ACQUISITION

6 Months Ended

Apr. 28, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 2 — ACQUISITION

On June 22, 2012, we completed the acquisition of Metl-Span LLC, a Texas limited liability company (“Metl-Span”). Pursuant to the terms of the Equity Purchase Agreement, dated as of May 2, 2012, as amended (the “Equity Purchase Agreement”), among VSMA, Inc., Metl-Span, NCI Group, Inc. and BlueScope Steel North America Corporation, NCI Group, Inc. acquired all of the outstanding membership interests of Metl-Span for approximately $145.7 million in cash (the “Acquisition”), which includes $4.7 million of cash acquired. The purchase price is also subject to a post-closing adjustment based on Metl-Span’s cash, working capital, indebtedness, transaction expenses and accrued employee bonuses at closing. Upon the closing of the Acquisition, Metl-Span became a direct, wholly-owned subsidiary of NCI Group, Inc. Effective October 29, 2012, Metl-Span merged with and into NCI Group, Inc., with NCI Group, Inc. being the lone survivor. Metl-Span’s operations are now conducted through NCI Group, Inc. and its results are included in the results of our metal components segment. The Acquisition has strengthened our position as a leading fully integrated supplier to the nonresidential building products industry in North America, providing our customers a comprehensive suite of building products.

Accordingly, the results of Metl-Span’s operations from June 22, 2012 are included in our consolidated financial statements. For the period from October 29, 2012 to April 28, 2013, Metl-Span contributed revenue and operating income of $91.7 million and $6.0 million, respectively. Metl-Span assets acquired through the Acquisition include five manufacturing facilities in the United States serving the nonresidential building products market with cost-effective and energy efficient insulated metal wall and roof panels. The Acquisition resulted in goodwill of $71.7 million. During the three and six month periods ended April 29, 2012, we recognized $1.5 million and $1.9 million, respectively, in acquisition-related costs.

We report on a fiscal year that ends the Sunday closest to October 31. Metl-Span previously reported on a calendar year that ended on June 30. The unaudited pro forma financial information in the fiscal three and six months ended April 29, 2012 in the table below was prepared based on financial information for Metl-Span for the calendar months of October through March. The unaudited pro forma financial information for the fiscal three months ended April 28, 2013 and April 29, 2012 and the fiscal six months ended April 28, 2013 and April 29, 2012 give effect to the transaction as if it had occurred at the beginning of the earliest fiscal period presented.

This unaudited pro forma financial information does not necessarily represent what would have occurred if the transaction had taken place on the dates presented and should not be taken as representative of our future consolidated results of operations. We have not finalized our integration plans. Accordingly, this pro forma information does not include all costs related to the integration. We also expect to realize operating synergies from consolidating procurement activities. The pro forma information does not reflect these potential synergies or expense reductions.  

	Unaudited Pro Forma						Unaudited Pro Forma
	Fiscal Three Months Ended						Fiscal Six Months Ended
(In thousands except per share amounts)	April 28, 2013			April 29, 2012			April 28, 2013			April 29, 2012
Sales	$	293,399		$	285,532		$	590,983		$	574,496
Net income (loss)	$	(5,342	)	$	212		$	(8,969	)	$	796
Net loss applicable to common shares	$	(5,342	)	$	(17,390	)	$	(8,969	)	$	(27,434	)
Earnings per share:
Basic	$	(0.28	)	$	(0.92	)	$	(0.46	)	$	(1.46	)
Diluted	$	(0.28	)	$	(0.92	)	$	(0.46	)	$	(1.46	)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as part of the Acquisition. The fair value of certain assets acquired and liabilities assumed are preliminary and the final determination of any required purchase accounting adjustments will be made upon the finalization of the post-closing adjustment in the Equity Purchase Agreement and finalization of certain contingent assets and liabilities. We are currently completing our plans to functionally integrate the newly acquired operations into our existing operations. Additionally, as these plans are finalized, we may identify integration charges that are required to be recognized.

(In thousands)	June 22, 2012
Current assets	$	35,233
Current deferred income taxes		2,182
Property, plant and equipment		57,572
Intangible assets		32,760
Assets acquired	$	127,747
Current liabilities	$	24,924
Deferred income taxes		27,404
Lease liability		1,392
Liabilities assumed	$	53,720
Fair value of net assets acquired	$	74,027
Total consideration paid		145,682
Goodwill	$	71,655

The long-term deferred tax liability primarily relates to differences between the book basis and tax basis of property, plant and equipment and intangible assets, which were written up to fair market value for book purposes when accounting for the Acquisition and are not deductible for tax purposes.

The amount allocated to intangible assets was attributed to the following categories (in thousands):

			Lives
Trade names	$	9,600	15 years
Backlog		1,410	3 months
Supplier relationships		150	3 years
Customer lists and relationships		21,600	12 years
	$	32,760

These intangible assets are amortized on a basis consistent with the expected future cash flows.

The excess of the purchase price over the fair values of assets acquired and liabilities assumed was allocated to goodwill. Goodwill of $71.7 million was recorded in our metal components segment. None of the goodwill recorded as a result of this transaction is expected to be deductible for tax purposes.