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

6 Months Ended

Mar. 30, 2013

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 from MCHP.  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 Company’s second fiscal quarter ended March 30, 2013, Span-Canada contributed net revenues of approximately $3,500,000 and operating income of approximately $589,000 compared to the same period last year when net revenues were approximately $4,900,000 and operating income was approximately $1,100,000.  For the six months ended March 30, 2013, Span-Canada contributed net sales of approximately $5,900,000 and operating income of approximately $545,000.  For the period from December 9, 2011, the date of the MCHP asset acquisition, through March 31, 2012, Span-Canada contributed net sales of approximately $6,000,000 and operating income of approximately $1,115,000.  These results are included in the Consolidated Financial Statements for the fiscal quarters ended March 30, 2013 and March 31, 2012.