Audiovox 2004 Annual Report Download - page 86

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AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2002, 2003 and 2004
(Dollars in thousands, except share and per share data)
The acquisition was accounted for using the purchase method of accounting
in accordance with SFAS No. 141 which requires that the total cost of the
acquisition be allocated to the tangible and intangible assets acquired and
liabilities assumed based upon their respective fair values at the date of
acquisition. The results of operations of this acquisition have been
included in the consolidated financial statements from the date of
acquisition.
The following summarizes the allocation of the purchase price to the fair
value of the assets acquired and liabilities assumed at the date of
acquisition:
Assets acquired:
Accounts receivable $12,291
Inventory 21,979
Other current assets 4,014
Property, plant and equipment 2,201
Trademarks 10,303
−−−−−−−
Total assets acquired 50,788
−−−−−−−
Liabilities assumed:
Accounts payable and other current liabilities 6,966
Long−term debt 3,776
−−−−−−−
Total liabilities assumed 10,742
−−−−−−−
Cash paid, net of cash acquired $40,046
=======
The excess of the estimated purchase price over the fair value of assets
and liabilities acquired of $10,303 was allocated to trademarks, with an
indefinite useful life. The allocation of purchase price to assets and
liabilities acquired was based upon an independent valuation study, and the
purchase price is final.
Subsequent to July 8, 2003, the Company sold accounts receivable, inventory
and trademarks ($524, $816 and $2,260, respectively) attributable to the
marine products division acquired in the Recoton acquisition based upon
their estimated fair values which resulted in no gain or loss to the
Company. The sale of the marine division assets was required since the
Company is precluded from selling marine products as a result of its joint
venture agreement with Audiovox Specialized Applications, Inc. (ASA), an
equity investee of the Company.
83