Note 5. Business Combination

On April 30, 2018, the Company acquired 100 percent of the outstanding shares of privately held Accurate Holding, Inc., a holding company whose subsidiaries do business under the name, All Integrated Solutions (“AIS”). AIS is a leading value-added distributor of industrial fasteners and components, MRO supplies and assembly tools headquartered in Franksville, Wisconsin. Total cash consideration paid was $86,693, subject to certain post-closing adjustments, and the acquisition was funded from available cash resources and borrowings under the Credit Facility.

AIS delivers production fasteners and custom tool and fastener solutions for use in the assembly of manufactured commercial and consumer products serving customers primarily in the Midwest region. The Company plans to provide AIS’s customer base access to its product portfolio to support their full metalworking and MRO needs. Similarly, the Company will extend AIS's production fastener and Vendor Managed Inventory (“VMI”) solutions to its manufacturing customers.

The acquisition of AIS was accounted for as a business purchase pursuant to ASC Topic 805, “Business Combinations” (“ASC 805”). Non-recurring transaction and integration costs totaling $682 are included in the Company’s condensed consolidated statement of income as operating expenses for the thirteen and thirty-nine-week periods ended June 2, 2018. As required by ASC 805-20, the Company allocated the purchase price to assets and liabilities based on their estimated fair value at the acquisition date. The Company’s purchase accounting as of June 2, 2018 is preliminary primarily due to the pending final valuation and an expected working capital adjustment to the purchase price.

The following table summarizes the amounts of identified assets acquired and liabilities assumed based on the estimated fair value at the acquisition date:



Cash and cash equivalents	$	1,586
Inventories		20,629
Accounts receivable		9,834
Prepaid expenses and other current assets		1,303
Identifiable intangibles		23,200
Goodwill		39,574
Property, plant and equipment		1,561
Other assets		121
Total Assets Acquired	$	97,808
Accounts payable		3,119
Accrued liabilities		4,971
Deferred income taxes and tax uncertainties		3,025
Total Liabilities Assumed	$	11,115
Net Assets Acquired	$	86,693

Acquired intangible assets with a fair value of $23,200 consisted of customer relationships of $21,000 with a useful life of 10 years and a trademark of $2,200 with a useful life of 5 years. The goodwill amount of $39,574 represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The primary items that generated the goodwill were the premiums paid by the Company for the right to control the business acquired and benefit from adding a highly complementary provider of production fasteners and custom tool and fastener solutions and services with an experienced field sales force and VMI solution. This goodwill will not be amortized and will be included in the Company’s periodic test for impairment at least annually. The amount of goodwill deductible for tax purposes was $4,900.

The amount of revenue and loss before provision for income taxes from AIS included in the condensed consolidated statements of income for both the thirteen and thirty-nine-week periods ended June 2, 2018 was $6,725 and ($1,719), respectively.