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Note 2 - Acquisitions and Divestiture | 3 Months Ended
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Mar. 31, 2023
Notes to Financial Statements |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] |
(2) | Acquisition and Divestiture
Molded Fiber On July 26, 2022, pursuant to a share purchase agreement and related agreements, the Company sold its former wholly owned subsidiary Moulded Fiber Technology, Inc. (“MFT”) and related real estate in Iowa to CKF USA INCORPORATED (“CKF”) (a Delaware Corporation) for approximately $31.5 million (including a working capital adjustment of approximately $0.1 million that decreased the total consideration). The net book value of the assets sold were approximately $15.4 million and the Company recorded a net gain on sale of approximately $15.7 million, which was recorded in the year ended December 31, 2022. $2.6 million of the purchase price is being held in escrow to indemnify CKF against certain claims, losses, and liabilities. The Securities Purchase Agreement contains customary representations, warranties, and covenants customary for transactions of this type. Proceeds from the sale were used to pay down debt on the Company’s revolving credit facility, as well as income tax obligations on the related gain. Advant Medical On March 16, 2022 the Company purchased 100% of the outstanding shares of common stock of Advant Medical, Ltd., Advant Medical Inc. and Advant Medical Costa Rica, Limitada, (together Advant), pursuant to a Stock Purchase Agreement and related agreements, for an aggregate purchase price of €19.0 million in cash along with a working capital adjustment at closing. Total consideration in U.S. Dollars amounted to approximately $21.2 million. The purchase price was subject to additional adjustment based upon Advant’s final working capital at closing. A portion of the purchase price is being held in escrow to indemnify the Company against certain claims, losses, and liabilities. The Stock Purchase Agreement contains customary representations, warranties, and covenants customary for transactions of this type. Founded in 1993, Advant is headquartered in Galway, Ireland, with operations in Costa Rica and partner manufacturing in Mexico. Advant is a developer and manufacturer of Class I, II, and III medical devices and packaging, primarily for catheters and guide wires. The following table summarizes the allocation of consideration paid to the acquisition date fair value of the assets acquired and liabilities assumed based on management’s estimates of fair value (in thousands):
Fair value of considerations transferred |  |  |  |
Cash paid at closing |  | $ | 23,608 |
Other liability |  |  | 395 |
Cash from Advant |  |  | (2,840 | )
Total consideration |  | $ | 21,163 |
Purchase price allocation |  |  |  |
Accounts receivable |  | $ | 2,299 |
Inventory |  |  | 2,410 |
Other current assets |  |  | 213 |
Property, plant, and equipment |  |  | 5,704 |
Customer contracts & relationships |  |  | 2,925 |
Intellectual property |  |  | 2,127 |
Non-compete agreement |  |  | 259 |
Lease right of use assets |  |  | 289 |
Other assets |  |  | 41 |
Goodwill |  |  | 7,140 |
Total identifiable assets |  | $ | 23,407 |
Accounts payable |  |  | (772 | )
Accrued expenses |  |  | (668 | )
Income taxes |  |  | (66 | )
Deferred taxes |  |  | (449 | )
Lease liabilities |  |  | (289 | )
Net assets acquired |  | $ | 21,163 |
Acquisition costs associated with the transaction through the first quarter of 2022 were approximately $669 thousand, of which $639 thousand was charged to expense in the quarter ended March 31, 2022 and $30 thousand was charged to expense in the year ended December 31, 2021. These costs were primarily for legal services, valuation services and stamp duty filings and are reflected on the face of the condensed consolidated statements of income and comprehensive income. The amount of revenue and earnings of Advant recognized since the acquisition date through the first quarter of 2022 was approximately $824 thousand and $63 thousand, respectively, and is included in the condensed consolidated statements of income and comprehensive income for the period ended March 31, 2022. Pro-forma statements The following table contains an unaudited pro forma condensed consolidated statement of operations for the three-month period ended March 31, 2022, as if the Advant acquisition had occurred at the beginning of 2022 (in thousands):
|  | Three-month Period Ended |
|  | March 31, 2022 |
|  | (Unaudited) |
Sales |  | $ | 75,469 |
Operating income |  | $ | 7,023 |
Net income |  | $ | 5,346 |
Earnings per share: |  |  |  |
Basic |  | $ | 0.71 |
Diluted |  | $ | 0.70 |
The above unaudited pro forma information is presented for illustrative purposes only and may not be indica‐tive of the results of operations that would have occurred had both acquisitions occurred as presented. In addition, future results may vary significantly from the results reflected in such pro forma information.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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