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Note 2 - Acquisitions | 6 Months Ended
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Jul. 02, 2023
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
2. | ACQUISITIONS
In 2022, the Company completed three acquisitions. These acquisitions are expected to enhance the Company's portfolio of products and services in the automotive aftermarket and automotive safety solutions market. The Company accounts for acquisitions using the acquisition method, and accordingly, the purchase price has been allocated based upon the fair value of the assets acquired and liabilities assumed. The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the Company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date. Goodwill generated by the acquisitions is primarily attributable to the strong market position of the entities acquired. Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions were for 100 percent of the acquired business and are reported in the Consolidated Statements of Cash Flows, net of acquired cash and cash equivalents. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are typically expensed in the periods in which the costs are incurred and are recorded in acquisition and restructuring costs. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. In 2022, the Company acquired substantially all the assets of John's Ind., Inc. ("John's"), Southern Kentucky Classics ("SKC"), and Vesta Motorsports USA, Inc., doing business as RaceQuip ("RaceQuip"). These acquisitions were immaterial business combinations. Cash paid for the three acquisitions, net of cash acquired, was $14,863, and was funded with borrowings from the Company's credit facility and cash on hand. The acquisitions resulted in both amortizable and nonamortizable intangibles and goodwill totaling $10,553. The goodwill and intangibles generated as a result of these acquisitions are deductible for income tax purposes. The final allocation of the purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:
|  |  |  |  |  | Measurement |  |  |  |  |
|  | 2022 |  |  | Period |  |  | 2022 |
|  | (as initially reported) |  |  | Adjustments |  |  | (as adjusted) |
Accounts receivable |  | $ | 959 |  |  | $ | (397 | ) |  | $ | 562 |
Inventory |  |  | 3,481 |  |  |  | 146 |  |  |  | 3,627 |
Property, plant and equipment |  |  | 275 |  |  |  | — |  |  |  | 275 |
Other assets |  |  | 1,132 |  |  |  | (1,108 | ) |  |  | 24 |
Tradenames |  |  | 1,689 |  |  |  | — |  |  |  | 1,689 |
Customer relationships |  |  | 1,512 |  |  |  | — |  |  |  | 1,512 |
Goodwill |  |  | 5,858 |  |  |  | 1,494 |  |  |  | 7,352 |
Accounts payable |  |  | (25 | ) |  |  | (133 | ) |  |  | (158 | )
Accrued liabilities |  |  | (18 | ) |  |  | (2 | ) |  |  | (20 | )
|  | $ | 14,863 |  |  | $ | — |  |  | $ | 14,863 |
The fair value of the acquired customer relationship intangible asset was estimated using the excess earnings approach. The customer relationship intangible asset is being amortized based on the attrition rate of customers which was determined to be 20 years. The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

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