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This excerpt taken from the WEN 10-K filed Apr 3, 2006. Ascension Capital Group, Ltd. On August 30, 2005, the Company acquired substantially all the assets and assumed certain liabilities of Ascension Capital Group, Ltd. (“Ascension Capital”), which included customer contracts and a site in Arlington, Texas. The acquisition was accounted for as a business combination in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” The initial purchase price consisted of $15.8 million in cash and 230,176 shares of Encore common stock valued at $17.38 per share. In addition, the Company will be required to pay a $1.0 million working capital adjustment as part of the purchase price. The Company also deposited $2.0 million into an escrow account in connection with the execution of a three-year employment contract with a key executive of Ascension Capital. The Company will recognize the $2.0 million as compensation expense ratably over three years. If the executive voluntarily departs without good reason or is terminated for cause, any unapplied funds from the escrow will be returned to the Company. The results of operations of the business acquired have been included in the Company’s consolidated financial statements from the date of acquisition. An independent appraisal has been performed for certain identifiable intangible assets acquired in the acquisition. Intangibles assets identified were as follows (in thousands):
Trade Names and TradeMarks were added into Goodwill and the remaining identifiable intangibles assets were grouped as “identifiable intangibles assets” on the consolidated statement of financial condition. The Customer Relationships intangible asset is being amortized over the weighted average life using discounted cash
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flows, resulting in a majority of the amortization expense being recognized in the earlier portion of the useful life of the asset. The remaining
identifiable intangible assets are being amortized on a straight-line basis over the useful economic life of 4 years. Amortization expense for the year ended December 31, 2005 was $0.8 million. Pro forma disclosures have been omitted due to immateriality. The Company’s allocation of the purchase price, which was determined based on an
independent appraisal, is summarized as follows (in thousands): Total cash consideration Purchase price adjustment payable Common stock Acquisition-related costs Total purchase price The Company’s allocation of the purchase price is summarized as follows (in
thousands): Assets: Accounts receivable Notes receivable Purchased Servicing Asset Property and equipment Other assets Intangible assets Goodwill Total assets Liabilities: Accounts payable and accrued liabilities Purchased service obligation Debt Total liabilities Total purchase price | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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