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Acquisition
 9 Months Ended
Feb. 26, 2022
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
 
Income. 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
 
an
 
$
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.