Plantronics 2010 Annual Report Download - page 70

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62
4. DISCONTINUED OPERATIONS
The Company entered into an Asset Purchase Agreement on October 2, 2009, a First Amendment to the Asset Purchase Agreement on
November 30, 2009, a Side Letter to the Asset Purchase Agreement on January 8, 2010, and a second Side Letter to the Asset
Purchase Agreement on February 15, 2010 (collectively, the “APA”) to sell Altec Lansing, its AEG segment, which was completed
effective December 1, 2009. AEG was engaged in the design, manufacture, sales and marketing of audio solutions and related
technologies. All of the revenues in the AEG segment were derived from sales of Altec Lansing products. All operations of AEG
have been classified as discontinued operations in the Consolidated statement of operations for all periods presented.
Pursuant to the APA, we received approximately $11.1 million upon closing of the transaction. In addition, the Company originally
recorded $5.1 million in contingent escrow assets which primarily consisted of amounts for (1) potential customer short payments on
accounts receivable for sales related reserves that were sold to the Purchaser, (2) potential indemnification claims, and (3) potential
adjustments related to the final valuation of net assets sold in comparison to the target net asset value. In the fourth quarter of fiscal
2010, the Company received $2.1 million of the escrow and released $1.4 million of the escrow for potential customer short payments
as this was not utilized. The remaining escrow amounts of $1.6 million are included in Other current assets on the Consolidated
balance sheet as of March 31, 2010 as they are all collectable within one year.
The final purchase price was based on certain post closing adjustments which were finalized in the fourth quarter of fiscal 2010.
Consequently, the actual proceeds and net assets sold varied from the amounts reported in the third quarter of fiscal 2010 based on the
final net asset value as compared to the target net asset value per the APA.
Under the terms of the APA, the Company sold the following net assets, valued at their book value (in thousands):
Inventory, net 17,702$
Sales related reserves included in Accounts receivable, net (4,724)
l assets transferred (1,893)
ld 11,057$
Property, plant and equipment, net 1,012
Warranty obligation accrual (383)
Accrual for inventory claims at manufacturers (657)
Adjustment for fina
Total net assets so
The Company retained all existing AEG related accounts receivable, accounts payable and certain other liabilities as of the close date.
The Company recorded a loss of $0.6 million in fiscal 2010 on the sale of Altec Lansing which is calculated as follows (in thousands):
Proceeds received upon close 11,075$
Escrow payments received to date 2,065
Remaining escrow payments to be received 1,625
Payment to purchaser for adjustment for final value of net assets under APA (3,956)
Total estimated proceeds 10,809
Book value of net assets sold (11,057)
Costs incurred upon closing (363)
Loss on sale of AEG (611)$