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Note B - Acquisitions

12 Months Ended

Sep. 28, 2019

Business Combination Disclosure [Text Block]

NOTE B – ACQUISITIONS

On December 30, 2016, we acquired Hill & Valley Inc., a premium bakery located in Rock Island, IL for approximately $31 million. Hill & Valley, with sales of over $45 million annually, is a manufacturer of a variety of pre-baked cakes, cookies, pies, muffins and other desserts selling to retail in-store bakeries. Hill & Valley is a brand of Sugar Free and No Sugar Added pre-baked in-store bakery items. Additionally, Hill & Valley sustains strategic private labeling partnerships with retailers nationwide. Sales and operating income of Hill & Valley included in our operating results for 2018 were $59.9 million and $2.4 million, respectively; and for 2017 were $35.8 million and $653,000, respectively.

On May 22, 2017, we acquired an ICEE distributor doing business in Georgia and Tennessee for approximately $11 million. Sales of the acquired business included in our operating results for 2018 and 2017 were $3.5 million and $1.7 million, respectively.

On August 16, 2017, we acquired Labriola Baking Company, a bakery of breads and artisan soft pretzels located in Alsip, IL for approximately $6 million. Labriola Bakery, with sales of approximately $17 million annually, is a manufacturer of pre-baked breads, rolls and soft pretzels for retail in-store bakery and foodservice outlets nationwide. Sales of Labriola included in our operating results for 2018 and 2017 were $14 million and $2 million, respectively.

Acquisition costs of $1,070,000 for the acquisitions are included in other general expense in the consolidated statements of earnings for the year ended September 29, 2018.

The purchase price allocations for the three acquisitions are as follows:

ICEE

Labriola

Hill & Valley

Distributor

Baking Co

(in thousands)

Accounts Receivable, net
$ 4,054 $ 340 $ 1,165

Inventories
6,088 217 779

Prepaid expenses and other
122 25 102

Property, plant & equipment, net
4,398 2,277 3,598

Trade Names
2,090 - 388

Customer Relationships
13,000 57 -

Distibution rights
- 6,900 -

Goodwill
14,175 1,236 658

Covenant not to compete
670 - 188

Accounts Payable
(2,260 ) (79 ) (1,110 )

Accrued Liabilities
(2,162 ) (26 ) (128 )

Accrued compensation expense
(650 ) - -

Other long-term liabilities
(1,782 ) - -

Deferred income taxes
(6,632 ) - -

Purchase Price
$ 31,111 $ 10,947 $ 5,640

The goodwill and intangible assets acquired in the business combinations are recorded at estimated fair value. To measure fair value for such assets, we use techniques including discounted expected future cash flows (Level 3 input). The goodwill recognized is attributable to the assembled workforce of each acquired business and certain other strategic intangible assets that do not meet the requirements for recognition separate and apart from goodwill.

Our unaudited proforma results, giving effect to these three acquisitions and assuming an acquisition date of September 28, 2014, would have been:

Fiscal Year Ended

(in thousands)

September 30,

2017

(53 weeks)

Unaudited

Net Sales
$ 1,116,599

Net Earnings
$ 79,082