Note 2. Acquisitions Level 1 (Notes)

9 Months Ended

Nov. 30, 2011

Acquisitions [Abstract]

Business Combination Disclosure [Text Block]

Acquisitions

Klipsch

On March 1, 2011, Soundtech LLC, a Delaware limited liability company and wholly-owned subsidiary of Voxx, acquired all of the issued and outstanding shares of Klipsch Group, Inc. and its worldwide subsidiaries (“Klipsch”) for a total purchase price of $169.6 million, consisting of cash paid at closing of $167.4 million, including a working capital adjustment, and contingent consideration of $2.2 million as a result of a contractual arrangement with a former principal shareholder, plus related transaction fees and expenses. Klipsch is a global provider of high-end speakers for audio, multi-media and home theater applications. The acquisition of Klipsch adds world-class brand names to Audiovox's offerings, increases its distribution network, both domestically and abroad, and provides the Company with entry into the high-end installation market at both the residential and commercial level. In addition to the Klipsch® brand, the Klipsch portfolio includes the brands Jamo®, Mirage®, and Energy®.

In connection with the acquisition, the Company entered into a $175 million credit agreement with Wells Fargo Capital Finance, LLC to fund a portion of the acquisition and future working capital needs, as applicable. At closing, approximately $89 million of the cash paid was borrowed under the Credit Agreement to fund the balance of the purchase price.

As the Klipsch acquisition occurred on March 1, 2011, the consolidated financial statements presented for the three and nine months endedNovember 30, 2011 included the operations of Klipsch.

The Company is currently performing a formal valuation of the acquisition including an analysis of purchase price adjustments and a review of the assets and liabilities acquired to determine appropriate fair values. Management has estimated the fair value of tangible assets acquired and liabilities assumed based on preliminary estimates and assumptions. These preliminary estimates and assumptions could change during the purchase price measurement period as the Company finalizes the valuations of the net tangible and intangible assets.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the date of the acquisition and the estimated amounts assigned to goodwill and intangible asset classifications:

	As of March 1, 2011
Accounts Receivable	$	28,614
Inventory	30,167
Prepaid expenses and other current assets	846
Property, plant and equipment, net	6,347
Goodwill	79,993
Intangible assets	82,563
Deferred tax assets	3,086
Total assets acquired	231,616
Accounts payable	15,796
Accrued expenses and other liabilities	12,664
Deferred tax liabilities	33,557
Net tangible and intangible assets acquired	$	169,599

During the measurement period, the Company recorded $30.5 million of net deferred tax liabilities related to the basis difference between the financial reporting value and the tax value, and adjustments to the intangible asset values in connection with our preliminary purchase price valuation. In addition, the original purchase price allocation was adjusted by $2.2 million during the quarter ended August 31, 2011 to account for contingent purchase price consideration. As a result of these changes, goodwill associated with this transaction was adjusted accordingly.

The preliminary amounts assigned to goodwill and intangible assets for the acquisition are as follows:

	March 1, 2011		Amortization Period (Years)
Goodwill (non-deductible)	$	79,993	N/A
Tradenames (non-deductible)	49,316		Indefinite
Customer relationships	32,000		15
Patents	1,247		13
	$	162,556

Acquisition related costs of $988, $93, $239 and $25 in the three months ended February 28, May 31, August 31, and November 30, 2011, respectively, were expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of income. In addition, the Company incurred $1,250 of costs which were contingent upon the completion of the acquisition and were expensed on March 1, 2011.

Pro Forma Information

The following unaudited pro forma information illustrates the effect on net sales and net income for the nine months endedNovember 30, 2011 and November 30, 2010, assuming that the acquisition had taken place on March 1, 2010.

	Nine Months Ended
	November 30, 2011		November 30, 2010
Net sales:
As reported	$	530,465	$	422,778
Pro forma	530,465		552,082
Net income:
As reported	$	14,783	$	5,624
Pro forma	15,733		15,587
Basic earnings per share:
As reported	$	0.64	$	0.25
Pro forma	0.61		0.68
Diluted earnings per share:
As reported	$	0.64	$	0.24
Pro forma	0.68		0.68
Average shares - basic	23,073,983		22,904,746
Average shares - diluted	23,203,504		23,057,969

The above pro-forma results include certain adjustments for the periods presented to adjust the financial results and give consideration to the assumption that the acquisition occurred on the first day of Fiscal 2011. These adjustments include costs such as an estimate for amortization and depreciation associated with intangible and fixed assets acquired, additional financing costs as a result of the acquisition, and the movement of expenses specific to the acquisition from Fiscal 2012 to Fiscal 2011. These pro-forma results of operations have been estimated for comparative purposes only and may not reflect the actual results of operations that would have been achieved had the transaction occurred on the date presented or be indicative of results to be achieved in the future.