Audiovox 2010 Annual Report Download - page 85

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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)
The contingent payment may be due by the Company if certain earnings targets are generated by Oehlbach for a period of
three years after the acquisition date (March 1, 2010). The earnings target calculation requires that if the accumulated
Oehlbach operating income, including or excluding certain items exceeds 3,290 Euros over the cumulative three year period,
the Company is liable to pay the excess of the operating income amount (as defined in the purchase agreement) over 3,290
Euros but not to exceed 1,000 Euros. 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 $8,134.
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 the Company’s accessory product lines to European Markets.
The following summarizes the final allocation of the total purchase price to the estimated fair value of the assets acquired and
liabilities assumed at the date of acquisition:
Assets acquired:
Cash $ 200
Accounts receivable, net 2,215
Inventory 1,939
Prepaid expenses and other current assets 60
Property, plant and equipment, net 327
Trademark and other intangible assets 11,661
Total assets acquired $ 16,402
Liabilities assumed:
Accounts payable $ 601
Accrued expenses and other liabilities 2,383
Income taxes payable 891
Long-term debt 807
Deferred tax liability 3,586
Total liabilities assumed $ 8,268
Total purchase price (includes cash paid plus contingent payment) $ 8,134
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.
Pro-forma Financial Information
The following unaudited pro-forma financial information for the years ended February 28, 2010, February 28, 2009 and
February 29, 2008 represents the combined results of the Company's operations as if the Oehlbach, Incaar, Technuity,
Thomson A/V, Schwaiger and Invision acquisitions had occurred at March 1, 2007. 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.
Year Year Year
Ended Ended Ended
February 28, February 28, February 29,
2010 2009 2008
Net Sales $ 617,340 $ 657,647 $ 1,025,342
Net income (loss) 27,966 (77,336) 1,855
Net income (loss) per share-diluted $ 1.22 $ (3.38) $ 0.08
56
Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