Business Combinations

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

Business Combinations

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 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 paid at the closing was approximately $700 million, subject to adjustments as provided in the Asset Purchase 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 10.

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. The Company continues to believe that there are certain synergies the Company can capitalize on as a result of the acquisition. 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 Company accounted for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations. The assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The operating results for the Business are included in the Automotive Products segment from the date of acquisition, 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 below table shows the preliminary allocation of the purchase price as of September 30, 2013, the subsequent adjustments to the preliminary allocation that were made prior to December 31, 2013. There were no adjustments to the preliminary allocation the in the first quarter 2014, accordingly we believe the allocation of the purchase price was final as of March 31, 2014, which was within the allowable measurement period.

Net Assets Acquired	Fair Value as of September 30, 2013		Fair Value Adjustments			Other Adj			Fair Value as of March 31, 2014
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.

Managements 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 was based upon valuation information available and estimates and assumptions made as of March 31, 2014. From the acquisition date throughout the first quarter of 2014 the Company 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.