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Note 2 - Acquisition of O Olive | 3 Months Ended
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Aug. 27, 2017
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
2 . | Acquisition of O Olive
On March 1, 2017, the Company purchased substantially all of the assets of O Olive for $2.5 million in cash plus contingent consideration of up to $7.5 million over the next three years based upon O Olive achieving certain earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets. All accounting for this acquisition is final. The potential earn out payment up to $7.5 million is based on O Olive ’s cumulative EBITDA over the Company’s fiscal years 2018 through 2020. At the end of each fiscal year , beginning in fiscal year 2018, the former owners of O Olive will earn the equivalent of the EBITDA achieved by O Olive for that fiscal year up to $4.6 million over the three year period. The former owners can also earn an additional $2.9 million on a dollar for dollar basis for exceeding $6.0 million of cumulative EBITDA over the three year period. During the fourth quarter of fiscal year 2017, the Company performed, with the assistance of a third party appraiser, an analysis of O Olive’s projected EBITDA over the next three years. Based on this analysis the Company has recorded a contingent consideration liability of $5.9 million as of both August 27, 2017 and May 28, 2017, representing the present value of the expected earn out payments. For this analysis, the Company assumed that the maximum earn out of $7.5 million would be paid over the three year period with over half being earned in fiscal year 2020. Th e operating results of O Olive are included in the Company’s financial statements beginning March 1, 2017 , in the Other segment. Intangible Assets The Com pany identified two intangible assets in connection with the O Olive acquisition: trade names and trademarks valued at $1.6 million, which are considered to be indefinite life assets and therefore, will not be amortized; and customer relationoships valued at $700,000 with an eleven year useful life. The Company recorded $16,000 of amortization expense from the amortization of the customer relationships intangible during the three months ended August 27, 2017. The trade name/trademark intangible asset was valued using the relief from royalty valuation method and the customer relationship intangible asset was valued using the excess earnings method.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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