income (loss) from continuing operations | | | $ | 4,871 | | | $ | (221,668) | | | $ | (216,797) | | | Loss from discontinued operations, net of income tax | | | (4,021) | | | — | | | (4,021) | | | Gain on sale of discontinued operations, net of income tax | | | 11,957 | | | — | | | 11,957 | | | Net income (loss) attributable to Holdings | | | $ | 12,807 | | | $ | (221,668) | | | $ | (208,861) | | | Basic and fully diluted income (loss) per share attributable to Holdings (refer to Note K) | | | | | | | | | Continuing operations | | | (1.25) | | | (2.69) | | | (3.94) | | | Discontinued operations | | | 0.11 | | | — | | | 0.11 | | | | | $ | (1.14) | | | $ | (2.69) | | | $ | (3.83) | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2024 | | (in thousands) | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Cash flows from operating activities: | | | | | | | | | Net income | | | $ | 47,349 | | | $ | (370,119) | | | $ | (322,770) | | | Loss from discontinued operations, net of income tax | | | (6,905) | | | — | | | (6,905) | | | Gain on sale of discontinued operations, net of income tax | | | 11,957 | | | — | | | 11,957 | | | Income (loss) from continuing operations | | | 42,297 | | | (370,119) | | | (327,822) | | | Adjustments to reconcile net income (loss) to net cash used in operating activities: | | | | | | | | | Depreciation expense | | | 43,891 | | | — | | | 43,891 | | | Amortization expense - intangibles | ADJ 3 | | 99,760 | | | (4,943) | | | 94,817 | | | Amortization expense - inventory step-up | | | 5,295 | | | — | | | 5,295 | | | Amortization of debt issuance costs | | | 4,018 | | | — | | | 4,018 | | | Impairment expense | | | 8,182 | | | — | | | 8,182 | | | Loss on sale of Crosman | | | 24,218 | | | — | | | 24,218 | | | Noncontrolling stockholder stock based compensation | | | 16,345 | | | — | | | 16,345 | | | Provision for receivable and inventory reserves | | | (7,044) | | | 2,018 | | | (5,026) | | | Deferred taxes | | | (17,879) | | | 3,761 | | | (14,118) | | | Other | | | 1,171 | | | 585 | | | 1,756 | | | Changes in operating assets and liabilities, net of acquisitions: | | | | | | | | | Accounts receivable | ADJ 1 | | (117,742) | | | 102,802 | | | (14,940) | | | Inventories | ADJ 2 | | (229,365) | | | 188,456 | | | (40,909) | | | Other current and non-current assets | | | 3,132 | | | — | | | 3,132 | | | Accounts payable and accrued expenses | ADJ 4 | | 51,091 | | | (6,009) | | | 45,082 | | | Net cash used in operating activities - continuing operations | | | (72,630) | | | (83,449) | | | (156,079) | | | Net cash provided by operating activities - discontinued operations | | | 4,993 | | | — | | | 4,993 | | | Net cash used in operating activities | | | (67,637) | | | (83,449) | | | (151,086) | | | Cash flows from investing activities: | | | | | | | | | Acquisitions, net of cash acquired | | | (517,856) | | | — | | | (517,856) | | | Purchases of property and equipment | | | (56,701) | | | — | | | (56,701) | | | Proceeds from sale of businesses | | | 74,719 | | | — | | | 74,719 | | | Other investing activities | | | (4,296) | | | — | | | (4,296) | | | Net cash used in investing activities - continuing operations | | | (504,134) | | | — | | | (504,134) | | | Net cash provided by investing activities - discontinued operations | | | 81,684 | | | — | | | 81,684 | | | Net cash used in investing activities | | | (422,450) | | | — | | | (422,450) | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2024 | | (in thousands) | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Cash flows from financing activities: | | | | | | | | | Proceeds from the issuance of Trust common shares, net | | | 7,707 | | | — | | | 7,707 | | | Proceeds and expenses from issuance of Trust preferred shares, net | | | 114,914 | | | — | | | 114,914 | | | Purchase