Virginia
(State or other jurisdiction of incorporation) |
000-25349
(Commission File Number) |
54-0251350
(IRS Employer Identification No.) |
440 East Commonwealth Boulevard
Martinsville, Virginia
(Address of Principal Executive Offices) |
24112
(Zip Code)
|
(276) 632-0459
Registrant’s Telephone Number,
Including Area Code)
|
99.1 |
Audited balance sheets of Shenandoah as of December 31, 2015 and 2016, the related audited statement of operations and stockholders’ equity for the year ended December 31, 2016 and the related notes to such audited financial statements.
|
99.2 |
Unaudited balance sheets of Shenandoah as of June 30, 2016 and 2017, the related unaudited statement of operations for the six-months ended June 30, 2016 and 2017.
|
99.3 |
Unaudited pro forma condensed combined balance sheet as of July 30, 2017, the related unaudited pro forma condensed combined statement of income for the year ended January 29, 2017 and the six-month period ended July 30, 2017 and the related notes to such unaudited pro forma condensed combined financial statements.
|
Exhibit No.
|
Description
|
|
|
23.1*
|
|
|
|
99.1*
|
|
|
|
99.2*
|
|
|
|
99.3*
|
|
Page
|
Independent Auditors' Report on the Financial Statements
|
1
|
Financial Statements:
|
|
Balance Sheets
|
2 - 3
|
Statement of Operations
|
4
|
Statement of Stockholders' Equity
|
5
|
Statement of Cash Flows
|
6
|
Notes to Financial Statements
|
7 - 11
|
Supplementary Information:
|
|
Independent Auditors' Report on Supplementary Information
|
12
|
Cost of Goods Sold
|
13
|
Selling, General and Administrative Expenses
|
14
|
Assets
|
||||||||
2016
|
2015
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
4,475,761
|
4,981,150
|
|||||
Accounts receivable, net of allowance for doubtful
|
||||||||
accounts of $76,133 in 2016 and $89,737 in 2015
|
3,332,699
|
2,790,449
|
||||||
Inventories
|
2,212,667
|
2,531,097
|
||||||
Prepaids and other
|
6,875
|
124,207
|
||||||
Total current assets
|
10,028,002
|
10,426,903
|
||||||
Property and equipment:
|
||||||||
Land
|
70,740
|
70,740
|
||||||
Building and improvements
|
738,913
|
738,913
|
||||||
Land improvements
|
293,295
|
275,795
|
||||||
Leasehold improvements
|
2,929,627
|
2,638,445
|
||||||
Machinery and equipment
|
3,942,229
|
3,041,509
|
||||||
Manufacturing software
|
840,202
|
569,588
|
||||||
Automobiles and trucks
|
209,430
|
209,430
|
||||||
Office and computer equipment
|
593,006
|
555,695
|
||||||
Showroom improvements
|
57,221
|
57,221
|
||||||
9,674,663
|
8,157,336
|
|||||||
Less accumulated depreciation
|
4,024,241
|
3,742,576
|
||||||
5,650,422
|
4,414,760
|
|||||||
Other assets:
|
||||||||
Cash value of life insurance
|
496,580
|
433,007
|
||||||
Other
|
5,838
|
5,838
|
||||||
Total other assets
|
502,418
|
438,845
|
||||||
$
|
16,180,842
|
15,280,508
|
Liabilities and Stockholders' Equity
|
||||||||
2016
|
2015
|
|||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
493,619
|
684,125
|
|||||
Wages payable
|
213,769
|
224,444
|
||||||
Other accrued expenses
