NOTE

–

ACQUISITION

February

21,

2017,

the Company acquired all the capital stock of Atlas Lighting Products, Inc. (Atlas), a Burlington North Carolina manufacturer of high-quality LED lighting products sold into the electrical distribution market. The purchase price of

$97.5

million included a cash payment of

$96.9

million and

200,000

five

year warrants valued at

$0.6

million. The Company funded the acquisition with a combination of cash on hand and

$66

million from a new

$100

million revolving line of credit (See note

8).

The Company has accounted for this transaction as a business combination. Under business combination accounting, the preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of

February

21,

2017

is as follows:

(amounts in thousands)
Cash and Cash Equivalents	$	1,815
Accounts Receivable		7,202
Inventories		8,490
Property, Plant, and Equipment		3,631
Other Assets		248
Intangible Assets		34,319
Liabilities Assumed		(6,106	)
Identifiable net assets acquired		49,599
Goodwill		47,868
Net Purchase Consideration	$	97,467

As indicated, the allocation of the purchase price and estimated useful lives of the property, plant, and equipment, and intangible assets shown remain preliminary, pending final completion of valuations.

Goodwill recorded from the acquisition of Atlas is attributable to the impact of the positive cash flow from Atlas in addition to the expected synergies from the business combination. The goodwill resulting from the acquisition is deductible for tax purposes. The intangible assets include amounts recognized for the fair value of the trade name, customer relationships, and technology-related assets. The fair value of the intangible assets was determined based upon a combination of the market and income (discounted cash flow) approach. The following table present the details of the identified intangible assets acquired at the date of acquisition (in thousands):

	Estimated		Estimate Useful
	Fair Value		Life (Years)
Tradename	$	2,198		20
Technology asset		4,838		10
Customer relationship		27,283		15
Total	$	34,319

The fair market value write-up of the inventory totaled

$228,000,

and the fair market value write-up of the property, plant, and equipment totaled

$526,000.

Transaction costs related to the acquisition totaled

$1.48

million in the

third

quarter and

nine

months ended

March

31,

2017

and are recorded as an operating expense.

Atlas’s post-acquisition results of operations for the period from

February

21,

2017

through

March

31,

2017

are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of Atlas for the period from

February

21,

2017

through

March

31,

2017

were

$6.7

million and operating income was

$1.0

million. The operating results of Atlas are included in the Lighting Segment.

Pro Forma Impact of the Acquisition of Atlas Lighting Products, Inc.

(unaudited)

The following table represents pro forma results of operations and gives effect to the acquisition of Atlas as if the transaction had occurred on

July

2015.

The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that

may

occur in the future. Furthermore, the pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of Atlas.

(In thousands, unaudited)	Nine Months Ended March 31
	2017		2016
Net Sales	$	283,122	$	287,176

Gross Profit	$	73,802	$	81,067

Operating Income	$	6,230	$	14,694

The unaudited pro forma financial information for the

nine

months ended

March

31,

2017

and

March

31,

2016

is prepared using the acquisition method of accounting and has been adjusted to effect to the pro forma events that are:

(1)

directly attributable to the acquisition.

(2)

factually supportable, and

(3)

expected to have a continuing impact on the combined results. The pro forma operating income of

$6.2

million excludes acquisition-related expenses of

$1.48

million.