of treasury shares, net | | | (9,571) | | | — | | | (9,571) | | | Borrowings under credit facility | | | 585,000 | | | — | | | 585,000 | | | Repayments under credit facility | | | (475,000) | | | — | | | (475,000) | | | Repayments - Term Loan | | | (10,000) | | | — | | | (10,000) | | | Subsidiary financing arrangements - borrowings | ADJ 5 | | — | | | 153,646 | | | 153,646 | | | Subsidiary financing arrangements - repayments | ADJ 5 | | — | | | (70,196) | | | (70,196) | | | Distributions paid - common shares | | | (75,490) | | | — | | | (75,490) | | | Distributions paid - preferred shares | | | (25,458) | | | — | | | (25,458) | | | Net proceeds provided by noncontrolling shareholders | | | 41,947 | | | — | | | 41,947 | | | Purchase of noncontrolling interest | | | (4,490) | | | — | | | (4,490) | | | Distributions paid - Allocation Interests | | | (48,941) | | | — | | | (48,941) | | | Other | | | (4) | | | — | | | (4) | | | Net cash provided by financing activities | | | 100,614 | | | 83,450 | | | 184,064 | | | Foreign currency impact on cash | | | (1,278) | | | — | | | (1,278) | | | Net increase decrease in cash and cash equivalents | | | (390,751) | | | 1 | | | (390,750) | | | Cash and cash equivalents — beginning of period | | | 450,477 | | | (68) | | | 450,409 | | | Cash and cash equivalents — end of period | | | $ | 59,726 | | | $ | (67) | | | $ | 59,659 | |
| | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2023 | | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Assets | | | | | | | | | Current assets: | | | | | | | | | Cash and cash equivalents | | | 446,684 | | | (68) | | | 446,616 | | | Accounts receivable, net | ADJ 1 | | 308,183 | | | (122,946) | | | 185,237 | | | Inventories, net | ADJ 2 | | 723,194 | | | (200,685) | | | 522,509 | | | Prepaid expenses and other current assets | ADJ 2 | | 88,844 | | | (11,075) | | | 77,769 | | | | | | | | | | | Current assets of discontinued operations | | | 36,915 | | | — | | | 36,915 | | | Total current assets | | | 1,603,820 | | | (334,774) | | | 1,269,046 | | | Property, plant and equipment, net | | | 191,283 | | | — | | | 191,283 | | | Goodwill | ADJ 3 | | 859,907 | | | (86,338) | | | 773,569 | | | Intangible assets, net | ADJ 3 | | 879,078 | | | (70,734) | | | 808,344 | | | Other non-current assets | | | 195,010 | | | 6 | | | 195,016 | | | Non-current assets of discontinued operations | | | 87,883 | | | — | | | 87,883 | | | Total assets | | | $ | 3,816,981 | | | $ | (491,840) | | | $ | 3,325,141 | | | | | | | | | | | Liabilities and stockholders’ equity | | | | | | | | | Current liabilities: | | | | | | | | | Accounts payable | | | 91,089 | | | (381) | | | 90,708 | | | Accrued expenses | ADJ 4 | | 151,443 | | | 86,374 | | | 237,817 | | | | | | | | | | | Due to related parties (refer to Note Q) | | | 16,025 | | | — | | | 16,025 | | | Current portion, long-term debt | | | 10,000 | | | 1,661,879 | | | 1,671,879 | | | Subsidiary financing arrangements | ADJ 5 | | — | | | 100,741 | | | 100,741 | | | Other current liabilities | | | 34,812 | | | — | | | 34,812 | | | Current liabilities of discontinued operations | | | 8,986 | | | — | | | 8,986 | | | Total current liabilities | | | 312,355 | | | 1,848,613 | | | 2,160,968 | | | Deferred income taxes | | | 118,882 | | | (15,618) | | | 103,264 | | | Long-term debt (Refer to Note I) | | | 1,661,879 | | | (1,661,879) | | | — | | | Other non-current liabilities | | | 203,207 | | | — | | | 203,207 | | | Non-current liabilities of discontinued operations | | | 1,277 | | | — | | | 1,277 | | | Total liabilities | | | 2,297,600 | | | 171,116 | | | 2,468,716 | | | | | | | | | | | | | | | | | | | | | | | | | | | Stockholders’ equity | | | | | | | | Trust preferred shares, 50,000 authorized; 12,600 shares issued and outstanding at December 31, 2023 | | | | | | | | Series A preferred shares, no par value, 4,000 shares issued and outstanding at December 31, 2023 | | | 96,417 | | | — | | | 96,417 | | Series B preferred shares, no par value, 4,000 shares issued and outstanding at December 31, 2023 | | | 96,504 | | | — | | | 96,504 | | Series C preferred shares, no par value, 4,600 shares issued and outstanding at December 31, 2023 | | | 110,997 | | | — | | | 110,997 | | Trust common shares, no par value, 500,000 authorized; 75,753 shares issued and 75,270 shares outstanding at December 31, 2023 | | | 1,281,303 | | | — | | | 1,281,303 | | | Treasury shares, at cost | | | (9,339) | | | — | | | (9,339) | | | Accumulated other comprehensive income (loss) | | | 111 | | | (108) | | | 3 | | | Accumulated deficit | | | (249,243) | | | (396,982) | | | (646,225) | | | Total stockholders’ equity attributable to Holdings | | | 1,326,750 | | | (397,090) | | | 929,660 | | | Noncontrolling interest | ADJ 6 | | 175,875 | | | (265,866) | | | (89,991) | | | Noncontrolling interest of discontinued operations | | | 16,756 | | | — | | | 16,756 | | | Total stockholders’ equity | | | 1,519,381 | | | (662,956) | | | 856,425 | | | Total liabilities and stockholders’ equity | | | $ | 3,816,981 | | | $ | (491,840) | | | $ | 3,325,141 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2023 | | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Net revenues | ADJ 7 | | $ | 1,965,017 | | | $ | (275,097) | | | $ | 1,689,920 | | | Cost of revenues | ADJ 8 | | 1,132,014 | | | (116,814) | | | 1,015,200 | | | Gross profit | | | 833,003 | | | (158,283) | | | 674,720 | | | Operating expenses: | | | | | | | | | Selling, general and administrative expense | | | 502,013 | | | — | | | 502,013 | | | Management fees | | | 67,945 | | | — | | | 67,945 | | | Amortization expense | ADJ 3 | | 88,396 | | | (4,822) | | | 83,574 | | | Impairment expense | | | 89,400 | | | 1,197 | | | 90,597 | | | Operating income (loss) | | | 85,249 | | | (154,658) | | | (69,409) | | | Other income (expense): | | | | | | | | | Interest expense, net | ADJ 9 | | (105,179) | | | (4,713) | | | (109,892) | | | Amortization of debt issuance costs | | | (4,038) | | | — | | | (4,038) | | | | | | | | | | | Other income (expense), net | ADJ 10 | | 1,779 | | | (84,893) | | | (83,114) | | | Income (loss) from continuing operations before income taxes | | | (22,189) | | | (244,264) | | | (266,453) | | | Provision for income taxes | ADJ 11 | | 22,639 | | | (14,441) | | | 8,198 | | | Income (loss) from continuing operations | | | (44,828) | | | (229,823) | | | (274,651) | | | Income (loss) from discontinued operations, net of income tax | | | 24,208 | | | — | | | 24,208 | | | Gain on sale of discontinued operations, net of income tax | | | 283,025 | | | — | | | 283,025 | | | Net income | | | 262,405 | | | (229,823) | | | 32,582 | | | Less: Net income from continuing operations attributable to noncontrolling interest | | | 16,423 | | | (92,184) | | | (75,761) | | | Less: Net income (loss) from discontinued operations attributable to noncontrolling interest | | | (304) | | | — | | | (304) | | | Net income attributable to Holdings | | | $ | 246,286 | | | $ | (137,639) | | | $ | 108,647 | | | | | | | | | | | Amounts attributable to common shares of Holdings: | | | | | | | | | Loss from continuing operations | | | $ | (61,251) | | | $ | (137,639) | | | $ | (198,890) | | | Income from discontinued operations, net of income tax | | | 24,512 | | | — | | | 24,512 | | | Gain on sale of discontinued operations, net of income tax | | | 283,025 | | | — | | | 283,025 | | | Net income attributable to Holdings | | | $ | 246,286 | | | $ | (137,639) | | | $ | 108,647 | | | Basic and fully diluted income (loss) per share attributable to Holdings (refer to Note K) | | | | | | | | | Continuing operations | | | (1.81) | | | (1.76) | | | (3.57) | | | Discontinued operations | | | 4.27 | | | — | | | 4.27 | | | | | $ | 2.46 | | | $ | (1.76) | | | $ | 0.70 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2023 | | (in thousands) | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Cash flows from operating activities: | | | | | | | | | Net income | | | $ | 262,405 | | | $ | (229,823) | | | $ | 32,582 | | | Income from discontinued operations, net of income tax | | | 24,208 | | | — | | | 24,208 | | | Gain on sale of discontinued operations, net of income tax | | | 283,025 | | | — | | | 283,025 | | | Loss from continuing operations | | | (44,828) | | | (229,823) | | | (274,651) | | | Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | | | | Depreciation expense | | | 45,960 | | | — | | | 45,960 | | | Amortization expense - intangibles | ADJ 3 | | 88,396 | | | (4,822) | | | 83,574 | | | Amortization expense - inventory step-up | ADJ 3 | | 1,175 | | | (1,175) | | | — | | | Amortization of debt issuance costs | | | 4,038 | | | — | | | 4,038 | | | Impairment expense | | | 89,400 | | | 1,197 | | | 90,597 | | | Noncontrolling stockholder stock based compensation | | | 9,451 | | | — | | | 9,451 | | | Provision for receivable and inventory reserves | | | (62) | | | 3,235 | | | 3,173 | | | Deferred taxes | | | (19,800) | | | 4,797 | | | (15,003) | | | Other | | | 1,658 | | | (107) | | | 1,551 | | | Changes in operating assets and liabilities, net of acquisitions: | | | | | | | | | Accounts receivable | ADJ 1 | | (19,941) | | | 28,862 | | | 8,921 | | | Inventories | ADJ 2 | | (65,492) | | | 102,583 | | | 37,091 | | | Other current and non-current assets | | | (1,945) | | | — | | | (1,945) | | | Accounts payable and accrued expenses | ADJ 4 | | (72,903) | | | 33,814 | | | (39,089) | | | Net cash provided by (used in) operating activities - continuing operations | | | 15,107 | | | (61,439) | | | (46,332) | | | Net cash provided by operating activities - discontinued operations | | | 62,973 | | | — | | | 62,973 | | | Net cash provided by (used in) operating activities | | | 78,080 | | | (61,439) | | | 16,641 | | | Cash flows from investing activities: | | | | | | | | | | | | | | | | | Purchases of property and equipment | | | (55,016) | | | — | | | (55,016) | | | Proceeds from sale of businesses | | | 500,305 | | | — | | | 500,305 | | | Other investing activities | | | (1,742) | | | — | | | (1,742) | | | Net cash provided by investing activities - continuing operations | | | 443,547 | | | — | | | 443,547 | | | Net cash provided by investing activities - discontinued operations | | | 126,956 | | | — | | | 126,956 | | | Net cash provided by investing activities | | | 570,503 | | | — | | | 570,503 | | | Cash flows from financing activities: | | | | | | | | | Proceeds from the issuance of Trust common shares, net | | | 74,259 | | | — | | | 74,259 | | | | | | | | | | | Purchase of treasury shares, net | | | (9,339) | | | — | | | (9,339) | | | Borrowings under credit facility | | | 360,000 | | | — | | | 360,000 | | | Repayments under credit facility | | | (515,000) | | | — | | | (515,000) | | | Repayments - Term Loan | | | (10,000) | | | — | | | (10,000) | | | Subsidiary financing arrangements - borrowings | ADJ 5 | | — | | | 121,806 | | | 121,806 | | | Subsidiary financing arrangements - repayments | ADJ 5 | | — | | | (60,367) | | | (60,367) | | | Distributions paid - common shares | | | (71,967) | | | — | | | (71,967) | | | Distributions paid - preferred shares | | | (24,181) | | | — | | | (24,181) | | | Net proceeds provided by noncontrolling shareholders | | | 15,599 | | | — | | | 15,599 | | | Purchase of noncontrolling interest | | | (41,297) | | | — | | | (41,297) | | | Distributions to noncontrolling shareholders | | | (11,745) | | | — | | | (11,745) | | | Distributions