|
190,151
|
244,410
|
||||||
Total current liabilities
|
897,539
|
1,152,979
|
||||||
Stockholders' equity:
|
||||||||
Common stock, par value $1 per share, 25,000 shares
|
||||||||
authorized and outstanding in 2016 and 2015
|
25,000
|
25,000
|
||||||
Paid-in capital
|
25,000
|
25,000
|
||||||
Retained earnings
|
15,233,303
|
14,077,529
|
||||||
Total stockholders' equity
|
15,283,303
|
14,127,529
|
||||||
$
|
16,180,842
|
15,280,508
|
2016
|
||||
Net sales
|
$
|
42,347,388
|
||
Cost of goods sold
|
31,648,375
|
|||
Gross profit
|
10,699,013
|
|||
Selling, general and administrative expenses
|
2,781,243
|
|||
Operating income
|
7,917,770
|
|||
Other income (expense):
|
||||
Interest and dividend income
|
14,661
|
|||
Loss on sale of property and equipment
|
(16,169
|
)
|
||
Other
|
78,972
|
|||
Total other income
|
77,464
|
|||
Net income
|
$
|
7,995,234
|
Total
|
||||||||||||||||
Common
|
Paid – In
|
Retained
|
Stockholders
|
|||||||||||||
Stock
|
Capital
|
Earnings
|
Equity
|
|||||||||||||
Balance, December 31, 2015
|
25,000
|
25,000
|
14,077,529
|
14,127,529
|
||||||||||||
Net income, December 31, 2016
|
-
|
-
|
7,995,234
|
7,995,234
|
||||||||||||
Dividends paid
|
-
|
-
|
(6,839,460
|
)
|
(6,839,460
|
)
|
||||||||||
Balance, December 31, 2016
|
$
|
25,000
|
25,000
|
15,233,303
|
15,283,303
|
|||||||||||
2016
|
||||
Net income
|
$
|
7,995,234
|
||
Adjustments to reconcile net income to net cash
|
||||
provided by operating activities:
|
||||
Depreciation
|
507,665
|
|||
Loss on sale of property and equipment
|
16,169
|
|||
Increase in cash value of life insurance
|
(63,573
|
)
|
||
Increase in accounts receivable
|
(542,250
|
)
|
||
Decrease in inventories
|
318,430
|
|||
Decrease in prepaids and other
|
117,332
|
|||
Decrease in accounts payable
|
(190,506
|
)
|
||
Decrease in wages payable
|
(10,675
|
)
|
||
Decrease in other accrued expenses
|
(54,259
|
)
|
||
Net adjustments
|
98,333
|
|||
Net cash provided by operating activities
|
8,093,567
|
|||
Cash flows from investing activities:
|
||||
Proceeds from sale of equipment
|
16,999
|
|||
Purchases of property and equipment
|
(1,776,495
|
)
|
||
Net cash used by investing activities
|
(1,759,496
|
)
|
||
Cash flows from financing activities:
|
||||
Cash dividends paid
|
(6,839,460
|
)
|
||
Redemption of common stock
|
-
|
|||
Net cash used by financing activities
|
(6,839,460
|
)
|
||
Net decrease in cash and cash equivalents
|
(505,389
|
)
|
||
Beginning cash and cash equivalents
|
4,981,150
|
|||
Ending cash and cash equivalents
|
$
|
4,475,761
|
|
Years
|
|||
Building and leasehold improvements
|
7 - 40
|
|||
Land improvements
|
15 - 20
|
|||
Machinery and equipment
|
5 - 10
|
|||
Manufacturing software
|
5 - 7
|
|||
Automobiles and trucks
|
5 - 10
|
|||
Office and computer equipment
|
3 - 10
|
|||
Showroom improvements
|
39
|
2016
|
2015
|
|||||||
Finished goods
|
$
|
80,591
|
74,973
|
|||||
Work-in-process
|
615,441
|
571,401
|
||||||
Raw materials
|
1,516,635
|
1,884,723
|
||||||
|
$
|
2,212,667
