Tech Data 2013 Annual Report Download - page 66

Table of Contents
Amortization expense for the fiscal years ended January 31, 2013, 2012 and 2011, totaled $37.8 million , $35.4 million and $26.3 million ,
respectively. Estimated amortization expense of capitalized software and development costs placed in service at January 31, 2013, and acquired
intangible assets (which includes customer and vendor relationships, preferred supplier agreement and other intangible assets) is as follows (in
thousands):
NOTE 6 — ACQUISITIONS
Acquisition of Brightstar Europe Limited
In September 2012, the Company acquired Brightstar Corp.’s ("Brightstar") fifty percent ownership interest in Brightstar Europe Limited (“BEL”),
which was a consolidated joint venture between Tech Data and Brightstar. The terms of the agreement included a payment of $165.9 million
in cash
for Brightstar's equity in BEL (reflected as “noncontrolling interest” within the Company’s consolidated balance sheet) and the repayment of all
loans advanced by Brightstar to BEL. Upon the closing of the transaction, the Company recorded a decrease of approximately $85.9 million to
additional paid-in capital within shareholders’ equity, comprised of a purchase price premium of approximately $85.0 million paid to Brightstar for
its share of BEL and approximately $0.9 million of direct costs incurred with the transaction (based on the foreign currency exchange rates on the
date of acquisition). The acquisition of Brightstar's fifty percent interest in BEL, the repayment of all loans advanced by Brightstar to BEL and
transaction costs were funded with the Company’s available cash.
Acquisition of SDG
On November 1, 2012, the Company acquired several distribution companies of Specialist Distribution Group, the distribution arm of Specialist
Computer Holdings PLC (“SCH”), a privately-held IT services company headquartered in the United Kingdom, for a purchase price, which was
finalized during the first quarter of fiscal 2014, of approximately $358 million . The Company used the proceeds from the $350 million of Senior
Notes issued in September 2012 and available cash to fund the acquisition. The acquired distribution companies are Specialist Distribution Group
(SDG) Limited; ETC Metrologie SARL; Best’Ware France SA; ETC Africa SAS and SDG BV (collectively “SDG”). SDG is a leading distributor
of value and broadline IT products in the UK, France and the Netherlands. Management believes the acquisition of SDG supports the Company’s
diversification strategy by strengthening its European value and broadline IT offerings in key markets and expanding the Company’s vendor and
customer portfolios, while leveraging the Company’s existing pan-European infrastructure. Simultaneously with the acquisition of SDG, the
Company entered into a preferred supplier agreement whereby SCH, through its IT reseller business, will have annual purchase commitments
through Tech Data for a period of five years, which the Company estimated would add incremental annual sales of approximately $500 million . In
November 2013, the preferred supplier agreement was amended to extend the term of the agreement from
five years to six years, expiring in
January 2019. In connection with this amendment, while we expect the total sales during the extended term to be higher than originally forecast, we
expect the incremental sales to be approximately $450 million to $475 million annually over six years versus the original forecast of $500 million
annually over five years. SDG's results of operations are included in the Company's consolidated financial statements subsequent to the date of
acquisition.
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Fiscal year:
Capitalized software and
development costs Acquired intangible
assets Total
2014
$
21,000
$
29,800
$
50,800
2015
16,200
29,400
45,600
2016
10,900
26,000
36,900
2017
8,200
24,200
32,400
2018
6,200
21,400
27,600