paid - Allocation Interests | | | (26,475) | | | — | | | (26,475) | | | Other | | | (17) | | | — | | | (17) | | | Net cash provided by (used in) financing activities | | | (260,163) | | | 61,439 | | | (198,724) | | | Foreign currency impact on cash | | | 786 | | | — | | | 786 | | | Net increase (decrease) in cash and cash equivalents | | | 389,206 | | | — | | | 389,206 | | | Cash and cash equivalents — beginning of period | | | 61,271 | | | (68) | | | 61,203 | | | Cash and cash equivalents — end of period | | | $ | 450,477 | | | $ | (68) | | | $ | 450,409 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | | ADJ Reference | | As Reported (1) | | Adjustments | | As Restated | | Assets | | | | | | | | | Current assets: | | | | | | | | | Cash and cash equivalents | | | $ | 52,743 | | | (68) | | | 52,675 | | | Accounts receivable, net | ADJ 1 | | 288,901 | | | (85,224) | | | 203,677 | | | Inventories, net | ADJ 2 | | 657,494 | | | (96,044) | | | 561,450 | | | Prepaid expenses and other current assets | ADJ 2 | | 67,509 | | | (14,202) | | | 53,307 | | | | | | | | | | | Current assets of discontinued operations | | | 143,538 | | | — | | | 143,538 | | | Total current assets | | | 1,210,185 | | | (195,538) | | | 1,014,647 | | | Property, plant and equipment, net | | | 183,397 | | | — | | | 183,397 | | | Goodwill | ADJ 3 | | 950,111 | | | (86,337) | | | 863,774 | | | Intangible assets, net | ADJ 3 | | 965,624 | | | (74,358) | | | 891,266 | | | Other non-current assets | | | 161,850 | | | 7 | | | 161,857 | | | Non-current assets of discontinued operations | | | 378,464 | | | — | | | 378,464 | | | Total assets | | | $ | 3,849,631 | | | $ | (356,226) | | | $ | 3,493,405 | | | | | | | | | | | Liabilities and stockholders’ equity | | | | | | | | | Current liabilities: | | | | | | | | | Accounts payable | | | 80,447 | | | (3,362) | | | 77,085 | | | Accrued expenses | ADJ 4 | | 180,233 | | | 52,415 | | | 232,648 | | | | | | | | | | | Due to related parties (refer to Note Q) | | | 15,495 | | | — | | | 15,495 | | | Current portion, long-term debt | | | 10,000 | | | — | | | 10,000 | | | Subsidiary financing arrangements | ADJ 5 | | — | | | 48,160 | | | 48,160 | | | Other current liabilities | | | 33,957 | | | — | | | 33,957 | | | Current liabilities of discontinued operations | | | 39,700 | | | — | | | 39,700 | | | Total current liabilities | | | 359,832 | | | 97,213 | | | 457,045 | | | Deferred income taxes | | | 139,471 | | | (20,414) | | | 119,057 | | | Long-term debt | | | 1,824,468 | | | — | | | 1,824,468 | | | Other non-current liabilities | | | 139,072 | | | — | | | 139,072 | | | Non-current liabilities of discontinued operations | | | 24,826 | | | — | | | 24,826 | | | Total liabilities | | | 2,487,669 | | | 76,799 | | | 2,564,468 | | | | | | | | | | | | | | | | | | | | | | | | | | | Stockholders’ equity | | | | | | | | Trust preferred shares, 50,000 authorized; 12,600 shares issued and outstanding at December 31, 2022 | | | | | | | | Series A preferred shares, no par value, 4,000 shares issued and outstanding at December 31, 2022 | | | 96,417 | | | — | | | 96,417 | | Series B preferred shares, no par value, 4,000 shares issued and outstanding at December 31, 2022 | | | 96,504 | | | — | | | 96,504 | | Series C preferred shares, no par value, 4,600 shares issued and outstanding at December 31, 2022 | | | 110,997 | | | — | | | 110,997 | | Trust common shares, no par value, 500,000 authorized; 72,203 shares issued and outstanding at December 31, 2022 | | | 1,207,044 | | | — | | | 1,207,044 | | | Accumulated other comprehensive income (loss) | | | (1,136) | | | — | | | (1,136) | | | Accumulated deficit | | | (372,906) | | | (259,343) | | | (632,249) | | | Total stockholders’ equity attributable to Holdings | | | 1,136,920 | | | (259,343) | | | 