|
2,531,097
|
2016
|
||||
225 Beaver Creek Drive
|
$
|
231,916
|
||
Showroom Facilities
|
96,317
|
|||
Valdese, North Carolina
|
240,000
|
|||
Mt. Airy, North Carolina
|
204,100
|
|||
$ |
772,333
|
Fiscal Years Ending
|
Amount
|
|||
2017
|
$
|
29,470
|
||
2018
|
32,579
|
|||
2019
|
17,012
|
|||
2020
|
2,182
|
|||
$ |
81,243
|
Percent of
|
||||||||
2016
|
Net Sales
|
|||||||
Raw materials:
|
||||||||
Inventory, beginning
|
$
|
1,884,723
|
4.45
|
%
|
||||
Purchases, net
|
16,704,935
|
39.45
|
||||||
Freight-in
|
179,628
|
0.42
|
||||||
18,769,286
|
44.32
|
|||||||
Inventory, ending
|
(1,516,635
|
)
|
(3.58
|
)
|
||||
Raw materials used
|
17,252,651
|
40.74
|
||||||
Labor expense:
|
||||||||
Direct labor
|
8,762,197
|
20.69
|
||||||
Contract labor
|
23,319
|
0.06
|
||||||
Total labor expense
|
8,785,516
|
20.75
|
||||||
Manufacturing expenses:
|
||||||||
Salaries - supervisors
|
789,951
|
1.86
|
||||||
Other indirect labor
|
178,370
|
0.42
|
||||||
Depreciation - machinery and equipment
|
343,167
|
0.81
|
||||||
Depreciation - building
|
100,514
|
0.24
|
||||||
Insurance - general
|
366,733
|
0.87
|
||||||
Insurance - group
|
901,715
|
2.13
|
||||||
Machine rental
|
78,403
|
0.18
|
||||||
Miscellaneous
|
290,950
|
0.68
|
||||||
Repairs and maintenance
|
483,781
|
1.14
|
||||||
Shop supplies
|
96,904
|
0.23
|
||||||
Taxes - payroll
|
811,961
|
1.92
|
||||||
Taxes and licenses
|
43,463
|
0.10
|
||||||
Utilities
|
497,938
|
1.18
|
||||||
Rent
|
676,016
|
1.60
|
||||||
Total manufacturing expense
|
5,659,866
|
13.36
|
||||||
Cost of goods manufactured
|
31,698,033
|
74.85
|
||||||
Finished goods and work-in-process variation
|
||||||||
Inventory, beginning
|
646,374
|
1.53
|
||||||
Inventory, ending
|
(696,032
|
)
|
(1.64
|
)
|
||||
Cost of goods sold
|
$
|
31,648,375
|
74.74
|
%
|
Percent of
|
||||||||
2016
|
Net Sales
|
|||||||
Selling expenses:
|
||||||||
Advertising
|
$
|
148,338
|
0.35
|
%
|
||||
Depreciation - showroom
|
2,474
|
0.01
|
||||||
Freight-out
|
98,207
|
0.23
|
||||||
General insurance
|
60,091
|
0.14
|
||||||
Showroom expense
|
112,714
|
0.27
|
||||||
Travel and entertainment
|
20,721
|
0.05
|
||||||
Wages
|
614,682
|
1.45
|
||||||
Payroll taxes
|
28,818
|
0.07
|
||||||
Miscellaneous
|
6,940
|
0.01
|
||||||
Total selling expense
|
1,092,985
|
2.58
|
||||||
Administrative expenses:
|
||||||||
Salaries - officers
|
198,365
|
0.47
|
||||||
Salaries - office
|
541,369
|
1.28
|
||||||
For hire advertisements
|
2,427
|
0.01
|
||||||
Contributions
|
13,275
|
0.03
|
||||||
Depreciation - office equipment
|
54,024
|
0.13
|
||||||
Depreciation - vehicles
|
7,486
|
0.02
|
||||||
Dues and subscriptions
|
11,275
|
0.03
|
||||||
Insurance - officers' life/disability
|
5,233
|
0.01
|
||||||
Group general insurance
|
74,885
|
0.18
|
||||||
Office supplies
|
49,212
|
0.12
|
||||||
Postage
|
14,240
|
0.03
|
||||||
Professional fees
|
111,731
|
0.26
|
||||||
Consulting - IT
|
61,327
|
0.14
|
||||||
Repairs and maintenance
|
14,365
|
0.03
|
||||||
Taxes - licenses, etc.
