|
15. Subsequent Events
On October 1, 2011, LSI completed its acquisition of the assets of Jacobs Trading, LLC. The acquisition price includes an upfront cash payment of $80.0 million, a seller subordinated 5% note of $40.0 million, stock consideration of $24.5 million and an earn-out payment. Under the terms of the agreement, the earn-out is based on EBITDA earned by Jacobs during the trailing 12 months ending December 31, 2012 and 2013. The Company's estimate of the fair value of the earn-out as of October 1, 2011 is $8.2 million out of a possible total earn out payment of $30.0 million. As of September 30, 2011, the Company has incurred $1.7 million of acquisition costs, which were expensed as incurred. Jacobs is a leading remarketer for the sale of surplus and returned consumer goods. Jacobs conducts its sales on a purchase model basis using its marketplace, an extensive global buyer base and product domain expertise.
Under the acquisition method of accounting, the total estimated purchase price is allocated to Jacobs' net tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of October 1, 2011, the effective date of the acquisition of Jacobs. Based on management's preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, and other factors, the preliminary estimated purchase price is allocated as follows:
|
|
|
|
|
|
|
Consideration
Amount |
|
|
|
(in thousands)
|
|
|
Accounts receivable |
|
$ |
4,710 |
|
|
Inventory |
|
|
6,059 |
|
|
Prepaid expenses |
|
|
120 |
|
|
Goodwill |
|
|
110,226 |
|
|
Vendor contract intangible asset |
|
|
33,300 |
|
|
Covenants not to compete |
|
|
2,400 |
|
|
Property and equipment |
|
|
847 |
|
|
Accounts payable |
|
|
(1,837 |
) |
|
Accrued liabilities |
|
|
(3,101 |
) |
| |
|
|
|
|
Total consideration |
|
$ |
152,724 |
|
| |
|
|
|
Goodwill was created as part of the acquisition as the Company acquired an experienced and knowledgeable workforce, all of which is expected to be tax deductable as a result of the asset purchase structure of the transaction. The pro forma revenue and earnings of the Company, including the Jacobs acquisition, was $352.0 million and $15.2 million, respectively. |
