Audiovox 2010 Annual Report Download - page 81

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 28, 2010
(Dollars in thousands, except share and per share data)
Schwaiger
On October 1, 2009, Audiovox German Holdings GmbH completed the acquisition of certain assets of Schwaiger, a German
market leader in consumer electronics as well as SAT and receiver technologies.
Purchase price (cash) $ 4,348
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 expand our European operations and increase our presence in the
European accessory market. As consideration, the Company made a cash payment of $4,348, with all acquisition costs
expensed as incurred in accordance with ASC 805.
The following summarizes the preliminary allocation of the purchase price to the fair value of the assets acquired and
liabilities assumed at the date of acquisition:
Assets acquired:
Inventory $ 5,596
Prepaid assets 86
Property, plant and equipment, net 351
Trademarks and other intangible assets 6,213
Total assets acquired $ 12,246
Liabilities assumed:
Accrued expenses and other liabilities 102
Net assets acquired 12,144
Less: purchase price 4,348
Gain on bargain purchase $ 7,796
The allocation of the purchase price to the assets acquired was based upon a valuation study performed by management and
is final.
Thomson Audio/Video
On December 31, 2007, the Company completed the acquisition of certain assets and liabilities of Thomson’s U.S., Canada,
Mexico, China and Hong Kong consumer electronics audio/video business as well as the rights to the RCA brand for the
audio/video field of use. As consideration for Thomson’s audio/video business, the Company paid the following:
Purchase Price $ 18,953
Net asset payment 10,079
Acquisition related costs 926
29,958
Less: Multimedia license fee (10,000)
Multimedia inventory payment (4,387)
Total net purchase price $ 15,571
In addition, the Company agreed to pay Thomson a 1% fee related to future net sales of the RCA brand for the audio/video
field of use for five years (beginning in 2010 through 2014).
Contemporaneous with this transaction, the Company entered into a license agreement with Multimedia Device Ltd., a
Chinese manufacturer, to market certain product categories acquired in the acquisition for an upfront fee of $10,000, the
purchase of certain inventory, which amounted to $4,387, plus a 1% royalty payment on future net RCA sales beginning in
2008 and continuing in perpetuity. From 2010 through 2014, this royalty fee increases to 2% of future net sales.
Accordingly, the upfront license fee of $10,000 and the inventory payment will reduce the Company’s cost of the transaction
(refer to purchase price above).
53
Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