|
15,352
|
0.04
|
||||||
Taxes - payroll
|
62,677
|
0.15
|
||||||
Telephone
|
89,909
|
0.21
|
||||||
Internet and electronic data interface
|
525
|
-
|
||||||
Miscellaneous
|
64,490
|
0.15
|
||||||
Employee benefits - other
|
13,835
|
0.03
|
||||||
Employee benefits - profit sharing
|
190,150
|
0.45
|
||||||
401(k) match
|
54,737
|
0.13
|
||||||
Travel
|
37,369
|
0.09
|
||||||
Total administrative expense
|
1,688,258
|
3.99
|
||||||
Total selling and administrative expenses
|
$
|
2,781,243
|
6.57
|
%
|
Shenandoah Furniture, Inc.
|
||||||||
Balance Sheet
|
||||||||
As of June 30, 2017
|
||||||||
unaudited
|
||||||||
Jun-17
|
Jun-16
|
|||||||
Cash
|
5,473,178
|
3,119,020
|
||||||
Accounts Receivable
|
3,545,894
|
3,970,283
|
||||||
Inventory
|
1,440,549
|
2,355,719
|
||||||
Prepaid Insurance
|
163,775
|
128,861
|
||||||
Current assets
|
10,623,396
|
9,573,883
|
||||||
PP&E
|
9,853,477
|
8,948,896
|
||||||
Accumulate Depr
|
(4,214,999
|
)
|
(3,963,826
|
)
|
||||
Net Fixed Assets
|
5,638,478
|
4,985,070
|
||||||
CSV life insurance
|
496,580
|
433,007
|
||||||
Total assets
|
16,758,454
|
14,991,960
|
||||||
Accounts Payable
|
792,015
|
949,615
|
||||||
Other payables
|
392
|
57
|
||||||
Accrued salaries, wages & taxes
|
499,124
|
493,312
|
||||||
accrued expenses
|
139,189
|
89,970
|
||||||
Current Liabilities
|
1,430,720
|
1,532,954
|
||||||
common Stock
|
50,000
|
50,000
|
||||||
Retained earnings
|
722,989
|
722,990
|
||||||
current retained earnings
|
3,664,982
|
3,010,923
|
||||||
accumulated adjustment
|
10,889,763
|
9,675,093
|
||||||
Stockholders equity
|
15,327,734
|
13,459,006
|
||||||
Total Liabilities & equity
|
16,758,454
|
14,991,960
|
Shenandoah Furniture, Inc.
|
||||||||||||||||
Statement of Operations
|
||||||||||||||||
As of June 30, 2017
|
||||||||||||||||
unaudited
|
||||||||||||||||
Six Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30, 2017
|
June 30, 2016
|
|||||||||||||||
Net Sales
|
21,653,173
|
20,358,143
|
||||||||||||||
COGS
|
||||||||||||||||
Materials
|
9,473,263
|
43.7
|
%
|
8,906,824
|
43.8
|
%
|
||||||||||
Labor
|
4,314,478
|
19.9
|
%
|
4,321,778
|
21.2
|
%
|
||||||||||
Overhead
|
2,784,221
|
12.9
|
%
|
2,804,350
|
13.8
|
%
|
||||||||||
Total COGS
|
16,571,962
|
76.5
|
%
|
16,032,952
|
78.8
|
%
|
||||||||||
Gross Profit
|
5,081,211
|
23.5
|
%
|
4,325,191
|
21.2
|
%
|
||||||||||
Selling
|
577,983
|
2.7
|
%
|
556,901
|
2.7
|
%
|
||||||||||
Admin
|
904,805
|
4.2
|
%
|
870,080
|
4.3
|
%
|
||||||||||
SG&A
|
1,482,788
|
6.8
|
%
|
1,426,981
|
7.0
|
%
|
||||||||||
Operating Income
|
3,598,423
|
16.6
|
%
|
2,898,210
|
14.2
|
%
|
||||||||||
Other
|
66,559
|
0.3
|
%
|
112,713
|
0.6
|
%
|
||||||||||
Net income
|
3,664,982
|
16.9
|
%
|
3,010,923
|
14.8
|
%
|
§ |
the separate audited historical consolidated financial statements of Hooker Furniture Corporation for the year ended January 29, 2017 (as filed with the SEC on April 15, 2016 in Hooker Furniture Corporation’s Annual Report on Form 10-K for the fiscal year ended January 29, 2017);
|
·
|
the separate unaudited historical consolidated financial statements of Hooker Furniture Corporation for the quarter ended April 30, 2017 (as filed with the SEC on June 8, 2017 on a Quarterly Report on Form 10-Q) and the quarter ended July 30, 2017 (as filed with the SEC on September 8, 2017 on a Quarterly Report on Form 10-Q); and
|
§ |
the audited and unaudited historical consolidated financial statements of Shenandoah Furniture, Inc. included in this filing.
