Note 2 - Acquisition of M.C. Healthcare Products Inc.

3 Months Ended

Dec. 29, 2012

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

2.    ACQUISITION OF ASSETS OF M.C. HEALTHCARE PRODUCTS INC.

On December 9, 2011, we acquired, through Span-Canada (a new wholly-owned subsidiary), substantially all of the assets of M.C. Healthcare Products Inc. (“MCHP” or “M.C. Healthcare”) for approximately $9,800,000, including cash of approximately $7,980,000 at the time of closing and approximately $354,000 for the post-closing working capital adjustment, paid in January 2012, plus 100,000 shares of Span-America common stock valued at approximately $1,441,000.  MCHP manufactures medical bed frames and related products.  We funded the acquisition through a combination of cash on hand, proceeds from the sale of securities available for sale and proceeds of approximately $6,500,000 from our revolving credit facility.  No cash was acquired.  The excess of the consideration transferred over the net tangible and intangible assets was reflected as goodwill of approximately $2,530,000.

The allocation of the total consideration to the fair value of the assets acquired and liabilities assumed in U.S. dollars as of December 9, 2011 is as follows:

Receivables	$	1,800,000
Inventories		2,210,000
Intangibles		3,980,000
Other current assets		60,000
Equipment		300,000
Goodwill		2,530,000
Liabilities assumed		(1,070,000	)
Contingent consideration		(70,000	)
Deferred tax liability		(50,000	)
	$	9,690,000

For the period from December 9, 2011, the date of the MCHP asset acquisition, through December 31, 2011, MCHP contributed net sales of approximately $1,042,000 and operating income of approximately $14,000.  For the Company’s fiscal quarter ended December 29, 2012, MCHP contributed net revenues of approximately $2,380,000 and an operating loss of approximately $45,000.  These results are included in the Consolidated Financial Statements for the fiscal quarters ended December 31, 2011 and December 29, 2012.