On Carousel Acquisition, LLC, a then newly-formed and wholly-owned subsidiary of the Company, acquired substantially all of the assets and business of a privately held manufacturer and online retailer of infant and toddler bedding and nursery décor based in Douglasville, Georgia, which was at that time named Carousel Designs, LLC (the “Carousel Acquisition”). On the seller of such assets having relinquished its rights to its name as part of the terms of the acquisition transaction, Carousel Acquisition, LLC changed its name to Carousel Designs, LLC.

 

The Company anticipates that certain synergies, including administrative and capital efficiencies, be achieved as a result of the Company’s control of the combined assets and that the Company will benefit from the direct-to-consumer opportunities that will result from the Carousel Acquisition. Carousel paid an acquisition cost of million from cash on hand and assumed certain specified liabilities relating to the business. In connection with the Carousel Acquisition, Carousel paid off capital leases amounting to that were associated with certain fixed assets that were acquired and recognized as expense of costs associated with the acquisition during fiscal year which is included in marketing and administrative expenses in the accompanying consolidated statements of income.

 

The Carousel Acquisition has been accounted for in accordance with FASB ASC Topic The Company determined the allocation of the acquisition cost with the assistance of an independent party. The identifiable assets acquired were recorded at their estimated fair value, which was determined based on available information and the use of multiple valuation approaches. The estimated useful lives of the identifiable intangible assets acquired were determined based upon the remaining time that these assets are expected to directly or indirectly contribute to the future cash flow of the Company. In its allocation of the acquisition cost, the Company has recognized million of goodwill, the entirety of which has been assigned to the reporting unit of the Company that produces and markets infant and toddler bedding, blankets and accessories, and the entirety of which is expected to be deductible for income tax purposes.

 

The following table represents the Company’s allocation of the acquisition cost (in thousands) to the identifiable assets acquired and the liabilities assumed based on their respective estimated fair values as of the acquisition date. The excess of the acquisition cost over the estimated fair value of the identifiable net assets acquired is reflected as goodwill.

 

Tangible assets:
Inventory		$	967
Prepaid expenses			5
Fixed assets			1,068
Total tangible assets			2,040
Amortizable intangible assets:
Tradename			1,100
Developed technology			1,100
Non-compete covenants			360
Total amortizable intangible assets			2,560
Goodwill			5,679
Total acquired assets			10,279
Liabilities assumed:
Accounts payable			319
Accrued wages and benefits			59
Unearned revenue			271
Other accrued liabilities			60
Capital leases			845
Total liabilities assumed			1,554
Net acquisition cost		$	8,725

 

The Carousel Acquisition resulted in net sales of million and million during fiscal years and respectively. Carousel recorded amortization expense associated with the acquired amortizable intangible assets of and during fiscal years and respectively, which is included in marketing and administrative expenses in the consolidated statements of income. Amortization is computed for the acquired amortizable intangible assets using the straight-line method over the estimated useful lives of the assets, which are years for the tradename, years for the developed technology, years for the non-compete agreements and years on a weighted-average basis for the grouping taken together.

On Sassy Baby (then known as Hamco, Inc.) acquired assets associated with the Sassy®-branded developmental toy, feeding and baby care product line from Sassy LLC and assumed related liabilities (the “Sassy Acquisition”). Sassy Baby paid an acquisition cost of million from a combination of cash on hand and the revolving line of credit. Sassy Baby also recognized as expense of costs associated with the acquisition during fiscal year which is included in marketing and administrative expenses in the accompanying consolidated statements of income.

 

The Company has achieved certain administrative and capital efficiencies as a result of its acquisition of the Sassy product line. For example, synergies were attained in when the Company transferred the inventory acquired in the Sassy Acquisition from Grand Rapids, Michigan to the Company’s distribution facility in Compton, California. The Company anticipates that it will further benefit from the added diversity to the Company’s portfolio of products and that the Sassy Acquisition will strengthen the Company’s overall position in the infant and juvenile products market.

 

The Sassy Acquisition has been accounted for in accordance with FASB ASC Topic The Company determined the allocation of the acquisition cost with the assistance of an independent party. The identifiable assets acquired were recorded at their estimated fair value, which was determined based on available information and the use of multiple valuation approaches. The estimated useful lives of the identifiable intangible assets acquired were determined based upon the remaining time that these assets are expected to directly or indirectly contribute to the future cash flow of the Company.

 

The following table represents the Company’s preliminary allocation of the acquisition cost (in thousands) to the identifiable assets acquired and the liabilities assumed based on their respective estimated fair values as of the acquisition date. The excess of the acquisition cost over the estimated fair value of the identifiable net assets acquired is reflected as goodwill.

 

Tangible assets:
Inventory		$	3,297
Prepaid expenses			120
Fixed assets			383
Total tangible assets			3,800
Amortizable intangible assets:
Tradename			580
Customer relationships			1,840
Total amortizable intangible assets			2,420
Goodwill			320
Total acquired assets			6,540
Liabilities assumed:
Accrued wages			20
Net acquisition cost		$	6,520

 

In its allocation of the acquisition cost, the Company recognized of goodwill, the entirety of which has been assigned to the reporting unit of the Company that produces and markets infant and toddler bibs, developmental toys, bath care and disposable products, and the entirety of which is expected to be deductible for income tax purposes.

 

The Sassy Acquisition resulted in net sales of million and million of developmental toy, feeding and baby care products during fiscal years and respectively. Sassy Baby recorded amortization expense associated with the amortizable intangible assets acquired in the Sassy Acquisition of and during fiscal years and respectively, which is included in marketing and administrative expenses in the consolidated statements of income. Amortization is computed for the acquired amortizable intangible assets using the straight-line method over the estimated useful lives of the assets, which are years for the tradename, years for the customer relationships and years on a weighted-average basis for the grouping taken together.