|
Pro forma
|
Pro Forma
|
|||||||||||||||||
Hooker
|
Shenandoah
|
Adjustments
|
Combined
|
|||||||||||||||
Assets
|
||||||||||||||||||
Current assets
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
45,818
|
$
|
5,473
|
$
|
(26,123
|
)
|
a,b
|
25,168
|
|||||||||
Trade accounts receivable, less
|
||||||||||||||||||
allowance for doubtful accounts
|
75,371
|
3,546
|
-
|
78,917
|
||||||||||||||
Inventories
|
82,036
|
1,441
|
-
|
83,477
|
||||||||||||||
Prepaid expenses and other current assets
|
4,246
|
164
|
-
|
4,410
|
||||||||||||||
Total current assets
|
207,471
|
10,624
|
(26,123
|
)
|
191,972
|
|||||||||||||
Property, plant and equipment, net
|
25,507
|
5,638
|
(232
|
)
|
a
|
30,913
|
||||||||||||
Cash surrender value of life insurance policies
|
23,178
|
497
|
(497
|
)
|
a
|
23,178
|
||||||||||||
Deferred taxes
|
6,019
|
-
|
-
|
6,019
|
||||||||||||||
Intangible assets
|
25,256
|
-
|
13,193
|
d
|
38,449
|
|||||||||||||
Goodwill
|
23,187
|
17,645
|
c
|
40,832
|
||||||||||||||
Other assets
|
2,241
|
-
|
-
|
2,241
|
||||||||||||||
Total non-current assets
|
105,388
|
6,135
|
30,109
|
141,632
|
||||||||||||||
Total assets
|
$
|
312,859
|
$
|
16,759
|
$
|
3,986
|
$
|
333,604
|
||||||||||
Liabilities and Shareholders’ Equity
|
||||||||||||||||||
Current liabilities
|
||||||||||||||||||
Current portion of term loan
|
$
|
5,822
|
1,578
|
b
|
7,400
|
|||||||||||||
Trade accounts payable
|
27,712
|
792
|
-
|
28,504
|
||||||||||||||
Accrued salaries, wages and benefits
|
7,049
|
499
|
-
|
7,548
|
||||||||||||||
Income tax accrual
|
953
|
-
|
-
|
953
|
||||||||||||||
Customer deposits
|
5,993
|
-
|
-
|
5,993
|
||||||||||||||
Other accrued expenses
|
3,288
|
139
|
-
|
3,427
|
||||||||||||||
Total current liabilities
|
50,817
|
1,430
|
1,578
|
53,825
|
||||||||||||||
Long term debt
|
38,858
|
-
|
10,422
|
b
|
49,280
|
|||||||||||||
Deferred compensation and pension obligations, non-current
|
11,041
|
-
|
-
|
11,041
|
||||||||||||||
Pension Plan
|
3,008
|
-
|
-
|
3,008
|
||||||||||||||
Other long-term liabilities
|
793
|
-
|
-
|
793
|
||||||||||||||
Total long-term liabilities
|
53,700
|
-
|
10,422
|
64,122
|
||||||||||||||
Total liabilities
|
104,517
|
1,430
|
12,000
|
117,947
|
||||||||||||||
-
|
||||||||||||||||||
Shareholders’ equity
|
-
|
|||||||||||||||||
Common stock, no par value
|
40,403
|
50
|
8,346
|
b
|
48,799
|
|||||||||||||
Retained earnings
|
167,434
|
15,279
|
(16,360
|
)
|
a
|
166,353
|
||||||||||||
Accumulated other comprehensive income
|
505
|
-
|
-
|
505
|
||||||||||||||
Non-controlling interest
|
-
|
-
|
-
|
|||||||||||||||
Total shareholders’ equity
|
$
|
208,342
|
$
|
15,329
|
$
|
(8,014
|
)
|
$
|
215,657.00
|
|||||||||
Total liabilities and shareholders’ equity
|
$
|
312,859
|
$
|
16,759
|
$
|
3,986
|
$
|
333,604
|
Pro forma
|
Pro forma
|
|||||||||||||||||
Hooker
