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Business Acquisition | 12 Months Ended
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Jan. 02, 2021
Business Combinations [Abstract] |
BUSINESS ACQUISITION | 3. BUSINESS ACQUISITION Acquisition of Balboa Water Group On November 6, 2020, the Company completed the acquisition of Balboa Water Group, LLC (“Balboa”), an innovative market leader of electronic controls for the health and wellness industry with proprietary and patented technology that enables end-to-end electronic control systems for therapy bath and spas. Pursuant to the Agreement and Plan of Merger (the “Purchase Agreement”), the Company acquired all of the outstanding equity interests of BWG Holdings I Corp., the owner of 100% of the share capital of Balboa. The acquisition was completed for cash consideration totaling $223,158 and was financed with cash on hand and borrowings on the Company’s credit facility. The acquisition enables Helios to enter new and adjacent, high growth markets with a robust complementary product portfolio and diversifies Helios’s end markets, customers and product offerings while enhancing scale, addressable market and innovation in electronic control systems. The results of Balboa’s operations are reported in the Company’s Electronics segment and have been included in the Consolidated Financial Statements since the acquisition date. 63 The Purchase Agreement allows for future payments to the sellers for certain tax benefits realized, related to the pre-acquisition period, through tax periods ending on or before December 31, 2023. The estimated fair value of the contingent liability was determined to be $1,919, as of the acquisition date. The fair value of total purchase consideration consisted of the following:
Cash |  | $ | 223,158 |
Post closing adjustment receivable, net |  |  | (431 | )
Acquisition date fair value of contingent consideration |  |  | 1,919 |
Total purchase consideration |  |  | 224,646 |
Less: cash acquired |  |  | (6,129 | )
Total purchase consideration, net of cash acquired |  | $ | 218,517 |
The purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the acquisition. As additional information becomes available, as of the acquisition date, management will finalize its analysis of the estimated fair value of the identified intangible assets and tax related items. As management completes its evaluation, the preliminary purchase price allocation may be revised during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes to the fair values of the tangible and intangible assets acquired and liabilities assumed may be material. The preliminary allocation of the total purchase price, net of cash acquired, is as follows:
Accounts receivable |  | $ | 28,328 |
Inventories |  |  | 24,807 |
Property, plant and equipment |  |  | 12,562 |
Goodwill |  |  | 76,031 |
Intangible assets |  |  | 128,000 |
Other assets |  |  | 12,233 |
Total assets acquired |  |  | 281,961 |
Accounts payable |  |  | 17,840 |
Other accrued expenses and current liabilities |  |  | 11,219 |
Deferred income taxes |  |  | 23,823 |
Other noncurrent liabilities |  |  | 10,562 |
Total liabilities assumed |  |  | 63,444 |
Fair value of net assets acquired |  | $ | 218,517 |
Goodwill is primarily attributable to Balboa’s assembled workforce and anticipated synergies and economies of scale expected from the operations of the combined company. The synergies included certain cost savings, operating efficiencies, access to key end markets, and strategic benefits to be achieved as a result of the acquisition. Goodwill of $6,436 is expected to be deductible for tax purposes. Transaction costs of $6,644 incurred in connection with the acquisition are included in selling, engineering and administrative expenses in the Consolidated Statement of Operations for the year ended January 2, 2021. Net sales and loss before income taxes of Balboa included in the Consolidated Statement of Operations for the period from acquisition date through January 2, 2021 totaled $26,057 and $1,547, respectively. Included in Balboa’s loss for the period are $1,874 of charges related to the purchase accounting effects of inventory step up to fair value and $4,041 of amortization of acquisition related intangible assets. 64 The preliminary fair value of identified intangible assets and their respective useful lives are as follows:
|  | Fair Value |  |  | Weighted- Average Amortization Periods (Yrs) |
Trade name |  | $ | 22,000 |  |  |  | 18 |
Technology |  |  | 13,000 |  |  |  | 8 |
Customer relationships |  |  | 85,000 |  |  |  | 25 |
Sales order backlog |  |  | 8,000 |  |  |  | 0.5 |
Identified intangible assets |  | $ | 128,000 |  |  |  | 21 |
Unaudited Pro Forma Information The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if Balboa had been acquired as of the beginning of 2019. The pro forma information includes adjustments to amortization and depreciation for intangible assets and property, plant, and equipment and interest expense to reflect the borrowings of the combined entity. Non-recurring pro forma adjustments directly attributable to the Balboa acquisition included in the pro forma information presented below include the purchase accounting effect of inventory step up to fair value of $1,874, transaction costs for both entities totaling $7,239, other acquisition related costs of Balboa in 2019 of $1,683, other non-recurring costs of Balboa incurred in 2019 of $1,471 and amortization of sales order backlog intangible asset totaling $8,000. The pro forma information does not reflect any operating efficiencies or potential cost savings that may result from the acquisitions. Accordingly, the pro forma information is for illustrative purposes only and is not intended to present or be indicative of the actual results of operations of the combined company that may have been achieved had the acquisition actually occurred at the beginning of 2019, nor is it intended to represent or be indicative of future results of operations of the combined business. Consequently, actual results will differ from the unaudited pro forma information presented below:
|  | Fiscal Year |
|  | 2020 |  |  | 2019 |
Net sales |  | $ | 638,288 |  |  | $ | 667,524 |
Net income |  |  | 30,332 |  |  |  | 54,487 |
Basic and diluted net income per common share |  |  | 0.95 |  |  |  | 1.70 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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