Ingram Micro 2006 Annual Report Download - page 72

During fiscal year 2006, the Company recorded a credit adjustment to reorganization costs of $1,727,
consisting of: (i) $1,676 in North America related to detailed actions taken in prior years for which the Company
reversed remaining reserves for a portion of a restructured leased facility that management elected to reoccupy in
the current period; (ii) $34 in Europe related to detailed actions taken in prior years for which the Company incurred
lower than expected costs associated with employee termination benefits and facility consolidations; and (iii) $17 in
Asia-Pacific related to detailed actions taken in prior years for which the Company incurred lower than expected
costs associated with a facility consolidation.
In fiscal year 2005, the Company incurred reorganization costs of $16,276, consisting of $9,649 relating to the
outsourcing and optimization plan in North America, $6,709 for the integration of Tech Pacific in Asia-Pacific and a
credit adjustment for $82 for detailed actions taken in previous periods in Europe.
Reorganization costs in fiscal year 2004 consisted of $316 for workforce reduction in Asia-Pacific and net
credit adjustments of $3,212 related to detailed actions taken in previous periods.
Note 4 — Acquisitions
In June 2006, the Company acquired the assets of SymTech Nordic AS, the leading Nordic distributor of
automatic identification and data capture and point-of-sale technologies to solution providers and system inte-
grators. The purchase price for this acquisition consisted of a cash payment of $3,641, which following the
preliminary allocation of purchase price to the assets and liabilities acquired, resulted in the recording of $914 of
goodwill and $189 of amortizable intangible assets primarily related to customer relationships and non-compete
agreements.
In July 2005, the Company acquired certain net assets of AVAD, the leading distributor for solution providers
and custom installers serving the home automation and entertainment market in the U.S. This strategic acquisition
accelerated the Company’s entry into the adjacent consumer electronics market and improved the Company’s
operating margin in its North American operations. AVAD was acquired for an initial purchase price of $136,438.
The purchase agreement also requires the Company to pay the sellers earn-out payments of up to $80,000 over the
three years following the date of acquisition, if certain performance levels are achieved, and additional payments of
up to $100,000 are possible in 2010, if extraordinary performance levels are achieved over a five-year period
following the date of acquisition. Such payment, if any, will be recorded as an adjustment to the initial purchase
price. The purchase price was allocated to the assets acquired and liabilities assumed based on estimated fair values
on the transaction date, resulting in the recording of $47,609 of goodwill which is deductible for tax purposes,
$24,200 of trademarks with indefinite lives and $28,700 of vendor relationships and other amortizable intangible
assets with average estimated useful lives of approximately 10 years. In December 2005, the Company recorded a
payable of $30,000, which was paid in 2006, to the sellers for the initial earn-out in accordance with the provisions
of the purchase agreement, resulting in an increase of goodwill for the same amount. In 2006, the Company made an
adjustment to the purchase price allocation associated with the acquisition of AVAD to reduce the value of net assets
acquired by $603 to reflect the final fair value assessment, resulting in an increase of goodwill for that same amount.
In connection with the Company’s acquisition of AVAD, the parties agreed that $7,500 of the purchase price
shall be held in an escrow account to cover claims from Ingram Micro for various indemnities by the sellers under
the purchase agreement, which was scheduled to be released in full to the sellers in January 2007 if no claims are
made by the Company under the purchase agreement before such date. To date, this amount has not yet been settled
pending final determination of claims for various indemnities.
During 2005, the Company also acquired the remaining shares of stock held by minority shareholders of its
subsidiaries in New Zealand and India. The total purchase price for these acquisitions consisted of cash payments of
$596, resulting in the recording of approximately $577 of goodwill in Asia-Pacific.
In November 2004, the Company acquired all of the outstanding shares of Tech Pacific, one of Asia-Pacific’s
largest technology distributors, for 730 million Australian dollars ($553,688 at closing date) for cash and the
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)