|
Shenandoah
|
adjustment
|
Consolidated
|
|||||||||||||||
Net sales
|
$
|
577,219
|
$
|
42,347
|
$
|
619,566
|
||||||||||||
Cost of sales
|
451,098
|
31,664
|
482,762
|
|||||||||||||||
Gross profit
|
126,121
|
10,683
|
-
|
136,804
|
||||||||||||||
Selling and administrative expenses
|
83,767
|
2,781
|
284
|
d
|
86,832
|
|||||||||||||
Amortization of acquired intangibles
|
3,134
|
-
|
1,408
|
f
|
4,542
|
|||||||||||||
Operating income
|
39,220
|
7,902
|
(1,692
|
)
|
45,430
|
|||||||||||||
Other Income (expense), net
|
||||||||||||||||||
Interest expense
|
(954
|
)
|
15
|
(303
|
)
|
e
|
(1,242
|
)
|
||||||||||
Other, net
|
930
|
79
|
-
|
1,009
|
||||||||||||||
Income before income taxes
|
39,196
|
7,996
|
(1,995
|
)
|
45,197
|
|||||||||||||
Income tax expense
|
13,909
|
-
|
2,131
|
g
|
16,040
|
|||||||||||||
Net income
|
$
|
25,287
|
$
|
7,996
|
$
|
(4,126
|
)
|
$
|
29,157
|
|||||||||
Earnings per share
|
||||||||||||||||||
Basic
|
$
|
2.19
|
$
|
2.49
|
||||||||||||||
Diluted
|
$
|
2.18
|
$
|
2.48
|
||||||||||||||
Weighted average shares outstanding:
|
||||||||||||||||||
Basic
|
11,531
|
176
|
h
|
11,707
|
||||||||||||||
Diluted
|
11,563
|
176
|
11,739
|
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
|
||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
|
||||||||||||||||||
FOR THE SIX MONTHS ENDED JULY 30, 2017
|
||||||||||||||||||
(In thousands)
|
||||||||||||||||||
Pro forma
|
Pro forma
|
|||||||||||||||||
Hooker
|
Shenandoah
|
adjustment
|
Consolidated
|
|||||||||||||||
Net sales
|
$
|
287,180
|
$
|
21,653
|
$
|
308,833
|
||||||||||||
Cost of sales
|
225,920
|
16,572
|
242,492
|
|||||||||||||||
Gross profit
|
61,260
|
5,081
|
-
|
66,341
|
||||||||||||||
Selling and administrative expenses
|
41,690
|
1,483
|
142
|
d
|
43,315
|
|||||||||||||
Amortization of acquired intangibles
|
667
|
464
|
f
|
1,131
|
||||||||||||||
Operating income
|
18,903
|
3,598
|
(606
|
)
|
21,895
|
|||||||||||||
Other Income (expense), net
|
||||||||||||||||||
Interest expense
|
(533
|
)
|
(131
|
)
|
e
|
(664
|
)
|
|||||||||||
Other, net
|
722
|
67
|
-
|
789
|
||||||||||||||
Income before income taxes
|
19,092
|
3,665
|
(737
|
)
|
22,020
|
|||||||||||||
Income tax expense
|
6,568
|
-
|
1,039
|
g
|
7,607
|
|||||||||||||
Net income
|
$
|
12,524
|
$
|
3,665
|
$
|
(1,776
|
)
|
$
|
14,413
|
|||||||||
Earnings per share
|
||||||||||||||||||
Basic
|
$
|
1.08
|
$
|
1.23
|
||||||||||||||
Diluted
|
$
|
1.08
|
$
|
1.23
|
||||||||||||||
Weighted average shares outstanding:
|
||||||||||||||||||
Basic
|
11,554
|
176
|
h
|
11,730
|
||||||||||||||
Diluted
|
11,587
|
176
|
11,763
|
Fair value estimates of assets acquired and liabilities assumed
|
||||
Purchase price consideration
|
||||
Cash paid for assets acquired
|
$
|
32,000
|
||
Value of shares issued for assets acquired
|
8,396
|
|||
Cash paid for net working capital adjustment
|
650
|
|||
|
||||
|
||||
Total purchase price
|
$
|
41,046
|
Fair value allocation of purchase price
|
||||
Accounts receivable
|
$
|
3,576
|
||
Inventory
|
2,380
|
|||
Prepaid expenses and other current assets
|
52
|
|||
Property and equipment
|
5,418
|
|||
Intangible assets
|
13,193
|
|||
Goodwill
|
17,645
|
|||
Accounts payable and accrued expenses
|
(699
|
)
|
||
Accrued expenses
|
(519
|
)
|
||
|
||||
Total purchase price
|
$
|
41,046
|
Fair Value of identified intangible assets
|
Fair Value
|
|||
Trade names
|
$
|
645
|
||
Order backlog
|
479
|
|||
Customer relationships
|
12,069
|
|||
|
||||
|
$
|
13,193
|
Expected amortization of identified intangible assets
|
||||
Fiscal year
|
||||
2018
|
$
|
789
|
||
2019
|
928
|
|||
2020
|
928
|
|||
2021
|
928
|
|||
2022
|
928
|
|||
2023 and thereafter
|
8,046
|
|||
|
||||
|
$
|
12,547
|
a) |
To eliminate the historical balances not acquired
|
Cash
|
$
|
(5,473
|
)
|
|
Plant, property and equipment
|
(95
|
)
|
||
Cash surrender value, company owned life insurance
|
(497
|
)
|
||
Capital stock
|
50
|
|||
Retained earnings
|
15,279
|
|||
$
|
9,264
|
b) |
To record the initial cash purchase price and net working capital adjustment and related debt and equity issued (see Note 3).
|
c) |
To record the initial fair value estimates of identified intangible assets, leasehold improvements and residual goodwill (see Note 3).
|
d) |
Reflect new compensation arrangements with two key employees in connection with the business combination as per employment agreements which were a condition of the Asset Purchase Agreement, which resulted in a potential increase in total annual compensation of $284 or $142 for the six-month period, if bonus objectives are met.
|
e) |
Record interest expense related to the Bank of America Acquisition Credit Facility. Interest is computed using variable rates as discussed in Note 1 ($303 for the year and $131 for the six-month period). The initial interest rate on the $12 million Unsecured Term Loan was 2.74%. A 1/8% variance in the variable interest rate would have an annual impact of $15,000 on interest expense.
|
f) |
Record amortization of identified intangible assets. Margin in the acquired backlog ($479) is amortized during the first four months after the Acquisition and the value of Customer Relationships is amortized over 13 years, using the straight- line method ($928 annually or $464 for the six-month period)
|
g) |
Record corporate income tax expense, acquired company was previously taxed as a subchapter S corporation, net of the tax impact of other income statement adjustments
|
h) |
Represents the increase in the weighted average shares in connection with the issuance of 176,018 Company common shares in the Acquisition.
|
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