Acquisitions

On July 1, 2013, the Company acquired substantially all of the assets of Sabre Assembly & Manufacturing Co. of Texas (“Sabre”), a sheet metal fabrication company with facilities located in Juarez, Mexico. The acquisition of Sabre enables the Company to offer metal fabrication directly to its customers, in combination with plastic molding, PCB assembly, complete product assembly, design engineering and testing engineering services. Under the terms of the transaction, the assets acquired included manufacturing equipment, inventory, customer relationships and non-compete agreements with key employees. No debt or liabilities were assumed. The total cash payment of $6.0 million was funded through existing cash. The Company incurred approximately $50,000 of costs related to due diligence and closing this acquisition.

The following table summarizes the fair values of the assets acquired as of the date of acquisition (in thousands):



	Fair Values
	At July 1, 2013
Current Assets	$	777
Fixed Assets	1,168
Non-Compete Agreements	372
Customer Relationships	1,970
Goodwill	1,740
Fair Value of Assets Acquired	$	6,027

The Sabre acquisition was accounted for using the acquisition method of accounting whereby the total purchase price is allocated to tangible and intangible assets and liabilities based on their fair values on the date of acquisition. The Company determined the purchase price allocations on the acquisition based on estimates of the fair values of the assets acquired.

On September 3, 2014, the Company acquired all of the outstanding stock of Ayrshire, resulting in Ayrshire becoming a wholly owned subsidiary of the Company. Ayrshire provides printed circuit board assembly and other electronic manufacturing services to a diversified customer base through manufacturing facilities operated by Ayrshire or its subsidiaries in Minnesota, Arkansas, Mississippi, and Kentucky and through a sheltered maquiladora facility in Reynosa, Mexico. The total cash payment of approximately $48.0 million was funded through borrowings on our term loan, revolving line of credit, and cash on hand. The Company incurred approximately $775,000 of costs related to due diligence and closing this acquisition and accrued an additional $200,000 for anticipated costs required to move its Reynosa operations to the Company's existing facility in Juarez, Mexico.

The preliminary allocation of Ayrshire's net purchase price resulted in $8.2 million of goodwill. The final allocation of the purchase price, which the Company expects to complete as soon as practical, may differ from the amounts included in these financial statements. Management does not expect the adjustments resulting from the purchase price allocation, if any, to have a material effect on the Company's financial position or results of operations.

The following table is an estimate of the purchase price for Ayrshire and the preliminary purchase price allocation (in thousands):



	Estimated Fair Values
	At September 3, 2014
Purchase price paid	$	48,010
Cash acquired	(46		)
Purchase price, net of cash received	$	47,964

Cash	$	46
Accounts Receivable	21,211
Inventories	21,772
Other Current Assets	2,321
Fixed Assets	7,823
Favorable Leases	2,941
Customer Relationships	2,833
Non-Compete Agreements	196
Goodwill	8,217
Other Assets	42
Accounts Payable	(11,070		)
Accrued Salaries and Wages	(2,188		)
Other Current Liabilities	(2,408		)
Deferred Tax Liability	(3,726		)
Fair Value of Assets Acquired	$	48,010

The following summary pro forma condensed consolidated financial information reflects the Ayrshire acquisition as if it had occurred on June 30, 2013 for purposes of the statements of income. This summary pro forma information is not necessarily representative of what the Company’s results of operations would have been had this acquisition in fact occurred on June 30, 2013 and is not intended to project the Company’s results of operations for any future period.

Pro forma condensed consolidated financial information for the three and six months ended December 27, 2014 and December 28, 2013 (in thousands):



	Three Months Ended
	(unaudited)
	December 27, 2014		December 28, 2013
Net sales	$	114,311	$	109,981
Net income	$	1,626	$	3,407



	Six Months Ended
	(unaudited)
	December 27, 2014		December 28, 2013
Net sales	$	224,132	$	219,132
Net income	$	721	$	5,440