877,577 | | | Noncontrolling interest | ADJ 6 | | 187,444 | | | (173,682) | | | 13,762 | | | Noncontrolling interest of discontinued operations | | | 37,598 | | | — | | | 37,598 | | | Total stockholders’ equity | | | 1,361,962 | | | (433,025) | | | 928,937 | | | Total liabilities and stockholders’ equity | | | $ | 3,849,631 | | | $ | (356,226) | | | $ | 3,493,405 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2022 | | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Net revenues | ADJ 7 | | $ | 1,920,695 | | | $ | (163,886) | | | $ | 1,756,809 | | | Cost of revenues | ADJ 8 | | 1,192,073 | | | (84,695) | | | 1,107,378 | | | Gross profit | | | 728,622 | | | (79,191) | | | 649,431 | | | Operating expenses: | | | | | | | | | Selling, general and administrative expense | | | 441,628 | | | — | | | 441,628 | | | Management fees | | | 62,104 | | | — | | | 62,104 | | | Amortization expense | ADJ 3 | | 77,237 | | | (4,584) | | | 72,653 | | | Impairment expense | ADJ 3 | | — | | | 28,602 | | | 28,602 | | | Operating income (loss) | | | 147,653 | | | (103,209) | | | 44,444 | | | Other income (expense): | | | | | | | | | Interest expense, net | ADJ 9 | | (83,481) | | | (1,778) | | | (85,259) | | | Amortization of debt issuance costs | | | (3,740) | | | — | | | (3,740) | | | Loss on debt extinguishment | | | (534) | | | — | | | (534) | | | Other income (expense), net | ADJ 10 | | (2,314) | | | (66,533) | | | (68,847) | | | Income (loss) from continuing operations before income taxes | | | 57,584 | | | (171,520) | | | (113,936) | | | Provision for income taxes | ADJ 11 | | 41,367 | | | (11,874) | | | 29,493 | | | Income (loss) from continuing operations | | | 16,217 | | | (159,646) | | | (143,429) | | | Income from discontinued operations, net of income tax | | | 25,831 | | | — | | | 25,831 | | | Gain on sale of discontinued operations, net of income tax | | | 9,393 | | | — | | | 9,393 | | | Net income | | | 51,441 | | | (159,646) | | | (108,205) | | | Less: Net loss from continuing operations attributable to noncontrolling interest | | | 13,793 | | | (64,033) | | | (50,240) | | | Less: Net income (loss) from discontinued operations attributable to noncontrolling interest | | | 1,258 | | | — | | | 1,258 | | | Net income (loss) attributable to Holdings | | | $ | 36,390 | | | $ | (95,613) | | | $ | (59,223) | | | | | | | | | | | Amounts attributable to common shares of Holdings: | | | | | | | | | Income (loss) from continuing operations | | | $ | 2,424 | | | $ | (95,613) | | | $ | (93,189) | | | Income from discontinued operations, net of income tax | | | 24,573 | | | — | | | 24,573 | | | Gain on sale of discontinued operations, net of income tax | | | 9,393 | | | — | | | 9,393 | | | Net income (loss) attributable to Holdings | | | $ | 36,390 | | | $ | (95,613) | | | $ | (59,223) | | | Basic and fully diluted income (loss) per share attributable to Holdings (refer to Note K) | | | | | | | | | Continuing operations | | | (0.53) | | | (1.28) | | | (1.81) | | | Discontinued operations | | | 0.43 | | | 0.01 | | | 0.44 | | | | | $ | (0.10) | | | $ | (1.27) | | | $ | (1.37) | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2022 | | (in thousands) | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Cash flows from operating activities: | | | | | | | | | Net income (loss) | | | $ | 51,441 | | | $ | (159,646) | | | $ | (108,205) | | | Income from discontinued operations, net of income tax | | | 25,831 | | | — | | | 25,831 | | | Gain on sale of discontinued operations, net of income tax | | | 9,393 | | | — | | | 9,393 | | | Income (loss) from continuing operations | | | 16,217 | | | (159,646) | | | (143,429) | | | Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | | | | Depreciation expense | | | 39,476 | | | — | | | 39,476 | | | Amortization expense - intangibles | ADJ 3 | | 77,237 | | | (4,584) | | | 72,653 | | | Amortization expense - inventory step-up | ADJ 3 | | 6,113 | | | (5,483) | | | 630 | | | Amortization of debt issuance costs | | | 3,740 | | | — | | | 3,740 | | | Impairment expense | | | — | | | 28,602 | | | 28,602 | | | Loss on debt extinguishment | | | 534 | | | — | | | 534 | | | Noncontrolling stockholder stock based compensation | | | 10,519 | | | — | | | 10,519 | | | Provision for receivable and inventory reserves | | | (689) | | | 4,238 | | | 3,549 | | | Deferred taxes | | | 3,023 | | | — | | | 3,023 | | | Other | | | 2,338 | | | 4 | | | 2,342 | | | Changes in operating assets and liabilities, net of acquisitions: | | | | | | | | | Accounts receivable | ADJ 1 | | (43,420) | | | 59,672 | | | 16,252 | | | Inventories | ADJ 2 | | (146,220) | | | 20,125 | | | (126,095) | | | Other current and non-current assets | | | (12,772) | | | — | | | (12,772) | | | Accounts payable and accrued expenses | ADJ 4 | | (7,299) | | | 38,720 | | | 31,421 | | | Net cash provided by (used in) operating activities - continuing operations | | | (51,203) | | | (18,352) | | | (69,555) | | | Net cash provided by operating activities - discontinued operations | | | 22,910 | | | — | | | 22,910 | | | Net cash provided by (used in) operating activities | | | (28,293) | | | (18,352) | | | (46,645) | | | Cash flows from investing activities: | | | | | | | | | Acquisitions, net of cash acquired | | | (569,028) | | | — | | | (569,028) | | | Purchases of property and equipment | | | (60,183) | | | — | | | (60,183) | | | Proceeds from sale of businesses | | | 9,393 | | | — | | | 9,393 | | | Other investing activities | | | (1,102) | | | — | | | (1,102) | | | Net cash provided by (used in) investing activities - continuing operations | | | (620,920) | | | — | | | (620,920) | | | Net cash provided by (used in) investing activities - discontinued operations | | | (5,803) | | | — | | | (5,803) | | | Net cash provided by (used in) investing activities | | | (626,723) | | | — | | | (626,723) | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2022 | | (in thousands) | ADJ Reference | | As Reported | | Adjustments | | As Restated | | Cash flows from financing activities: | | | | | | | | | Proceeds from the issuance of Trust common shares, net | | | 83,851 | | | — | | | 83,851 | | | | | | | | | | | Issuance of Term Loan | | | 400,000 | | | — | | | 400,000 | | | Borrowings under credit facility | | | 268,000 | | | — | | | 268,000 | | | Repayments under credit facility | | | (113,000) | | | — | | | (113,000) | | | Repayments - Term Loan | | | (5,000) | | | — | | | (5,000) | | | Subsidiary financing arrangements - borrowings | ADJ 5 | | — | | | 60,499 | | | 60,499 | | | Subsidiary financing arrangements - repayments | ADJ 5 | | — | | | (42,147) | | | (42,147) | | | Distributions paid - common shares | | | (70,845) | | | — | | | (70,845) | | | Distributions paid - preferred shares | | | (24,181) | | | — | | | (24,181) | | | Net proceeds provided by noncontrolling shareholders | | | 1,312 | | | — | | | 1,312 | | | Net proceeds provided by noncontrolling shareholders | | | 35,263 | | | — | | | 35,263 | | | Debt issuance costs | | | (5,276) | | | — | | | (5,276) | | | Distributions to noncontrolling shareholders | | | (11,292) | | | — | | | (11,292) | | | | | | | | | | | Purchase of noncontrolling interest | | | (1,957) | | | — | | | (1,957) | | | Other | | | 10 | | | — | | | 10 | | | Net cash provided by (used in) financing activities | | | 556,885 | | | 18,352 | | | 575,237 | | | Foreign currency impact on cash | | | (1,331) | | | — | | | (1,331) | | | Net increase (decrease) in cash and cash equivalents | | | (99,462) | | | — | | | (99,462) | | | Cash and cash equivalents — beginning of period | | | 160,733 | | | (68) | | | 160,665 | | | Cash and cash equivalents — end of period | | | $ | 61,271 | | | $ | (68) | | | $ | 61,203 | |
