CompUSA 2009 Annual Report Download - page 100

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2. ACQUISITIONS
On September 18, 2009, the Company acquired all of the outstanding stock of WStore Europe SA and its subsidiaries,
(“WStore”), a European supplier of business IT products and software solutions with operations in France and the United
Kingdom. The purchase price (after giving effect to the conversion of Euros to U.S. dollars) was approximately $4.4 million in
cash, $2.2 million of which was placed into an escrow account for one year to secure the sellers’ indemnification obligations
under the purchase agreement. The Company completed a preliminary allocation of the purchase price as of the acquisition date
and recorded assets of approximately $3.4 million for Client Lists, $1.4 million for Trademarks, $1.0 million for Technology
acquired and $0.1 million of residual goodwill. These assets were recorded in the Company’ s Technology Products business
segment. The Company expects to amortize its Client Lists and Technology over a weighted average 5 year period. All other
assets have indefinite lives. A final purchase price allocation will be done in 2010. The operating results of WStore are included
in the accompanying condensed consolidated statements of operations from the date of acquisition. WStore is included in the
Company’ s Technology Products business segment. The Company has determined that this was not a material acquisition.
On April 5, 2009, the Company entered into an Asset Purchase Agreement with Circuit City Stores, Inc. and Circuit City Stores
West Coast, Inc. (the “Sellers”). Pursuant to the Asset Purchase Agreement, on May 19, 2009 the Company acquired certain
intellectual property and ecommerce assets owned by the Sellers for $14.0 million in cash. In addition, the Company
will pay the Sellers a royalty based on a percentage of sales over a thirty month period dependent upon levels of sales achieved
from the acquired assets, with a minimum payment of $3.0 million. The Company capitalized legal and other fees incurred of
approximately $0.5 million. The acquisition has been accounted for as an asset purchase rather than a business combination as
the acquisition does not meet the definition of a business under applicable accounting principles.
The Company has completed a purchase price allocation with respect to the Circuit City asset acquisition and recorded assets of
approximately $5.0 million for Trademarks and Trade Names, $7.0 million for Domain Names and $2.5 million for Client Lists.
These assets were recorded in the Company’ s Technology Products business segment. The Company expects to amortize its
Client Lists over a weighted average 5 year period. All other assets have indefinite lives. The gross carrying amount and
accumulated amortization for amortizable intangible assets related to this acquisition at December 31, 2009 and December 31,
2008 was as follows (in thousands):
Gross Carrying
Amount
Accumulated
Amortization
Client Lists $ 2,541 $ 370
On January 5, 2008, the Company, through various subsidiaries, entered into an asset purchase agreement with CompUSA Inc., a
Delaware corporation. Pursuant to the Purchase Agreement, the Company acquired certain assets and liabilities related to the e-
commerce business of CompUSA Inc., certain intellectual property rights owned by CompUSA, and the E-Commerce Business
for $18.9 million in cash. Pursuant to the Purchase Agreement, the Company also acquired sixteen retail leases from CompUSA
Inc. and certain fixtures located at these locations. This acquisition accelerated the Company’ s planned expansion into the retail
market place in North America and Puerto Rico. The Company has recorded assets of approximately $17.0 million for
Trademarks and Trade Names, $8.0 million for Domain Names, $3.4 million for Retail Store Leases, $0.4 million for Client
Lists, $0.9 million for fixed assets and $0.9 million for Goodwill. These assets were recorded in the Company’ s Technology
Products business segment. The Company expects to amortize its Retail Store Leases over the remaining weighted average life of
the leases, 12.9 years, the Client Lists over a weighted average 5 year period and depreciate its fixed assets over a similar period.
All other intangible assets are indefinite lived. All of the Company’ s goodwill at December 31, 2009 is deductible for tax
purposes on a straight line basis over 15 years. The gross carrying amount and accumulated amortization for amortizable
intangible assets at December 31, 2009 was as follows (in thousands):
2009 2008
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Retail store leases $ 3,410 $ 484 $ 3,410 $ 220
Client lists 400 323 400 $ 103
$ 3,810 $ 807 $ 3,810 $ 323
The aggregate amortization expense for material acquisitions was approximately $0.9 million in 2009. The estimated
amortization for material acquisitions for future years ending December 31 is as follows (in thousands):
2010 823
2011 781
2012 771
2013 765
2014 and after 2,034
Total $ 5,174