Acquisition

3 Months Ended

Sep. 30, 2021

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 $31.8 million in contingent earn-out consideration.

The contingent earn-out is payable on annual revenue and profitability milestones achieved through June 30, 2024. As of September 30, 2021 and June 30, 2021, the fair value of the contingent earn-out liability was $24.8 million and $20.2 million, respectively.

A summary of the final 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

Goodwill is primarily attributable to the anticipated supply chain and revenue synergies including cross selling initiatives expected from the operations of the combined company. The goodwill is not deductible for tax purposes. 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 final as of September 30, 2021.

The operating results of this acquisition are included in our consolidated financial statements beginning on December 9, 2020. For the first quarter of fiscal year 2022, net sales and net loss related to Poppin were $15.2 million of net sales and $4.1 million of net loss. The aforementioned net loss includes amortization on acquired intangibles and excludes earn-out adjustments related to operating performance after the acquisition date. There were no direct acquisition costs during the quarter ended September 30, 2021.

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)
	Quarter Ended
	September 30
(Amounts in Thousands, Except Per Share Data)	2020
Net Sales	$	160,790
Net Income (Loss)	2,982
Diluted Earnings (Loss) Per Share of Common Stock	$	0.08

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.