(8) Product Acquisitions

All product acquisitions made after January 1, 2009 have been accounted for pursuant to FASB ASC 805.

On October 7, 2011, AMVAC completed the acquisition of the international rights to cotton defoliant product tribufos (sold under the trade name Def ^®) from Bayer CropScience AG (“BCS AG”). The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, and the trademark Def. Def complements AMVAC’s existing cotton defoliant product Folex^®, which it has marketed since 2002. This acquisition also complements the U.S. rights to Def that the Company purchased from BCS AG in July 2010 (see below). Both Folex and Def are fast and effective cotton defoliants that facilitate the removal of leaves surrounding the cotton boll and in combination with other products function as a harvest aid.

On December 20, 2010, AMVAC completed the acquisition of a global product line relating to the active ingredient tebupirimfos from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, and the trademarks Aztec^®, Azteca^® and Capinda^®. When combined in a mixture with another active ingredient Cyfluthrin, the resulting dual active ingredient product is a leading insecticide that is registered in the United States as Aztec and Mexico as Azteca, where it is used to combat such soil borne insects as rootworm, cutworm, wireworm, seed corn maggots/beetles and white grub in a variety of corn crops. Additionally, it is registered in South Korea (and sold under the trade name Capinda) for use primarily in vegetable crops such as Chinese cabbage and ginseng.

On December 7, 2010, AMVAC completed the acquisition of a global insecticide product line relating to the active ingredient ethoprophos (sold under the trade name Mocap^®) from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, the Ultima^® packaging system and the trademarks Mocap and Ultima. Mocap is a leading soil insecticide that is registered in 50 countries where it is used to combat nematode species in a wide range of crops. On December 7, 2010—AMVAC completed the acquisition of a global (except for Europe and Argentina) insecticide product line relating to the active ingredient fenamiphos (sold under the trade name Nemacur^®) from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories and the trademark Nemacur. Nemacur is a leading soil insecticide that is registered in 30 countries for use primarily as a nematicide with additional efficacy against above-ground sucking insects.

On October 14, 2010, AMVAC and Kanesho Soil Treatment completed agreements with Certis-USA regarding the crop protection product Basamid^® (dazomet) under which AMVAC will become the exclusive distributor and registration holder for this granular soil fumigant in the United States. Certis-USA, will continue to market Basamid into non-food crop applications under a distribution agreement with AMVAC. Basamid complements the strong market position of AMVAC’s Vapam^® & K-Pam^® soil fumigant brands. The Company will be developing the use of Basamid for high-valued crop segments such as strawberries, tomatoes, lettuce & spinach and will be responsible for the re-registration of dazomet in the United States.

On July 21, 2010, AMVAC completed the acquisition of the U.S. cotton defoliant product Tribufos (sold under the trade name Def^®) from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, and the trademark Def. Def complements AMVAC’s existing cotton defoliant product Folex^®, which it has marketed since 2002. Both are fast and effective cotton defoliants that facilitate the removal of leaves surrounding the cotton boll and in combination with other products function as a harvest aid.

The following schedule represents intangible assets recognized in connection with product acquisitions (See description of Business, Basis of Consolidation and Significant Accounting Policies for the Company’s accounting policy regarding intangible assets):


	Amount
Intangible assets at December 31, 2009	$	86,973
Acquisitions during fiscal 2010		32,677
Impact of movement in exchange rates and other adjustments		63
Amortization expense		(4,464	)

Intangible assets at December 31, 2010		115,249
Acquisitions during fiscal 2011		316
Impact of movement in exchange rates and other adjustments		(161	)
Other Adjustments related to deferred liabilities		6,802
Amortization expense		(6,017	)

Intangible assets at December 31, 2011		116,189
Acquisitions during fiscal 2012		3,473
Impact of movement in exchange rates		(118	)
Amortization expense		(6,023	)

Intangible assets at December 31, 2012	$	113,521

During 2012 the Company completed the acquisition of product licenses and recorded intangibles assets in the amount of $3,473, of which $2,400 was paid in the period. Furthermore, the Company made payments in the amount of $7,447 associated with product line acquisitions.

During 2011, the Company recorded final purchase accounting entries related to the product line acquisitions completed in the final quarter of 2010. As a result, the Company recorded $6,802 as additions to intangible assets and related liability. There was no cash impact on this transaction during this period. The Company made payments in the amount of $400 and $401 associated with product line acquisitions in 2008 and 2010 respectively.

During 2010, the Company completed the acquisition of product lines and recorded intangible assets in the amount of $32,677, of which $20,655 was paid during the period. Furthermore, the Company made payments in the amount of $400 associated with product line acquisitions completed in 2008.

The following schedule represents the gross carrying amount and accumulated amortization of the intangible assets. Product rights are amortized over their expected useful lives of 25 years. Customer lists are amortized over their expected useful lives of ten years, and trademarks are amortized over their expected useful lives of 25 years.


	2012						2011
$000’s	Gross		Accumulated Amortization		Net Book Value		Gross		Accumulated Amortization		Net Book Value
Product Rights	$	139,256	$	38,530	$	100,726	$	135,901	$	33,130	$	102,771
Customer Lists		1,091		218		873		1,091		109		982
Trademarks		12,941		1,019		11,922		12,941		505		12,436

Total Intangibles	$	153,288	$	39,767	$	113,521	$	149,933	$	33,744	$	116,189

The following schedule represents future amortization charges related to intangible assets:


Year ending December 31,
2013	$	6,370
2014		6,370
2015		6,370
2016		6,370
2017		6,370
Thereafter		81,671

	$	113,521

The following schedule represents the Company’s obligations under product acquisition agreements:


	Amount
Obligations under acquisition agreements at December 31, 2009		1,200
Additional obligations acquired		32,608
Payments on existing obligations		(20,986	)

Obligations under acquisition agreements at December 31, 2010		12,822
Additional obligations acquired		216
Addition of deferred liabilities		6,802
Adjustment to deferred liabilities		(2,857	)
FX impact		101
Amortization of discounted liabilities		1,341
Payments on existing obligations		(801	)

Obligations under acquisition agreements at December 31, 2011	$	17,624
Additional obligations acquired		1,073
Adjustment to deferred liabilities		(216	)
FX impact		48
Amortization of discounted liabilities		818
Payments on existing obligations		(7,447	)

Obligations under acquisition agreements at December 31, 2012	$	11,900

During 2012, the Company remeasured the fair value of the earn out liabilities related to the acquisitions completed in the first quarter of 2010. Based on the remeasurement, the fair value was reduced by $189. The fair value change had the effect of reducing cost of sales by $0 and operating expenses by $189.

During 2011, the Company remeasured the fair value of the earn out liabilities related to the acquisitions completed in the first quarter of 2010. Based on the remeasurement, the fair value was reduced by $2,857. The fair value change had the effect of reducing cost of sales by $495 and operating expenses by $2,362.

As of December 31, 2012, of the $11,900 obligations under the product acquisitions, $6,154 is included in debt and $5,746 is in other liabilities for a total of $11,900.