Audiovox 2005 Annual Report Download - page 82

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Simultaneous with this business acquisition, the Company entered into a
purchase and supply agreement with a third party. In exchange for
entering into this agreement, the Company issued 50 warrants in its
subsidiary, Code, which vest immediately. Furthermore, the agreement
calls for the issuance of additional warrants based upon the future
operating performance of Code. Based upon the contingent nature of the
warrants, no recognition was given to the Code debenture or warrants as
the related contingency was not considered probable and such warrants
had not vested at November 30, 2004 or 2005.
Recoton Audio Group
On July 8, 2003, the Company, acquired in cash (i) trademarks from the
U.S. audio operations of Recoton Corporation (the "U.S. audio
business") or (Recoton) and (ii) the outstanding capital stock of
Recoton German Holdings GmbH (the "international audio business"), the
parent holding company of Recoton Corporation's Italian, German and
Japanese subsidiaries, for $40,046, net of cash acquired, including
transaction costs of $1,900. The primary reason for this transaction
was to expand product offerings and obtain certain long−standing
trademarks such as Jensen(R) and Acoustic Research(R). The Company also
acquired an obligation with a German financial institution as a result
of the purchase of the common stock of Recoton German Holdings GmbH,
which is secured by the acquired company's accounts receivable and
inventory (Note 8). The results of operations of this acquisition have
been included in the consolidated financial statements from the date of
acquisition.
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.
The following unaudited pro−forma financial information for the year
ended November 30, 2003 represents the combined results of the
Company's operations and the Recoton acquisition as if the Recoton
acquisition had occurred at the beginning of the year of acquisition.
The unaudited pro−forma financial information does not necessarily
reflect the results of operations that would have occurred had the
Company constituted a single entity during such periods.
YEAR ENDED
NOVEMBER 30,
−−−−−−−−−−−−−−−
2003
−−−−−−−−−−−−−−−
(unaudited)
Revenue $558,081
Net loss (3,961)
Net loss per share−basic and diluted $ (0.18)
F−28