Audiovox 2005 Annual Report Download - page 83

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On August 29, 2003, the Company entered into a call/put option
agreement with certain employees of Audiovox Germany, whereby these
employees can acquire up to a maximum of 20% of the Company's stated
share capital in Audiovox Germany at a call price equal to the same
proportion of the actual price paid by the Company for Audiovox
Germany. The put options cannot be exercised until the later of (i)
November 30, 2008 or (ii) the full repayment (including interest) of an
inter−company loan granted to Audiovox Germany in the amount of 5.3
million Euros. Notwithstanding the lapse of these time periods, the put
options become immediately exercisable upon (i) the sale of Audiovox
Germany or (ii) the termination of employment or death of the employee.
The put price to be paid to the employee upon exercise will be the then
net asset value per share of Audiovox Germany. Accordingly, the Company
recognizes compensation expense based on 20% of the increase in
Audiovox Germany's net assets representing the incremental change of
the put price over the call option price. Compensation expense for
these options amounted to $388, $371 and $408 for the years ended
November 30, 2003, 2004 and 2005, respectively.
Terk
On January 4, 2005, the Company signed an asset purchase agreement to
purchase certain assets of Terk Technologies Corp. ("Terk"). The
purchase price was subject to a working capital adjustment based on the
working capital of Terk at the time of closing, plus contingent
debentures with a maximum value of $9,280 based on the achievement of
future revenue targets. The total purchase price, which includes a
working capital adjustment of $1,730 and acquisition costs of $514,
approximated $15,345. No amount has been recorded with respect to the
debentures and any amount paid under the debentures would be recorded
as additional goodwill.
The results of operations of this acquisition have been included in the
consolidated financial statements from the date of acquisition. The
purpose of this acquisition is to increase the Company's market share
for satellite radio products as well as accessories such as antennas
for HDTV products.
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 $10,916
Inventory 9,349
Prepaid expenses and other current assets 293
Property, plant and equipment 1,210
Goodwill 8,869
Customer contract (5 years) 1,104
Tradename 1,999
−−−−−
Total assets acquired 33,740
−−−−−−
Liabilities assumed:
Accounts payable accrued expenses and
other liabilities 14,296
Bank obligations 4,099
−−−−−
Total liabilities assumed 18,395
−−−−−−
Cash paid $15,345
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