Note 7 – Acquisitions, Goodwill and Intangible Assets

On October 15, 2012, we completed the acquisition of BrightPoint, a U.S. publicly traded company and a global leader in providing device lifecycle services to the wireless industry, for cash and the assumption of its debt. The results of operations of BrightPoint are included in our consolidated financial statements from the date of the merger. The consideration paid was $868,192, net of cash acquired, primarily comprised of $9.00 cash per share of BrightPoint’s outstanding common stock (including common stock underlying restricted stock units and shares issued pursuant to restricted stock awards accelerated upon closing of the transaction) and payment of BrightPoint’s outstanding debt of $260,257 as of October 15, 2012.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of October 15, 2012:


Tangible assets (includes trade accounts receivable, inventory, property and equipment and other assets)	$	1,156,075
Goodwill		418,895
Identifiable intangible assets		309,000
Liabilities (includes accounts payable, accrued expenses and other liabilities)		(1,015,778	)

	$	868,192

We expect to realize operational benefits by leveraging existing channel relationships and utilizing the assembled workforce. We also expect the combined entity to achieve significant savings in corporate and operational overhead costs. We anticipate opportunities for growth through our entry into the global wireless industry, expansion of our geographic reach and customer segment diversity, and the ability to leverage additional products and capabilities. These factors, among others, contributed to a purchase price in excess of the estimated fair value of BrightPoint’s net identifiable assets acquired, and, as a result, we have recorded goodwill in connection with this transaction.

The components of identifiable intangible assets acquired in connection with the BrightPoint acquisition were as follows:


	Fair Value		Estimated Useful Life
Logistics customer relationships	$	237,000		10 years
Distribution customer relationships		59,000		7 years
Trade name		13,000		3 years

Total identifiable intangible assets	$	309,000

The following represents pro-forma operating results for the thirteen weeks ended March 31, 2012 as if BrightPoint had been included in our consolidated statements of operations as of the first date of fiscal year 2012 and include business combination accounting effects from our acquisition including amortization of acquired intangible assets and increase in interest expense associated with the issuance of our senior unsecured notes due in 2022 and additional borrowings from our revolving senior unsecured credit facility debt to fund the acquisition.


	Thirteen Weeks Ended March 31, 2012
Net sales	$	10,005,469

Net income	$	90,845

Earnings per share
Basic	$	0.60

Diluted	$	0.59

The above unaudited pro forma results have been prepared for informational purposes only and do not purport to represent what the results of operations would have been had the acquisition occurred as of those dates, nor of future results of operations.

On September 30, 2012, we acquired certain IT distribution businesses of Aptec Holdings Ltd. (“Aptec”), a Dubai-based value-added distributor in the Middle East and Africa, with products and solutions covering data center, storage, security, networking and software categories, including technical services. In addition, we acquired the Turkey business of Aptec on November 30, 2012. Excluding its Saudi Arabia business, we acquired Aptec for a cash price of approximately $16,302. The acquisition of the Saudi Arabia business is expected to close during the second half of 2013. This acquisition broadens our reach into the Middle East and Africa, while also building our portfolio of higher margin value-added distribution businesses. The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date, resulting in the recording of identifiable intangible assets of $1,834, primarily related to vendor and customer relationships and trademarks with estimated useful lives of 10 and 3 years, respectively, and goodwill of $4,951.

On November 30, 2012, we acquired all of the outstanding shares of Promark Technology Inc. (“Promark”), a value-added distributor in the U.S. with a core technology focus on data storage, data management and electronic document imaging products and services. This acquisition further strengthens our position in higher value products and solutions and extends our reach within the public sector in the U.S. We acquired Promark for an initial cash payment of $7,707; payment of its outstanding debt of $4,675; a hold-back amount of $2,250, which will be released upon settlement of certain closing matters; and a maximum potential earn-out of $1,000 to be paid out by the first quarter of 2015 based upon the achievement of certain pre-defined targets. We have recorded an earn-out obligation of $800, which reflects the estimated fair value of the payout to be achieved. The aggregate purchase price of $15,432 has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction date, resulting in the recording of identifiable intangible assets of $8,526, primarily related to U.S. General Services Administration IT schedule and vendor and customer relationships with estimated useful lives of 20 and 10 years, respectively, and goodwill of $4,555.

In the first quarter of 2012, we paid one of the annual earn-out payments related to a prior period acquisition totaling $333, which was previously accrued at the time of the acquisition.

All acquisitions for the periods presented above, with the exception of BrightPoint, were not material, individually or in aggregate, to us as a whole and therefore, pro forma financial information has not been presented.

The changes in the carrying amount of goodwill for the year ended December 29, 2012 and the thirteen weeks ended March 30, 2013 are as follows:


	North America		Asia- Pacific		BrightPoint		Total
Balance at December 31, 2011	$	—	$	—	$	—	$	—
Acquisitions		4,555		4,951		418,895		428,401

Balance at December 29, 2012	$	4,555	$	4,951	$	418,895	$	428,401

Balance at December 29, 2012	$	4,555	$	4,951	$	418,895	$	428,401
Acquisitions		—		—		—		—

Balance at March 30, 2013	$	4,555	$	4,951	$	418,895	$	428,401

The gross carrying amounts of finite-lived identifiable intangible assets of $443,309 and $445,385 at March 30, 2013 and December 29, 2012, respectively, are amortized over their remaining estimated lives ranging up to 20 years. The net carrying amount was $359,082 and $372,482 at March 30, 2013 and December 29, 2012, respectively. Amortization expense was $11,765 and $2,925 for the thirteen weeks ended March 30, 2013 and March 31, 2012, respectively.