Business Combinations

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Business Combinations

On September 27, 2013, the Company completed the acquisition of certain assets and liabilities of Johnson Controls, Inc. (the “Seller”) related to the Seller’s wireless vehicle/home communication HomeLink^® business. Prior to the above-described acquisition, the Seller supplied HomeLink^® products and was a licensor of HomeLink^® to the Company, which allowed for incorporation into the Company’s rearview mirror products, that are installed in automobiles. The aggregate purchase price for the Business paid at the closing was approximately $700 million, subject to adjustments as provided in the Asset Purchase Agreement.

The HomeLink^® acquisition was done to secure the Company’s current customers and product offerings in HomeLink^® mirrors and to enable and expand its capabilities beyond the mirror. Even prior to the acquisition the Company offered HomeLink^® mirrors as part of its existing product portfolio. HomeLink^® mirror products have been sold by the Company in the marketplace for over 10 years, where the Company was previously a licensee of the technology. After the acquisition, there are certain synergies the Company hopes to capitalize upon. There is significant value in the HomeLink^® brand, including consumer awareness when shopping for new automobiles equipped with the feature. The acquisition enables the Company to continue its long history of development and growth of the HomeLink^® mirror based products, as well as to add HomeLink^® products that are not based in the mirror. The Company believes it will be able to apply its expertise in electronics manufacturing to enhance even further the quality and reliability of the HomeLink^® products.

The assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The Company accounted for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations. Revenues related to the Business, of thirty-six million nine hundred thousand and gross profit of twenty million two hundred thousand, for the quarter and year to date period ended December 31, 2013, are included in the Company’s consolidated statement of income and comprehensive income since the acquisition date. The operating results for the Business are included in the Automotive Products segment, consistent with the Company's treatment of other features.

Separate from the Asset Purchase Agreement, the Seller and the Company have entered into a Supply Agreement, in the ordinary course of business, whereby the Company agrees to supply HomeLink^® product to the Seller for incorporation into the Seller’s vehicular products. The Supply Agreement contains customary terms and conditions which are consistent with market rates for sales of similar products to other parties. Due to the nature of the Supply Agreement and the fact that terms are at arms length, there has not been a portion of the purchase price which has been allocated to the Supply Agreement.

The Company funded the transaction using a combination of cash on hand of approximately $423 million and debt financing. The Company’s debt financing included net proceeds from the Company’s new Credit Agreement as described in Note 2.

Through December 31, 2013, the Company has incurred acquisition-related costs of approximately $3.3 million of which approximately $2.3 million has been expensed as incurred in the "Selling, general & administrative" section of its Condensed Consolidated Income Statement. The remaining costs of approximately $1.0 million, were related to the issuance of the Company's new debt financing, further explained in Note 2, which has been classified in the "Prepaid Expenses and Other" section of its' Condensed Consolidated Balance Sheet and will be amortized over the life of the credit agreement.

The below table shows the preliminary allocation of the purchase price as of September 30, 2013 and subsequent adjustments to the preliminary allocation as of December 31, 2013.

Net Assets Acquired	Fair Value as of September 30, 2013		Fair Value Adjustments			Other Adj			Fair Value as of December 31, 2013
Prepaid Service Agreement Costs (1)	$	3,383,000	$	—		$	(3,383,000	)	$	—
Personal Property	4,430,986		3,683,614			—			8,114,600
Real Property	1,060,000		—			—			1,060,000
HomeLink® Trade Names and Trademarks	47,000,000		5,000,000			—			52,000,000
HomeLink®Technology	166,000,000		14,000,000			—			180,000,000
Existing Customer Platforms	43,000,000		—			—			43,000,000
Exclusive Licensing Agreement	87,000,000		9,000,000			—			96,000,000
Accounts Receivable	7,719,302		—			3,400,145			11,119,447
Net Customer Tooling	956,665		—			26,741			983,406
Fair Value of Acquired Assets	360,549,953		31,683,614			43,886			392,277,453
Other adjustments	—		—			(1,492,398		)	(1,492,398		)
Goodwill	337,557,061		(31,683,614		)	1,492,398			307,365,845
Total Cash Consideration	$	698,107,014	$	—		$	43,886		$	698,150,900

(1) - The Company used the prepaid service agreement costs to offset payments due to the Seller in the quarter ended , December 31, 2013.

The following unaudited pro forma condensed consolidated statement of income for twelve month periods ended December 31, and 2012 include pro-forma adjustments to reflect the effect of the acquisition as if it had occurred on January 1, 2013. This unaudited pro forma consolidated statement of income is provided for informational purposes only and does not purport to be indicative of the results which would have actually been attained had the acquisition occurred on January 1, 2013 or that may be attained in the future. 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Twelve Months Ended December 31,
	2013		2012
Net Sales	$	1,271,320	$	1,216,009
Net Income	253,678		205,023

Managements preliminarily allocation of fair values to the identifiable intangible assets was completed through a combination of the relief from royalty and the excess earnings methods.The allocation of the purchase price above is considered preliminary and was based upon valuation information available and estimates and assumptions made as of December 31, 2013. Throughout the fourth quarter of 2013 the Company has worked with valuation specialists in verifying data and information related to the valuation and recording of identifiable intangible assets, net working capital,and the resulting effects on the amount of recorded goodwill. The Company expects to finalize these matters within the measurement period, which is currently expected to remain open through the first quarter of 2014.