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ACQUISITIONS | 3 Months Ended
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Apr. 02, 2023
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Horn Solutions On December 12, 2022, the Company acquired substantially all of the assets, and assumed certain of the liabilities, of Horn Solutions. The purchase price of $42.7 million was paid at closing with $33.9 million in cash and $3.4 million of the Company common stock (254,455 shares of the Company common stock privately placed under Section 4(a)(2) of the Securities Act of 1933, as amended), as well as a two-year convertible promissory note of $4.4 million with an annual interest rate of 6%, with interest paid quarterly. The promissory note is convertible into shares of the Company's common stock at any time after the one-year anniversary of the promissory note at a conversion price equal to $17.12 per share. The promissory note is subordinate to the Company’s senior debt. An additional portion of the purchase price, $1.0 million in cash, net of the true-up of working capital, was held back as partial security for a post-closing purchase price adjustment, which is expected to fund in May 2023, net of the net working capital and AR buyback adjustments. The asset purchase agreement contains a provision for a “true up” of acquired working capital, and unpaid accounts receivable within 120 days after the closing date. The purchase price at closing was paid out of funds under the Company's credit agreement led by BMO, see “Note 9 - Debt”. The acquired business was assigned to the Professional segment. The acquisition of Horn Solutions allows the Company to strengthen and expand its finance and accounting operations by providing consulting, project loan staff, interim staff, direct hire, and managed services through three complementary business units, strategic accounting and finance, information technology, and transactional accounting and office staffing. Horn Solutions provides services to clients in a variety of industries including, but not limited to energy, financial services, healthcare, real estate and construction, service, manufacturing, and software industries. The purchase price has been allocated to the assets acquired and liabilities assumed as of the date of acquisition as follows (in thousands):
Accounts receivable |  | $ | 3,734 |
Prepaid expenses and other assets |  | 118 |
Property and equipment, net |  | 83 |
Right-of-use asset - operating leases |  | 1,528 |
Intangible assets |  | 13,484 |
Goodwill |  | 26,493 |
Current liabilities assumed | (1,787) |
Lease liability - operating leases |  | (1,528) |
Total net assets acquired |  | $ | 42,125 |
Cash |  | $ | 33,940 |
Hold back (included in Other current liabilities) |  | 1,000 |
Convertible Note |  | 4,368 |
Common stock |  | 3,351 |
Working capital adjustment (included in Other current assets) |  | (534) |
Total fair value of consideration transferred for acquired business |  | $ | 42,125 |
The allocation of the intangible assets is as follows (in thousands):
|  | Estimated Fair Value |  | Estimated Useful Lives
Covenants not to compete |  | $ | 50 |  |  | 5 years
Client partner list |  | 13,434 |  |  | 10 years
Total |  | $ | 13,484 |  |  |
The Company incurred costs of $0.4 million related to the Horn Solutions acquisition. These costs were expensed as incurred in selling, general and administrative expenses. Supplemental Unaudited Pro Forma Information The Company estimates what would have been reported if the revenues and net income from continuing operations of the Horn Solutions acquisition had taken place on the first day of Fiscal 2022 (in thousands, except income per share):
|  |  |  |  | Thirteen Weeks Ended
|  |  |  |  | March 27, 2022
Revenues |  |  |  |  | $ | 76,494 |
Gross profit |  |  |  |  | $ | 27,186 |
Net Income |  |  |  |  | $ | 2,558 |
Income per share from continuing operations: |  |  |  |  |
Basic |  |  |  |  | $ | 0.25 |
Diluted |  |  |  |  | $ | 0.24 |
Pro forma net income includes amortization of primarily client partner lists, interest expense on additional borrowings on the New Term Loan (see “Note 9 - Debt”) at a rate of 2.5%, and tax benefit of the pro forma adjustments at an effective tax rate of 24.9% for Fiscal 2022. The pro forma operating results include adjustments to Horn Solutions related to synergy adjustments for expenses that would be duplicative and other non-recurring, non-operating and out of period expense items once integrated with the Company. Amounts set forth above are not necessarily indicative of the results that would have been attained had the Horn Solutions acquisition taken place on the first day of Fiscal 2022 or the results that may be achieved by the combined enterprise in the future.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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- References No definition available. + Details
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