Audiovox 2006 Annual Report Download - page 69

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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)
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 included a working capital adjustment of $1,730 and acquisition
costs of $514, approximated $15,274, as adjusted. No amount has been recorded with respect to
the debentures and any amount paid under the debentures to date 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................................................................... 8,798
Customer contract (5 years) .................................................. 1,104
Tradename ................................................................. 1,999
Total assets acquired ...................................................... 33,669
Liabilities assumed:
Accounts payable accrued expenses and other liabilities ......................... 14,296
Bank obligations ............................................................ 4,099
Total liabilities assumed.................................................... 18,395
Cash paid .................................................................. $15,274
The allocation of the purchase price to assets and liabilities acquired was based upon an
independent valuation study and is final.
The following unaudited pro-forma financial information for the year ended February 28, 2007,
the three months ended February 28, 2006 and the years ended November 30, 2005 and 2004
represents the combined results of the Company’s operations as if the Thomson and Terk
acquisitions had occurred at December 1, 2003. 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.
F-29