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Acquisitions
 6 Months Ended
Oct. 29, 2016
Acquisitions  
Acquisitions

 

Note 2: Acquisitions

 

In the second quarter of fiscal 2017, we acquired the assets of two independent operators of four La-Z-Boy Furniture Galleries® stores in Canada for $11.9 million, composed of $10.7 million of cash and $1.2 million of forgiveness of these dealers’ accounts receivable. As part of these acquisitions, we recorded a contingent consideration liability of $2.8 million based on management’s assumptions of the operating performance for some of these stores over the next three fiscal years. We began including these stores in our Retail segment results upon acquisition.

 

During the first quarter of fiscal 2017, we acquired the assets of an independent operator of one La-Z-Boy Furniture Galleries® store in Reno, Nevada for $5.3 million. We began including this store in our Retail segment results upon acquisition.

 

Prior to these acquisitions, we licensed the exclusive right to own and operate La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in those markets to the dealers whose assets we acquired. We reacquired these rights when we purchased the dealers’ other assets. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded indefinite-lived intangible assets of $3.2 million related to the reacquired rights. We also recognized $10.2 million of goodwill, which primarily relates to the expected synergies resulting from the integration of the acquired stores and the anticipated future benefits. We recorded the goodwill and other intangible assets in our Retail segment and will amortize and deduct them for federal income tax purposes over 15 years.

 

We based the purchase price allocations on fair values at the dates of acquisition and summarize them in the following table:

 

(Unaudited, amounts in thousands)

 

10/29/16

 

Current assets

 

$
7,721

 

Goodwill and other intangible assets

 
13,374

 

Property, plant and equipment, net

 
648

 

 

 

 

 

Total assets acquired

 
21,743

 

 

 

 

 

Current liabilities

 
(1,731

)

Contingent consideration liability

 
(2,825

)

 

 

 

 

Total liabilities acquired

 
(4,556

)

 

 

 

 

 

 

 

 

Net assets acquired

 

$
17,187

 

 

 

 

 

 

 

Since the impact of these acquisitions on our results of operations was not material, pro-forma financial information is not required.