INTL FCStone 2005 Annual Report Download - page 59

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INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements—(Continued)
September 30, 2005 and 2004
(7) Goodwill and Intangible Assets
The initial purchase price paid by the Company for the acquisition of the foreign exchange business of
Global Currencies Limited exceeded the net asset value received by $2,488,565. This amount was treated as
$2,138,565 initial goodwill and $350,000 identified intangible assets. The Company has accrued additional
goodwill of $3,914,858 under the earn-out provisions of the purchase agreement. As of September 30, 2005, the
Company has paid $1,562,158 of the additional goodwill. The balance of the additional goodwill accrual of
$2,352,700 is reported as deferred acquisition consideration payable in the consolidated balance sheets.
The goodwill related to the INTL Global Currencies acquisition is as follows:
September 30,
2005
September 30,
2004
Cash premium paid to sellers .................................. $1,000,000 $1,000,000
Cash paid for net assets received ............................... 3,577,375 3,577,375
Negotiation differences for fixed assets and stamp duty ............. (49,982) (49,982)
Legal and accounting fees .................................... 67,047 67,047
Value of 150,000 common shares at $9.81 per share ............... 1,471,500 1,471,500
Total payments of cash and shares .......................... 6,065,940 6,065,940
Less: Fair value of net assets received ........................... 3,577,375 3,577,375
Less: Intangible assets identified by independent valuation .......... 350,000 350,000
Initial goodwill ......................................... 2,138,565 2,138,565
Additional goodwill under earnout based on foreign exchange
revenues ................................................ 3,914,858 286,380
Total goodwill ......................................... $6,053,423 $2,424,945
The additional goodwill will be calculated for each period as each earn-out payment is earned and an
adjustment will be recorded to goodwill. The first earn-out installment of $1,562,158 was paid in August 2005.
The second earn-out installment of $400,000 is due on or by November 29, 2005. Five additional minimum
payments of $390,540 each are due on or by March 1, 2006, May 30, 2006, August 29, 2006, November 29, 2006
and March 1, 2007. These quarterly payments have a maximum ceiling of $400,000. Further payments may be
due, calculated at 10% of revenues exceeding $10,000,000 in the annual period ending June 30, 2006, and 10%
of revenue exceeding $5,000,000 in the six month period ending December 31, 2006.
The intangible assets identified by an independent valuation related to the INTL Global Currencies
acquisition are as follows:
Intangible assets
September 30,
2005
Noncompete agreement ........................................... $150,000
Tradename .................................................... 100,000
Customerbase .................................................. 100,000
Total intangible assets ........................................ 350,000
Less: Amortization of intangible assets ............................... 116,667
Intangible assets, net ............................................. $233,333
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