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Note 2 - Acquisition of O Olive | 9 Months Ended
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Feb. 25, 2018
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 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 in an amount not to exceed $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. Each quarter the Company performs, with the assistance of a third party appraiser, an analysis of O Olive’s projected EBITDA over the earnout period. Based on this analysis the Company records a contingent consideration liability, included in Other non-current liabilities. As of February 25, 2018 and May 28, 2017 the contingent consideration liability was $5.4 million and $5.9 million , respectively, representing the present value of the expected earn out payments. The $500,000 reduction in the contingent consideration liability was recorded during the first nine months of fiscal year 2018 as a reduction to Selling, General and Administrative expenses in the accompanying Consolidated Statements of Comprehensive Income. 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 Company 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 lived intangible assets and therefore, will not be amortized; and customer relationships valued at $700,000 with an eleven year useful life. The Company recorded $17,000 and $67 ,000 of amortization expense from the amortization of the customer relationships intangible during the three and nine months ended February 25, 2018, respectively. 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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