Acquisitions and Dispositions

Acquisitions:

Rosen Electronics LLC

On April 18, 2017, Voxx acquired certain assets and assumed certain liabilities of Rosen Electronics LLC for cash consideration of $1,814. In addition, the Company agreed to pay a 2% fee related to future net sales of Rosen products for three years, which resulted in a contingent consideration of $530.

Rosen's results of operations have been included in the consolidated financial statements from the date of acquisition. The purpose of this acquisition was to increase the Company's market share and strengthen its intellectual property related to the rear seat entertainment market.

The following summarizes the allocation of the purchase price for the fair value of the assets acquired and liabilities assumed at the date of acquisition:



	April 18, 2017 (as originally reported)		Measurement Period Adjustments			April 18, 2017 (as adjusted)
Assets acquired:
Inventory	$	2,314	(870		)	1,444
Goodwill	10		870			880
Intangible assets including trademarks and customer relationships	520		—			520
Total assets acquired	$	2,844	$	—		$	2,844

Liabilities assumed:
Warranty accrual	500		—			500
Total	$	500	$	—		$	500
Total purchase price	$	2,344	$	—		$	2,344

Dispositions:

Hirschmann Car Communication GmbH

On August 31, 2017 (the "Closing Date"), the Company completed its sale of Hirschmann Car Communication GmbH and its subsidiaries (collectively, “Hirschmann”) to a subsidiary of TE Connectivity Ltd ("TE"). The consideration received by the Company was €148,500. The purchase price, at the exchange rate as of the close of business on the Closing Date approximated $177,000 and is subject to adjustment based upon the final working capital. VOXX International (Germany) GmbH, the Company's German wholly-owned subsidiary, was the selling entity in this transaction.

The Hirschmann subsidiary group, which was included within the Automotive segment, qualified to be presented as a discontinued operation in accordance with ASC 205-20 beginning in the Company's second quarter ending August 31, 2017. Voxx has not had any continuing involvement in the Hirschmann business subsequent to the Closing Date. Hirschmann and TE are not related parties of the Company subsequent to the deconsolidation of Hirschmann.

In order to hedge the fluctuation in the exchange rate before closing, the Company entered into forward contracts totaling €148,500, which could be settled on dates ranging from August 31, 2017 through September 6, 2017. As the sale of Hirschmann closed on August 31, 2017, the Company settled all of the forward contracts on this date. The forward contracts were not designated for hedging and a total foreign currency loss of $(6,618) was recorded when the contracts were settled, within continuing operations for the year ended February 28, 2018.

The following table presents a reconciliation of the major financial lines constituting the results of operations for discontinued operations to the net income from discontinued operations, net of tax, presented separately in the Consolidated Statements of Operations and Comprehensive (Loss) Income:



	Year ended February 28, 2018			Year ended February 28, 2017

Net sales	$	91,824		$	166,512
Cost of sales	63,610			109,027
Gross profit	28,214			57,485

Operating expenses:
Selling	2,778			5,097
General and administrative	14,699			28,309
Engineering and technical support	7,920			16,083
Total operating expenses	25,397			49,489
Operating income from discontinued operations	2,817			7,996

Other (expense) income:
Interest and bank charges (a)	(279		)	(383		)
Other, net	145			(126		)
Total other expense of discontinued operations, net	(134		)	(509		)

Gain on sale of discontinued operations before taxes	36,118			—
Total income from discontinued operations before taxes	38,801			7,487
Income tax expense on discontinued operations (b)	4,183			1,421
Income from discontinued operations, net of taxes	$	34,618		$	6,066
Income per share - basic	$	1.43		$	0.25
Income per share - diluted	$	1.41		$	0.25

(a) Includes an allocation of consolidated interest expense and interest expense directly related to debt assumed by the buyer. The allocation of consolidated interest expense was based upon the ratio of net assets of the discontinued operations to that of the Consolidated Company.

(b) The income tax expense on discontinued operations for the year ended February 28, 2018 was positively impacted by an income tax benefit related to the partial reversal of the Company’s valuation allowance as the Company utilized a significant portion of its tax attributes to offset the U.S. tax gain related to the sale of Hirschmann.

The following table presents supplemental cash flow information of the discontinued operations:



	Year ended February 28, 2018		Year ended February 28, 2017
Operating activities:
Depreciation and amortization expense	$	2,939	$	5,908
Stock-based compensation expense	50		84

Investing activities:
Capital expenditures	2,652		5,122

Non-cash investing and financing activities:
Capital expenditures funded by long-term obligations	1,916		—