Acquisitions

12 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisition

On 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 remaining milestones are achieved, of $65.0 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. During the fourth quarter of fiscal year 2021 the fair value of the contingent earn-out liability decreased to $20.2 million.

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	70,801
Right-of-use operating lease assets	5,103
Other long-term assets	4,161
Deferred tax assets	5,836
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 fiscal year ended June 30, 2021, net sales and net loss related to Poppin were $24.1 million and $9.1 million, respectively. The aforementioned net loss includes amortization on acquired intangibles and excludes earn-out adjustments related to operating performance after the acquisition date. Direct costs of the acquisition during the fiscal year ended June 30,

2021 were $3.6 million which was expensed as incurred and included on the Selling and Administrative Expenses line of our 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 1 - Summary of Significant Accounting Policies of Notes to 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 such as pre-acquisition liabilities, which were not final as of June 30, 2021. We utilized management estimates and consultation with an independent third-party valuation firm to assist in the valuation process.

The following summarizes goodwill activity related to the acquisition:

Goodwill
(Amounts in Thousands)
Goodwill - June 30, 2020	$	—
Goodwill - at acquisition date	71,798
Adjustments to purchase price allocation	(997)
Goodwill - June 30, 2021	$	70,801

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)
	Year Ended
	June 30
(Amounts in Thousands, Except Per Share Data)	2021		2020
Net Sales	$	589,157	$	801,492
Net Income	4,210		28,165
Diluted Earnings Per Share of Common Stock	$	0.12	$	0.76

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.