Annual report pursuant to Section 13 and 15(d)

Acquisition

v2.4.0.6
Acquisition
 12 Months Ended
Dec. 31, 2011
Acquisition [Abstract]  
Acquisition

NOTE 4 – ACQUISITION

On July 27, 2011, the Company acquired Patapsco Designs Limited of the UK ("Patapsco"). The purchase price totals $5,094,000, with cash acquired totaling $862,000. The purchase price includes initial consideration of $3,271,000, deferred consideration of $466,000 to be paid out no later than 18 months from the acquisition date, $656,000 in working capital adjustments, and $701,000 in contingent consideration. The Company has agreed to pay consideration up to $818,000 contingent upon the Patapsco business meeting gross margin and other non-financial targets, with the consideration to paid out no later than two years from the acquisition date. Although the maximum contingent consideration is $818,000, the Company has recognized $701,000 as the estimated fair value of the contingent consideration at the date of acquisition. This contingent consideration has been calculated based on the exchange rate at the date of acquisition and actual payments may differ based on fluctuations in the exchange rate between the dollar and the pound. At December 31, 2011, the Company had estimated liabilities of $1,003,000 related to outstanding consideration payments.

The assets and liabilities of Patapsco were recorded in the consolidated balance sheet within the Transition Networks' segment as of the acquisition date, at their respective fair values. The purchase price allocation is based on the estimated fair value of assets acquired and liabilities assumed and has been allocated as follows:

 

 

 

 

 

 

 

July 27, 2011

 

Current assets

 

$

2,052,149

 

Property, plant, and equipment

 

 

163,671

 

Intangible assets

 

 

801,488

 

Goodwill

 

 

2,702,340

 

 

 

 

Total assets

 

 

5,719,648

 

 

 

 

 

 

Current liabilities

 

$

414,735

 

Long-term deferred tax liabilities

 

 

210,952

 

 

 

 

Total liabilities

 

 

625,687

 

 

 

 

 

 

Net assets acquired

 

$

5,093,961

 

Identifiable intangible assets are definite-lived assets. These assets include customer relationships, trademarks, and technology intangible assets, and have a weighted average amortization period of 8 years, which matches the weighted average useful life of the assets. Goodwill recorded as part of the purchase price allocation is not tax deductible.