Audiovox 2006 Annual Report Download - page 68

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 28, 2007
(Dollars in thousands, except share and per-share data)
3) Issuance of Subsidiary Shares and Transactions with Toshiba
Toshiba had been a minority interest shareholder in the Company’s discontinued Cellular
operation since 1999. As discussed in Note 2, the Company completed its sale of Cellular to
UTStarcom (UTSI) on November 1, 2004. In connection with the sale of Cellular, the Company
repurchased the minority interest in Toshiba and was released from all prior agreements on
November 1, 2004 as a result of the sale of the Cellular business to UTSI.
Minority interest expense relating to Toshiba’s minority share ownership in ACC for the year
ended November 30, 2004 was $2,398 and such expense has been included in discontinued
operations in the accompanying statements of operations.
4) Business Acquisitions
Thomson Accessories
On January 29, 2007, the Company acquired Thomson’s Americas consumer electronics accessory
business as well as rights to the RCA, Recoton, Spikemaster, Ambico and Discwasher brands for
consumer electronics accessories. As consideration for Thomson’s Americas consumer electronics
accessory business, the Company paid the following:
Purchase Price ................................................................ $50,000
Working Capital Adjustment ................................................... 7,617
Acquisition related costs ....................................................... 2,459
Severance costs ............................................................... 351
Total Purchase Price........................................................... $60,427
In addition, the Company agreed to pay Thomson a 0.75%fee related to future net sales of the
RCA brand for five years from the date of acquisition. This fee amounted to $58 for the year
ended February 28, 2007 and has been preliminarily allocated to intangible assets.
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 enhance the
Company’s market share in the accessory business, which includes rights to the RCA brand and
other brand names.
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:
Inventory .................................................................. $31,664
Prepaid expenses and other current assets...................................... 2,312
Tradename ................................................................. 46,735
Total assets acquired ...................................................... $80,711
Liabilities assumed:
Accounts payable .......................................................... $17,489
Accrued expenses and other liabilities ......................................... 2,795
Total liabilities acquired.................................................... $20,284
Cash paid .................................................................... $60,427
The allocation of the purchase price and liabilities acquired is preliminary.
F-28