Note 6 - Acquisitions

12 Months Ended

Dec. 28, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

6.     ACQUISITIONS

General

The Company has acquired numerous companies throughout its history and those acquisitions have generally included significant future contingent consideration. The Company gives no assurance that it will make acquisitions in the future and if they do make acquisitions gives no assurance that such acquisitions will be successful.

Future Contingent Payments

As of December 28, 2013, the Company had one active acquisition agreement whereby additional contingent consideration may be earned. Effective July 1, 2012 the Company acquired certain assets of BGA, LLC (“BGA”) as more fully described below. The Company estimates future contingent payments at December 28, 2013 as follows:

Period Ending
December 28, 2013	$	313
January 3, 2015		210
January 2, 2016		222
December 31, 2016		263
Estimated future contingent consideration payments	$	1,008

Actual future contingent payments may materially differ from the estimates above. Future contingent payments to be made to BGA are capped at a maximum of $3.0 million cumulatively. The Company estimates future contingent consideration in payments based on forecasted performance and recorded the net present value of those expected payments as of December 28, 2013. The measurement is based on significant inputs that are not observable in the market, which “Fair Value Measurements and Disclosures” (ASU Topic 820-10-35) refers to as Level 3 inputs.

During the fiscal years ended December 28, 2013 and December 29, 2012, the Company reduced its liability for contingent consideration by $92 and $135, respectively, which relates to the 2009 acquisition of Project Solutions Group, Inc. and is reflected in other income. The Company paid no contingent consideration during the fiscal years ended December 28, 2013 and December 29, 2012.

	Short Term			Long Term			Total
Contingent consideration balance as of December 29, 2012	$	309		$	713		$	1,022
Liability reduced in current year		(92	)		-			(92	)
Moved from long term to short term		306			(306	)		-
Contingent consideration balance as of December 28, 2013	$	523		$	407		$	930

BGA, LLC

Effective July 1, 2012, the Company purchased the operating assets of BGA. BGA provides comprehensive multidiscipline engineering solutions across numerous industry sectors including Power Generation (both Nuclear and Fossil), Energy Delivery, Energy Management, Architecture, Commercial Building and Manufacturing.  The Company believes that the BGA assembled workforce consists of highly trained and experienced engineers who will greatly assist RCM in executing future growth in revenues. The business acquired in the BGA acquisition will operate as part of the Company’s Engineering segment.  The BGA purchase consideration consisted of the following:

Cash	$	1,292
Lease in excess of market, net present value		469
Contingent consideration, net present value		930
Total consideration	$	2,691

The facility lease payments in excess of market value are expected to be incurred over a four year period following the effective date of the BGA acquisition. The acquired above market lease is recorded at its fair value based on the present value, using a discount rate that reflects the risks associated with the acquired lease, equal to the difference between the contractual amounts to be paid under the lease agreement and an estimate of the fair market lease rate at the acquisition date. The shareholders of BGA are eligible to receive post-closing contingent consideration upon BGA exceeding certain base levels of operating income, potentially earned over four years and not to exceed a total of $3.0 million cumulatively.  The amount recorded for the contingent consideration represents the acquisition date fair value of expected consideration to be paid based on BGA’s forecasted operating income during the four year period. Expected consideration was valued based on different possible scenarios for projected operating income. Each case was assigned a probability which was used to calculate an estimate of the forecasted future payments. Then a discount rate was applied to these forecasted future payments to determine the acquisition date fair value to be recorded. At the time of the acquisition, the book and tax basis of assets and liabilities acquired are the same, except for the above market value lease which gave rise to a deferred tax asset as shown below.

The acquisition has been accounted for under the purchase method of accounting. The total estimated purchase price has been allocated as follows:

Fixed assets	$	28
Restricted covenants		70
Customer relationships		180
Deferred tax asset		187
Goodwill		2,226
Total consideration	$	2,691

The primary item that generated goodwill was the acquisition of a highly skilled and trained assembled workforce of engineers that the Company anticipates will allow it to win contract awards from its current and future customer base that the Company would not otherwise win.

Pro Forma Results of Operations

The following (unaudited) results of operations have been prepared assuming the BGA acquisition had occurred as of the beginning of the fifty-two week period ended December 29, 2012. Those results are not necessarily indicative of results of future operations or of results that would have occurred had the acquisition occurred as of the beginning of the period presented.

	Proforma Results for the Fiscal Year Ended December 29, 2012
Revenues	$	148,420
Operating income	$	5,363
Basic and diluted earnings per share	$	0.26