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Note 2 - Acquisition of JSI Store Fixtures | 12 Months Ended
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Jun. 30, 2022
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | NOTE 2 — ACQUISITION OF JSI STORE FIXTURES On May 21, 2021, the Company acquired 100% of the issued and outstanding shares of capital stock of JSI Store Fixtures (JSI), a Maine-based provider of retail commercial display solutions, for $94.3 million. The acquisition of JSI expands the Company’s total addressable markets within the grocery and refueling and convenience store verticals. The Company funded the acquisition with a combination of cash on hand and $71.6 million from the credit facility The Company accounted for this transaction as a business combination. The Company preliminarily allocated the purchase price of approximately $93.7 million, which included an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values was recorded as goodwill. During the second quarter of fiscal 2022, goodwill increased by $0.6 million. The increase is the net difference between the original estimate of recovery from the pre-funded working capital and the final cash received of $0.5 million. During the fourth quarter of fiscal 2022, goodwill, deferred income taxes, and current tax liabilities were adjusted related to the finalization of pre-acquisition tax filings. The final allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of May 21, 2021, is as follows:
|  | May 21, 2021 as initially reported |  |  | Adjustments |  |  | May 21, 2021 as adjusted |
Cash and Cash Equivalents |  | $ | 4,067 |  |  |  |  |  |  | $ | 4,067 |
Account Receivable |  |  | 9,252 |  |  |  | (280 | ) |  |  | 8,972 |
Inventories |  |  | 9,898 |  |  |  |  |  |  |  | 9,898 |
Property, Plant and Equipment |  |  | 7,076 |  |  |  |  |  |  |  | 7,076 |
Other Assets |  |  | 7,440 |  |  |  | (2,062 | ) |  |  | 5,378 |
Intangible Assets |  |  | 45,760 |  |  |  |  |  |  |  | 45,760 |
Accounts Payable |  |  | (4,199 | ) |  |  |  |  |  |  | (4,199 | )
Accrued Liabilities |  |  | (8,434 | ) |  |  | (225 | ) |  |  | (8,659 | )
Deferred Tax Liability |  |  | (10,583 | ) |  |  | 1,925 |  |  |  | (8,658 | )
Identifiable Net Assets |  |  | 60,277 |  |  |  | (642 | ) |  |  | 59,635 |
Goodwill |  |  | 33,415 |  |  |  | 1,242 |  |  |  | 34,657 |
Net Purchase Consideration |  | $ | 93,692 |  |  | $ | 600 |  |  | $ | 94,292 |
The gross amount of accounts receivable is $9.3 million. Goodwill recorded from the acquisition of JSI is attributable to the impact of the positive cash flow from JSI in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, technology assets, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition
|  | Estimated |  |  | Estimated Useful |
(In thousands) |  | Fair Value |  |  | Life (Years) |
Tradename |  | $ | 8,680 |  |  | Indefinite life |
Technology asset |  |  | 4,900 |  |  |  | 7 |
Non-compete |  |  | 260 |  |  |  | 5 |
Customer relationship |  |  | 31,920 |  |  |  | 20 |
|  | $ | 45,760 |  |  |  |  |
The fair market value write-up of the property, plant, and equipment totaled $1.8 million. Transaction costs related to the acquisition totaled $2.9 million in the fourth quarter of fiscal 2021. JSI’s post-acquisition results of operations for the period from May 21, 2021, through June 30, 2021, are included in the Company’s Consolidated Statements of Operations. Since the acquisition date, net sales of JSI for the period from May 21, 2021, through June 30, 2021, were $9.1 million and operating income was $0.7 million. The operating results of JSI are included in the Display Solutions Segment. Pro Forma Impact of the Acquisition of JSI (unaudited) The following table represents unaudited pro forma results of operations and gives effect to the acquisition of JSI as if the transaction had occurred on July 1, 2019. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of JSI. The unaudited pro forma financial information for the twelve months ended June 30, 2021, and June 30, 2020, is prepared using the acquisition method of accounting and has been adjusted to give effect to the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro forma operating income of $19.3 million for fiscal 2021 excludes acquisition-related expenses of $2.9 million.
|  |  | Twelve Months Ended
|  |  | June 30
(In thousands, unaudited) |  | 2021 |  | 2020
Net sales |  | $ 391,000 |  | $ 362,541
Gross profit |  | $ 97,947 |  | $ 86,399
Operating income |  | $ 19,312 |  | $ 13,878

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