Audiovox 2009 Annual Report Download - page 89

The allocation of the purchase price to assets acquired and liabilities assumed was based upon a valuation study performed by
management and is final. Trademark and other intangible assets includes $4,315 of amortizable customer relationships with
an estimated life of 15 years.
Incaar
On August 14, 2007, Audiovox German Holdings GmbH completed the acquisition of certain assets and the business of
Incaar Limited (“Incaar”), an OEM business in Europe for $801, including acquisition costs of $51 and an estimated
contingent payment of approximately $400.
The contingent payment may be due by the Company if certain earnings targets are generated by Incaar for a period of
approximately two years after the acquisition date (August 14, 2007). The earnings target calculation requires that if the
accumulated Incaar pre-tax income, including or excluding certain items, exceeds 1,055 Euros over the cumulative two year
period, the Company is liable to pay an additional $400, as defined in the purchase agreement. The contingent payment was
recorded in connection with the final purchase price allocation (increase to intangible assets and other long-term liabilities) as
the estimated fair value of the net assets acquired exceeded the total purchase price. As the estimated fair value of the net
assets acquired exceeded the total purchase price, after recording the maximum contingent payment, the Company reduced
the estimated fair value of the non-financial assets acquired on a prorata basis to the adjusted purchase price of $801.
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 was to add the experience, concepts and product development of an OEM
business in Europe.
The following summarizes the final allocation of the total purchase price to the estimated fair value of the assets acquired at
the date of acquisition:
Assets acquired:
Trademark and other intangible assets $ 801
Total purchase price (includes cash paid plus estimated contingent fees) $ 801
The allocation of the purchase price to the assets acquired was based upon a valuation study performed by management and
is final. During 2009, the contingent payment period expired and the required earnings targets were not met. As such, the
Company reversed the liability established and reduced the Trademark and other intangibles on a prorata, prospective basis.
After the adjustment, Trademark and other intangible assets include $346 of amortizable customer relationships with an
estimated life of 5 years.
Technuity
On November 1, 2007, Audiovox Accessories Corporation completed the acquisition of all of the outstanding stock of
Technuity, Inc. (“Technuity”), an emerging leader in the battery and power products industry and the exclusive licensee of
the Energizer® brand in North and Latin Americas for rechargeable batteries and battery packs for camcorders, cordless
phones, digital cameras, DVD players and other power supply devices. As consideration for Technuity, the Company paid
the following:
Purchase Price (net of cash acquired) $ 20,373
Final working capital credit $ (317)
Acquisition related costs 1,131
Total Purchase Price $ 21,187
In addition, a minimum working capital payment, as defined in the agreement, and a maximum contingent payment of $1,000
may be due by the Company if certain sales and gross margin targets are met for a period of twelve months after the
acquisition date. The sales and gross margin targets require that net sales exceeds $26.5 million and gross margin exceeds
$7.65 million, as defined in the purchase agreement. As of February 28, 2009, no amount was accrued or paid for the
contingency payment as the sales and gross margin targets were not met. The contingency period has now expired.
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Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Research℠