Lugano - Adjustments to Lugano Purchase Price Allocation In addition to the restatement of the consolidated financial statements for the fiscal years ended December 31, 2024, 2023 and 2022, the Lugano Investigation also identified unrecorded financing arrangements and misstatements in revenue and cost of revenues in the period from acquisition of Lugano on September 3, 2021 through December 31, 2021, and errors in the balances of accounts receivable, inventory, other current assets, accounts payable, accrued expenses and unrecorded financing arrangements as of September 3, 2021 and the periods ended September 30, 2021 and December 31, 2021. As a result, the Company reperformed the September 3, 2021 purchase price allocation related to the acquisition of Lugano. The results of the revised purchase price allocation are presented below. | | | | | | | | | | | | | | | | | | | | | | | Purchase Price Allocation - 9/3/21 | | | | Purchase Price Allocation - 9/3/21 | | | As Reported | | Adjustments | | As Restated | | Purchase consideration | | $ | 265,134 | | | — | | | $ | 265,134 | | | | | | | | | | Fair value of identifiable assets acquired: | | | | | | | | Cash | | $ | 1,433 | | | $ | (68) | | | $ | 1,365 | | | Accounts Receivable | | 20,954 | | | (17,602) | | | 3,352 | | | Inventory | | 95,213 | | | (58,505) | | | 36,708 | | | Property, plant & equipment | | 3,135 | | | — | | | 3,135 | | | Intangible assets | | 82,454 | | | (78,155) | | | 4,299 | | | Other current and noncurrent assets | | 9,093 | | | (2,235) | | | 6,858 | | | Total identifiable assets | | 212,282 | | | (156,565) | | | 55,717 | | | | | | | | | | Fair value of liabilities assumed: | | | | | | | | Current liabilities | | 7,187 | | | 39,362 | | | 46,549 | | | Other liabilities | | 3,175 | | | — | | | 3,175 | | | Deferred tax liabilities | | 23,123 | | | (21,693) | | | 1,430 | | | Total liabilities | | 33,485 | | | 17,669 | | | 51,154 | | | | | | | | | | Net identifiable assets acquired | | 178,797 | | | (174,234) | | | 4,563 | | | | | | | | | | Goodwill | | $ | 86,337 | | | $ | 174,234 | | | $ | 260,571 | |
| | | | | | | | | | | | | | | | | | | | | | Intangible Assets | | Fair Value | | | | Fair Value | | | As Reported | | Adjustments | | As Restated | | | | | | | | | Tradename | | $ | 48,433 | | | $ | (48,207) | | | $ | 226 | | | Customer Relationships | | 34,021 | | | (29,948) | | | 4,073 | | | | $ | 82,454 | | | $ | (78,155) | | | $ | 4,299 | |
Lugano - Interim Impairment Testing The Company performed an interim impairment test of goodwill at Lugano as of December 31, 2021. Historical information that had previously been relied on by the Company in preparing projected financial information for the period ending December 31, 2021 proved to be inaccurate, and operating results were below forecast amounts that were used as the basis for the purchase price allocation performed when Lugano was acquired. Therefore the Company determined that a triggering event had occurred. The Company performed the quantitative impairment test using an income approach. The prospective information used in the income approach considered macroeconomic data, industry and reporting unit specific facts and circumstances and was our best estimate of operational results and cash flows for the Lugano reporting unit as of the date of our impairment testing. The discount rate used in the income approach was 12.0% The results of the quantitative impairment testing indicated that the fair value of the Lugano reporting unit did not exceed its carrying value, resulting in goodwill impairment expense of $237.2 million in the year ended December 31, 2021.
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