ACQUISITIONS

12 Months Ended

Dec. 31, 2018

NOTE C —ACQUISITIONS

Filament

December 22, 2017

, the Company entered into an agreement providing for the acquisition of Filament by the Company. The acquisition was completed on

March 2, 2018

. The aggregate consideration for Filament, after taking into account certain adjustments, was $294.4 million, consisting of $217.5 million of cash consideration and 5,593,116 newly issued shares of the Company’s common stock, with a value equal to $76.9 million based on the market value of the Company’s common stock as of March 2, 2018. The cash portion of the consideration was revised for certain adjustments as defined in the agreement.

The purchase price, as adjusted, has been determined to be as follows (in thousands):

Cash	$	217,511
Share consideration		76,905
Total purchase price	$	294,416

The purchase price was allocated based on the Company’s preliminary estimate of the fair value of the assets acquired and liabilities assumed, as follows (in thousands):

Accounts receivable	$	26,224
Inventory		29,444
Other assets		5,620
Other liabilities		(22,449	)
Deferred income tax		(13,877	)
Goodwill and other intangibles		269,454
Total allocated value	$	294,416

The acquisition is being accounted for as a business combination using the acquisition method of accounting in accordance with FASB ASC Topic 805,

Business Combinations

(“ASC Topic 805”), which established a new basis of accounting for all identifiable assets acquired and liabilities assumed at fair value. ASC Topic 805 allows the acquiring company to adjust preliminary amounts recognized at the acquisition date to their subsequently determined final fair values during a measurement period, generally up to one year from the date of the acquisition. The fair values of net assets acquired are based on the Company’s preliminary estimate of the respective fair values. While the final valuation of net assets may result in material adjustments to the respective fair values and resulting goodwill, the Company currently expects any future adjustments to be related to income taxes. During the three months ended December 31, 2018, the Company decreased goodwill by approximately $10.1 million due to certain opening balance sheet fair value adjustments, primarily related to deferred taxes. Goodwill results from such factors as an assembled workforce. The total amount of goodwill is not expected to be deductible for tax purposes. The goodwill and other intangible assets are included in the U.S. segment. Customer relationships and certain trade names, which are included in intangible assets, net, are amortized on a straight-line basis over their estimated useful lives (see Note F– Goodwill and Intangible Assets).

The year ended December 31, 2018 includes the operations of Filament for the period from March 2, 2018, the date of the acquisition of Filament, to December 31, 2018. The consolidated statement of operations for the year ended December 31, 2018, includes

128.8

million of net sales contributed by Filament.

Included in Selling, general and administrative expenses for the year ended December 31, 2018 is a $1.8 million credit to reflect the change in fair value of a contingent consideration obligation acquired by the Company in connection with its acquisition of Filament.

Unaudited Pro forma Results

The following table presents the Company’s pro forma consolidated net sales, income before income taxes and equity in earnings and net (loss) income for the years ended December 31, 2018 and 2017. The unaudited pro forma results include the historical statement of operations information of the Company and of Filament, giving effect to the Filament acquisition and related financing as if they had occurred at the beginning of the periods presented.

The unaudited pro forma results do not include any revenue or cost reductions that may be achieved through the business combination or the impact of non-recurring items directly related to the business combination.

The unaudited pro forma results are not necessarily indicative of the operating results that would have occurred if the Filament acquisition had been completed as of the date for which the pro forma financial information is presented. In addition, the unaudited pro forma results do not purport to project the future consolidated operating results of the combined company.

	Year ended December 31,
	2018			2017
	(In thousands, except per share data)
Net sales	$	730,353		$	747,549
Income before income taxes and equity in earnings		2,439			14,151
Net (loss) income		(267	)		5,794
Diluted (loss) income per common share	$	(0.01	)	$	0.28

Fitz and Floyd

On August 31, 2017, the Company acquired the Fitz and Floyd business, including the trade names and related working capital, from Fitz and Floyd Enterprises, LLC (“Fitz”) for cash in the amount of $9.1 million. The purchase price was funded by borrowings under the Company’s revolving credit facility.

The assets and operating results of the Fitz and Floyd business are reflected in the Company’s consolidated financial statements in accordance with ASC Topic 805 commencing from the date of the acquisition of Fitz. The consolidated statement of operations for the year ended December 31, 2017 includes

$7.7 million of net sales attributable to the Fitz and Floyd brands.

The purchase price was allocated based on the Company’s estimate of the fair values of the assets acquired and liabilities assumed, as follows (in thousands):

Accounts Receivable	$	3,115
Inventory		5,424
Other assets		458
Other liabilities		(2,056	)
Goodwill and other intangibles		2,131
Total allocated value	$	9,072

On the basis of estimated fair values, the excess of the purchase price over the net assets acquired of $2.1 million has been allocated as follows: $1.7 million for customer relationships and trade names and $0.4 million for goodwill. The goodwill recognized results from such factors as an assembled workforce and the value of other synergies expected from combining operations with the Company. All the goodwill and other intangibles are included in the U.S. segment. Customer relationships and trade names are amortized on a straight-line basis over their estimated useful lives (see Note F- Goodwill and Intangible Assets).

Focus

In September 2016, the Company acquired the Amco Houseworks

, Chicago™ Metallic and Swing-A-Way

kitchenware and bakeware brands, together with their related inventory, from Focus Products Group International, LLC (“Focus”) for cash in the amount of $8.8 million. The assets and operating results of the Focus brands are reflected in the Company’s consolidated financial statements in accordance with ASC Topic 805,

commencing from the date of the acquisition of Focus

. The consolidated statement of operations for the year ended December 31, 2016 includes $3.6 million of net sales attributable to the Focus brands. The purchase price was allocated based on the Company’s estimate of the fair values of the assets acquired, including inventory ($3.5 million) and customer relationships and trade names ($5.3 million). Customer relationships and trade names are amortized on a straight-line basis over their estimated useful lives of 15 years.

Copco

In October 2016, the Company acquired the Copco

product line from Wilton Industries, Inc., for cash in the amount of $12.3

million. The product line includes thermal and hydration beverageware, tea kettles and kitchen organization products. The assets and operating results of the Copco

brands are reflected in the Company’s consolidated financial statements in accordance with ASC Topic 805, commencing from the date of the acquisition of the Copco

brands. The consolidated statement of operations for the year ended December 31, 2016 includes

$3.9 million of net sales attributable to the Copco

brands. The purchase price was allocated based on the Company’s estimate of the fair values of the assets acquired, including inventory ($3.9 million) and customer relationships and trade names ($8.4 million). Customer relationships and trade names are amortized on a straight-line basis over their estimated useful lives of 15 and 10 years, respectively.