Business Acquisitions

12 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

BUSINESS ACQUISITIONS

BUSINESS ACQUISITIONS

On December 13, 2016, the Company completed the acquisition of substantially all of the net assets and business of The McCall Pattern Company and certain subsidiaries, through newly-formed subsidiaries ("McCall"), for approximately $13,914,000 in cash plus transaction costs of approximately $1,484,000. McCall designs, manufactures, and sells sewing patterns under the McCall’s®, Butterick®, Kwik Sew® and Vogue Patterns® brand names. McCall is a leading provider of home sewing patterns, selling to mass market retailers, specialty fabric and craft chains, and wholesale distributors. A portion of the purchase price is being held in escrow for certain post closing adjustments and indemnification obligations. The acquisition was accounted for using the acquisition method and, due to McCall's distressed financial condition and a motivated previous foreign owner who was seeking to exit operations in the United States, the transaction resulted in a bargain purchase due to the fair value of the net assets acquired of approximately $33,528,000 exceeding the amount paid.

On July 8, 2016, a subsidiary of the Company completed the acquisition of substantially all of the assets and business of Lawrence Schiff Silk Mills, Inc. ("Schiff") for $1,125,000 in cash. Schiff was a leading U.S. manufacturer and distributor of narrow woven ribbon prior to its April 2016 Chapter 11 bankruptcy filing. The acquisition was accounted for using the acquisition method and resulted in a bargain purchase due to the fair value of the net assets acquired of approximately $1,501,000 exceeding the amount paid.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisitions in fiscal 2017 (in thousands):

Accounts receivable	$	2,762
Inventory	32,206
Other assets	553
Total current assets	35,521
Property, plant and equipment	9,473
Intangible assets	4,900
Other	551
Total assets acquired	50,445
Current liabilities	5,328
Deferred tax liability	9,419
Long-term debt	516
Other long-term obligations	153
Total liabilities assumed	15,416
Net assets acquired	$	35,029

As the fair value of identifiable net assets acquired exceeded the fair value of the consideration transferred, the Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that all acquired assets and liabilities assumed were recognized and that the valuation procedures and resulting measures were appropriate. As a result, the Company recorded a gain on bargain purchases of approximately $19,990,000 in the fiscal year ended March 31, 2017.

The financial results of McCall and Schiff, from their respective acquisition dates, are included in the Company's fiscal 2017 results of operations. From the period of acquisition through March 31, 2017, McCall contributed approximately $8,133,000 of revenue and resulted in a net loss of approximately $4,627,000 (primarily due to the recognition of inventory step-up through cost of sales, and acquisition and transition costs that were expensed during the period). The revenue and earnings contributed by Schiff were immaterial for the period from acquisition through March 31, 2017. The following table summarizes the revenue and earnings of the Company had the date of the McCall acquisition been April 1, 2015 (unaudited and in thousands):

	Revenue		Earnings
Supplemental pro forma for the year ended March 31, 2017 (1)	$	344,487	$	10,314
Supplemental pro forma for the year ended March 31, 2016 (1)	$	350,195	$	15,740

⁽¹⁾ Earnings in the above pro forma table exclude bargain purchase gains and recognition of inventory step-up through cost of sales as the inventory turns.

On February 2, 2016, a subsidiary of the Company completed the acquisition of substantially all of the net assets and business of Blumenthal Lansing, LLC ("Blumenthal") for approximately $19,626,000 in cash, including transaction costs of approximately $81,000. The Company also incurred costs of approximately $1,028,000 in fiscal 2016, primarily related to severance. Blumenthal was a leading provider of buttons to the sewing and craft markets in the United States, selling to mass market retailers and wholesale distributors that service independent retail stores. The acquisition was accounted for using the acquisition method, and $4,075,000, which is the excess of cost over fair value of the net tangible and identifiable intangible assets acquired, was recorded as goodwill in the accompanying consolidated balance sheet as of March 31, 2016. During fiscal 2017, the Company recorded a decrease in goodwill of $58,000 related to adjustments to acquired property, plant and equipment and current liabilities. For tax purposes, goodwill resulting from this acquisition is deductible.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition in fiscal 2016 (in thousands):

Accounts receivable	$	1,536
Inventory	2,915
Other assets	203
Total current assets	4,654
Property, plant and equipment	267
Intangible assets	11,800
Goodwill	4,075
Total assets acquired	20,796
Current liabilities	1,051
Other long-term obligations	200
Total liabilities assumed	1,251
Net assets acquired	$	19,545