Note 2 - Business Combinations

9 Months Ended

Feb. 28, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

2.    BUSINESS COMBINATIONS

Business combinations completed in the third quarter of fiscal year 2014:

Acquisition of LIFECODES distribution businesses – The Company completed the acquisition of both the LIFECODES distribution businesses in the United Kingdom (“UK”) and Italy on January 31, 2014. These acquisitions enable Immucor to streamline the distribution of its LIFECODES products in Europe.

The Company acquired the stock of the UK distribution business for a total cash purchase price of $4.0 million, including acquired cash of $1.2 million. The Company acquired the assets of the Italy distribution business for a total cash purchase price of $2.4 million. In total, the Company acquired identifiable intangible assets of $3.5 million and $1.1 million of goodwill in these acquisitions.  The identifiable intangible assets are mainly customer relationships, which represent the fair value of the existing customer base. The tangible assets acquired in these acquisitions were not material to the Company’s consolidated financial statements. All of the goodwill arising from the Italy asset acquisition is deductible for income tax purposes.  The goodwill arising from the UK acquisition is not tax deductible. The operating results of the acquired businesses have been included in the Company's consolidated results of operations since their dates of acquisition.

Business combinations completed in fiscal 2013:

Acquisition of LIFECODES – The Company completed the acquisition of the LIFECODES business on March 22, 2013. This acquisition enables Immucor to enter the field of transplantation diagnostics – a close adjacency to its current business of transfusion medicine. The LIFECODES business specializes in pre-transplant human leukocyte antigen (“HLA”) typing and screening to ensure the most compatible match between patient and donor, as well as post-transplant patient monitoring to aid in the identification of graft rejection. LIFECODES also offers other immune-monitoring products.

The total cash purchase price of the LIFECODES business was $86.2 million, of which $87.3 million was paid in fiscal 2013, and $1.1 million was returned by the seller in the first quarter of fiscal 2014 as a result of finalizing certain purchase price adjustments.  The purchase agreement included a contingent consideration arrangement for a potential earn-out totaling $10.0 million in cash based upon the LIFECODES business attaining certain operating targets for the 2013 calendar year. Management estimated that the fair value of the contingent consideration arrangement as of the acquisition date was approximately $4.4 million. This was determined by applying a form of the income approach, based upon the probability-weighted projected payment amounts discounted to present value at a rate appropriate for the risk of achieving the financial performance target. The key assumptions were the earn-out period payment probabilities, and an appropriate discount rate. These assumptions are considered to be level 3 inputs by ASC Topic 820, Fair Value Measurement, which is not observable in the market. During fiscal 2013, the Company recognized accretion of $0.1 million which increased the contingent consideration liability to $4.5 million as of May 31, 2013.

The fair value of the contingent consideration liability was decreased by $4.5 million to zero in the first nine months of fiscal 2014 to reflect a change in the earn-out payment probabilities, and the accretion of the fair value amount. These decreases in the contingent consideration liability are reflected as a gain of $4.6 million in the acquisition-related items in the consolidated statements of operations for the first nine months of fiscal 2014. The contingent consideration liability was included in accrued expenses and other current liabilities in the Company’s consolidated balance sheet as of May 31, 2013.

The Company included the operating results of LIFECODES in the consolidated statement of operations since the acquisition date on March 22, 2013. The results for the three months and nine months ended February 28, 2014 included net sales of $11.0 million and $35.3 million and loss before income taxes of zero and $1.3 million, respectively, from LIFECODES.

Pro Forma financial information

The financial information in the table below summarizes the results of operations of the Company for the three and nine months ended February 28, 2014 on a pro forma basis as though the LIFECODES acquisition had occurred at June 1, 2012. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the LIFECODES acquisition had taken place at the beginning of the earliest period presented. Such pro forma financial information is based on the historical financial statements of the Company. This pro forma financial information is based on estimates and assumptions, which have been made solely for purposes of developing such pro forma information, including, without limitation, purchase accounting adjustments. The pro forma financial information presented below also includes depreciation and amortization based on the valuation of the Company’s tangible assets and identifiable intangible assets, and interest expense resulting from the LIFECODES acquisition. The unaudited pro forma financial information presented below for the three months and nine months ended February 28, 2013 does not reflect any synergies or operating cost reductions that may be achieved, or pro forma financial information from the UK or Italy distribution businesses acquired in the third quarter of fiscal 2014. The UK and Italy distribution businesses are not reflected in the unaudited pro forma financial information below because the impact of these businesses was not significant to the Company’s consolidated net sales or results of operations. Also included in the table below are our actual results for the three months and nine months ended February 28, 2014 (in thousands):

	Three Months Ended						Nine Months Ended
	February 28						February 28
	2014			2013			2014			2013
Net sales	$	90,979			97,922			287,226			287,684
Net loss		(7,355	)		(6,240	)		(15,902	)		(28,262	)