Incredimail 2013 Annual Report Download - page 116

PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3:- ACQUISITIONS (Cont.)
In addition, the Company incurred acquisition related costs in a total amount of $ 1,593, which are included in general and
administrative expenses for the year ended December 31, 2012. Acquisition related costs include legal, accounting fees
and other costs directly related to the acquisition.
Prior to the acquisition of SweetIM Ltd. its board of directors approved a cash dividend of $ 13,000 (the "Dividend").
However, the Dividend was not distributed to the shareholders prior to closing of the transaction. As part of the Share
Purchase Agreement (the "SPA") between the Company and SweetIM's shareholders, it was agreed that upon request by
the designated representative of SweetIM's shareholders to distribute the Dividend, the Company may withhold certain
amounts from such an amount, including on account of certain tax liabilities of SweetIM, and distribute the balance. Upon
execution of the SPA, the Company estimated such tax liabilities in an amount of $ 3,076. The balance of $ 9,960 was
classified previously as restricted cash by the Company.
In December 2013, the Company signed a final tax assessment agreement with the Israeli Tax Authorities with respect to
SweetIM's tax liabilities for the years 2008-
2012 (the "Tax Agreement"), in the amount of $ 1,692 (the "Tax Agreement
Amount").
In June 2013, the Company paid an additional $ 2,711 to SweetIM's shareholders pursuant to the terms of the SPA, as a
result of a working capital adjustment.
Pursuant to the terms of the SPA, the Company was obligated to pay SweetIM's shareholders a second installment in
December 2013, on account of the purchase price, in an overall amount of $ 7,500 (the "Second Installment").
The Company and the representative of SweetIM's shareholders agreed to deduct the Tax Agreement Amount from the
Second Installment instead of from the Dividend. As a result thereof, the Company paid on account of the Second
Installment, an amount of $5,572 ($ 7,500 minus the Tax Agreement Amount and other adjustments).
In December 2013, the Company paid $ 11,500 to SweetIM's shareholders on account of the Dividend. The balance of the
Dividend in the amount $ 1,500 million still remains with the Company and is included within restricted cash.
The primary reasons for this acquisition include; SweetIM’s back-
end systems, the talent and professional background of
its employees, and its product suite, so as to include other consumer products that bear similar characteristics appealing to
its unique demographic segment. A significant amount of the acquisition was recorded as goodwill due to the synergies
with SweetIM.
Under business combination accounting, the total purchase price was allocated to Sweet IM’
s net tangible and intangible
assets based on their estimated fair values as set forth below. The excess of the purchase price over the net tangible and
identifiable intangible assets was recorded as goodwill.
Cash
2,733
Restricted cash
10,260
Trade receivables
7,473
Other receivables and prepaid expenses
1,253
Property and equipment
216
Long
-
term prepaid expenses and other
70
Trade payables
(2,318
)
Accrued expenses and other liabilities
(5,148
)
Payment obligation related to acquisition
(9,958
)
Intangible assets
30,756
Deferred tax liability
(3,786
)
Goodwill
12,682
Total purchase price
44,233
F
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24