XML 23 R9.htm IDEA: XBRL DOCUMENT
v3.24.3

ACQUISITIONS | 9 Months Ended
--- | ---
Sep. 29, 2024
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Arroyo Consulting On April 24, 2023, the Company acquired substantially all of the assets, and assumed certain of the liabilities, of Arroyo Consulting for cash consideration of $6.8 million. Certain post-closing liabilities were held back of $0.4 million and partial security for any indemnification obligations was held back for one year of $0.9 million. The purchase agreement further provides for contingent consideration of up to $8.5 million based on the performance of the acquired business for the two years following the date of acquisition. The purchase price at closing was paid out of funds under the Company's credit agreement led by BMO, see “Note 8 - Debt”. The purchase agreement contained a provision for a “true up” of acquired working capital, which was paid on July 1, 2024, out of the delayed draw funds under the Company's credit agreement along with the hold backs and the year one payment of $4.3 million for contingent consideration. The acquired business was assigned to the Professional segment. The acquisition of Arroyo Consulting allows the Company to strengthen the go-to-market cross-selling efforts providing clients a cost effective alternative offering nearshore and offshore IT resources. Arroyo Consulting provides nearshore and offshore professional workforce solutions specializing in IT and software development with operations in the United States, Colombia, and India. In Fiscal 2023 Arroyo Consulting operations included twenty-three weeks for $9.8 million of revenue and $2.2 million of operating income, which included $0.5 million in amortization expense on acquisition intangibles. The final purchase price has been allocated to the assets acquired and liabilities as follows (in thousands):
Accounts receivable |  | $ | 3,476 |
Prepaid expenses and other assets |  | 72 |
Property and equipment, net |  | 145 |
Right-of-use asset - operating lease |  | 141 |
Intangible assets |  | 11,760 |
Goodwill (no deductible tax basis) |  | 3,400 |
Current liabilities assumed |  | (2,621) |
Lease liabilities - operating leases | (85) |
Total net assets acquired |  | $ | 16,288 |
Cash |  | $ | 6,800 |
Hold back, working capital* |  | 350 |
Hold back, indemnities* |  | 850 |
Working capital adjustment* |  | 679 |
Fair value of contingent consideration |  | 7,609 |
Total fair value of consideration transferred for acquired business |  | $ | 16,288 |
*Included in Other current liabilities as of December 31, 2023 |  |
The allocation of the intangible assets is as follows (in thousands):
|  | Estimated Fair Value |  | Estimated Useful Lives
Covenants not to compete |  | $ | 356 |  |  | 5 years
Client partner list |  | 11,234 |  |  | 10 years
Computer software |  | 170 |  |  | 5 years
Total |  | $ | 11,760 |  |  |
The Company incurred total costs of $0.6 million in Fiscal 2024 and Fiscal 2023 related to the Arroyo Consulting 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 of the Arroyo Consulting acquisition had taken place on the first day of Fiscal 2023 (in thousands, except income per share):
|  | Thirteen Weeks Ended |  |  | Thirty-nine Weeks Ended
|  | October 1, 2023 |  |  | October 1, 2023
Revenues |  | $ | 83,484 |  |  |  | $ | 246,403 |
Gross profit |  | $ | 29,979 |  |  |  | $ | 88,506 |
Net income (loss) |  | $ | 2,640 |  |  |  | $ | (10,479) |
Income (loss) per share: |  |  |  |  |
Basic |  | $ | 0.24 |  |  |  | $ | (0.97) |
Diluted |  | $ | 0.24 |  |  |  | $ | (0.97) |
Pro forma net income (loss) includes amortization of primarily client partner lists, interest expense on additional borrowings on the new term loan and the revolving facility (the “Revolving Facility”) (see “Note 8 - Debt”) at a rate of 7.1%. The tax benefit of the pro forma adjustments at effective tax rate of 26.6% and 24.1% for the thirteen and thirty-nine week periods ended October 1, 2023, respectively. The pro forma operating results include adjustments to Arroyo Consulting 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. There were no material nonrecurring adjustments. Amounts set forth above are not necessarily indicative of the results that would have been attained had the Arroyo Consulting acquisition taken place on the first day of Fiscal 2023 or the results that may be achieved by the combined enterprise in the future.

X
- 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/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration