Acquisition

9 Months Ended

Mar. 01, 2014

Acquisition [Abstract]

Acquisition

2.   Acquisition

Effective March 1, 2014, the Company purchased our joint venture partner’s 50% interest in Delta Egg Farm, LLC (“Delta Egg”) for $17.0 million.  The Company previously owned 50% of Delta Egg through a joint venture with Sunbest Foods of Iowa, a Moark, LLC affiliate.  The purchase price was funded from our available cash balances.  In conjunction with the acquisition, the Company recognized a non-recurring, non-cash gain of $4.0 million for the excess in purchase price over the carrying value of the 50% investment in the unconsolidated joint venture.  This gain was recorded in “Other Income” in the Company’s Condensed Consolidated Statements of Income.  The gain is non-taxable, and therefore resulted in a $1.5 million reduction to the Company’s income tax expense for the third quarter of fiscal 2014.  Additionally, the Company recorded a $3.7 million decrease to deferred income tax liabilities related to the outside basis of our equity investment in Delta Egg.  Delta Egg’s assets include a feed mill and a production complex with capacity for approximately 1.2 million laying hens near Delta, Utah, as well as an organic complex with capacity for approximately 400,000 laying hens near Chase, Kansas. 

The following table represents the allocation of the purchase price to the assets and liabilities acquired, based on their fair values (in thousands):

Cash and cash equivalents	$	5,452
Investment securities available for sale		1,973
Inventories		7,033
Property, plant, and equipment		24,767
Other intangible assets		929
Goodwill		3,881
Other current assets		2,824
Current liabilities		(3,677)
Long-term debt		(5,301)
Deferred income taxes		(3,881)
Total assets and liabilities acquired	$	34,000

The allocation was preliminary at March 1, 2014 due to the timing of the acquisition.