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Acquisition
 6 Months Ended
Nov. 27, 2021
Acquisitions [Abstract]  
Acquisitions
Note 2 – Acquisition
Effective
 
on
 
May
 
30,
 
2021,
 
the
 
Company
 
acquired
 
the
 
remaining
50
%
 
membership
 
interest
 
in
 
Red
 
River
 
Valley
 
Egg
 
Farm,
LLC (“Red River”),
 
including certain liabilities.
 
As a result of
 
the acquisition, Red River
 
became a wholly owned
 
subsidiary of
the Company.
 
Red River owns and
 
operates a specialty
 
shell egg production
 
complex with approximately
1.7
 
million cage-free
laying
 
hens,
 
cage-free
 
pullet
 
capacity,
 
feed
 
mill,
 
processing
 
plant,
 
related
 
offices
 
and
 
outbuildings
 
and
 
related
 
equipment
located on approximately
400
 
acres near Bogata, Texas.
The
 
following
 
table
 
summarizes
 
the
 
consideration
 
paid
 
for
 
Red
 
River
 
and
 
the
 
amounts
 
of
 
the
 
assets
 
acquired
 
and
 
liabilities
assumed recognized at the acquisition date:
Cash consideration paid
$
48,500
Fair value of the Company's equity interest in Red River held before the business combination
48,500
$
97,000
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash
$
3,677
Accounts receivable, net
1,980
Inventory
8,789
Property, plant and equipment
85,002
Liabilities assumed
(2,448)
Deferred income taxes
(8,481)
Total identifiable
 
net assets
88,519
Goodwill
8,481
$
97,000
Cash and
 
accounts receivable
 
acquired
 
along with
 
liabilities assumed
 
were valued
 
at their
 
carrying value
 
which approximates
fair value due to the short maturity of these instruments.
Inventory consisted primarily
 
of flock,
 
feed ingredients,
 
packaging, and egg
 
inventory.
 
Flock inventory was
 
valued at carrying
value as management believes
 
that their carrying value
 
best approximates their fair
 
value.
 
Feed ingredients, packaging
 
and egg
inventory were all valued based on market prices as of May 30, 2021.
 
Property,
 
plant and
 
equipment were
 
valued utilizing
 
the cost
 
approach which
 
is based
 
on replacement
 
or reproduction
 
costs of
the assets and subtracting any depreciation resulting from physical deterioration
 
and/or functional or economic obsolescence.
The Company
 
recognized
 
a gain
 
of $
4.5
 
million
 
as a
 
result of
 
remeasuring
 
to fair
 
value its
50
% equity
 
interest in
 
Red
 
River
held before the business combination. The gain
 
was recorded in other income and expense under the
 
heading “Other, net” in the
Company’s
 
Condensed Consolidated
 
Statements of
 
Operations. The
 
acquisition of
 
Red River
 
resulted in
 
a discrete
 
tax benefit
of $
8.3
 
million, which includes a $
7.3
 
million decrease in deferred income
 
tax expense related to the outside-basis
 
of our equity
investment
 
in
 
Red
 
River,
 
with
 
a
 
corresponding
 
non-recurring,
 
non-cash
 
$
954,000
 
reduction
 
to
 
income
 
taxes
 
expense
 
on
 
the
non-taxable
 
remeasurement
 
gain
 
associated
 
with
 
the
 
acquisition.
 
As
 
part
 
of
 
the
 
acquisition
 
accounting,
 
the
 
Company
 
also
recorded a $
8.5
 
million deferred tax liability
 
for the difference
 
in the inside-basis
 
of the acquired
 
assets and liabilities assumed.
The recognition
 
of deferred
 
tax liabilities resulted
 
in the
 
recognition of
 
goodwill. None
 
of the goodwill
 
recognized is
 
expected
to be deductible for income tax purposes.