Acquisition

9 Months Ended

Mar. 31, 2021

AcquisitionOn December 9, 2020, we acquired Poppin, Inc. (“Poppin”), a tech-enabled, market-leading B2B commercial furniture design company headquartered in New York City, New York. Poppin designs commercial-grade furniture that is made to mix, match, and scale in today’s modern office and work-from-home environments. The acquisition purchase price totaled $110.4 million in initial cash consideration plus additional contingent payments, if all milestones are achieved, of $70.0 million based on revenue and profitability milestones achieved through June 30, 2024. As of the acquisition date the fair value of the contingent earn-out was $31.8 million. The $110.4 million cash consideration is subject to certain post-closing working capital and other customary adjustments.

A summary of the preliminary purchase price allocation is as follows:


Purchase Price Allocation
(Amounts in Thousands)
Cash	$	5,768
Receivables	2,814
Inventories	15,718
Other current assets	700
Net property and equipment	975
Other intangible assets	52,394
Goodwill	71,973
Right-of-use operating lease assets	5,103
Other long-term assets	4,161
Deferred tax assets	4,664
Total Assets	$	164,270

Current maturities of long-term debt	1,252
Accounts payable	7,715
Customer deposits	2,045
Current portion of operating lease liability	1,937
Accrued expenses	5,260
Long-term debt, less current maturities	1,252
Long-term operating lease liability	2,565
Other long-term liabilities	80
Total Liabilities	$	22,106
Net Assets	$	142,164


Consideration
(Amounts in Thousands)
Cash	$	110,374
Contingent earn-out — fair value at acquisition date	31,790
Fair value of total consideration	$	142,164
Less: Acquired cash	5,768
Total consideration less acquired cash	$	136,396

The operating results of this acquisition are included in our consolidated financial statements beginning on December 9, 2020. For the quarter ended March 31, 2021, net sales and net loss related to Poppin were $8.9 million and $4.0 million, respectively. For the year-to-date period ended March 31, 2021, net sales and net loss related to Poppin were $11.5 million and $5.0 million, respectively. Direct costs of the acquisition during both the quarter and year-to-date periods ended March 31, 2021, of less than $0.1 million and $3.4 million were expensed as incurred and were included on the Selling and Administrative Expenses line of our Condensed Consolidated Statements of Income. The goodwill is not deductible for tax purposes. Goodwill is primarily attributable to the anticipated supply chain and revenue synergies including cross selling initiatives expected from the operations of the combined company. See Note 2 - Recent Accounting Pronouncements and Supplemental Information of Notes to Condensed Consolidated Financial Statements for more information on goodwill and other intangible assets. The purchase price

allocation is provisional pending final valuations and purchase accounting adjustments, which were not final as of March 31, 2021. We utilized management estimates and consultation with an independent third-party valuation firm to assist in the valuation process.

The following summarizes our goodwill activity:


Goodwill
(Amounts in Thousands)

Goodwill - at acquisition date	$	71,798
Adjustments to purchase price allocation	175
Goodwill - March 31, 2021	$	71,973

Pro Forma Information

The following unaudited pro forma financial information summarizes the combined results of operations for Kimball International, Inc. and Poppin, Inc. as if the companies were combined as of the beginning of fiscal year 2020:


	(unaudited)				(unaudited)
	Three Months Ended				Nine Months Ended
	March 31				March 31
(Amounts in Thousands, Except Per Share Date)	2021		2020		2021		2020
Net Sales	$	138,676	$	199,021	$	442,966	$	635,078
Net Income (Loss)	(4,529)		5,542		(3,187)		21,894
Diluted Earnings (Loss) Per Share of Common Stock	$	(0.12)	$	0.15	$	(0.08)	$	0.59

This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments. This pro forma information is not necessarily indicative of what our results would have been had we operated the businesses since the beginning of the periods presented. The pro forma adjustments reflect the income statement effects of amortization of intangibles related to the fair value adjustments of the assets acquired, acquisition-related costs, incremental interest expense, and the related tax effects.