Note P - Palladium Contingent Purchase Price

12 Months Ended

Dec. 31, 2011

Business Combination Disclosure [Text Block]

NOTE P – PALLADIUM CONTINGENT PURCHASE PRICE

On May 16, 2008, the Company entered into a Share Purchase and Shareholders’ Rights Agreement (the “Agreement”) by and among an individual, Palladium and the Company providing for the purchase of a 57% equity interest in Palladium from its shareholders for a total purchase price of €5,350,000, or approximately $8,448,000 (including a loan of €3,650,000, or approximately $5,764,000).  Pursuant to the terms of the Agreement, the Company also agreed to acquire the remaining 43% equity interest in Palladium, subject to certain conditions set forth in the Agreement, which would occur in the first half of 2013, except in certain circumstances.  Upon the initial purchase of the 57% equity interest, the Company determined that the mandatory redemption provisions of the Agreement required the Company to purchase the remaining 43% equity interest as a single unit and that there were no substantive conditions to the future purchase of this remaining 43% equity interest that would reasonably change the redemption conditions from mandatory to contingent.  As such, at July 1, 2008, the Company recorded a liability, Mandatorily Redeemable Minority Interest (“MRMI”) on its balance sheet at fair value, or $4,249,000.  As discussed in more detail below, the Company purchased the remaining 43% equity interest in Palladium on June 2, 2009.

On June 2, 2009, the Company entered into Amendment No. 1 to the Share Purchase and Shareholders’ Rights Agreement by and among an individual, Palladium and the Company providing for the purchase of the remaining 43% equity interest in Palladium for €5,000,000 plus a variable future price (see discussion below).  The payment of the €5,000,000 (or $7,034,000) was paid on June 16, 2009.  The future purchase price is equal to an amount calculated in accordance with a formula driven by Palladium’s EBITDA for the twelve months ended December 31, 2012 less €3,300,000, but not to exceed €6,700,000.  The fair value of this new liability, or the CPP, was determined each quarter based on the current quarter’s projection of Palladium’s EBITDA for the twelve months ended December 31 of the current year, less €3,300,000, but not less than zero.  The change in CPP is based on the current quarter’s EBITDA projection and was recognized as interest income or interest expense during the current quarter.  As a result of purchasing the remaining 43% equity interest, the Company recognized a loss of $2,616,000 on the purchase, which was recorded in Other Income/(Expense), net on the Consolidated Statement of Earnings/Loss.  The loss was calculated as the difference between the purchase price and its MRMI.

On May 1, 2010, the Company entered into Amendment No. 2 to the Share Purchase and Shareholders’ Rights Agreement to revise the terms of the remaining future purchase price for Palladium payable in 2013.  Pursuant to Amendment No. 2, the fair value of the future purchase price for Palladium, i.e. the CPP, will be equal to the net present value of €3,000,000 plus up to €500,000 based on an amount calculated in accordance with a formula driven by Palladium’s EBITDA for the twelve months ended December 31, 2012.  The €500,000 CPP will be determined each quarter based on the current quarter’s projection of Palladium’s EBITDA for the twelve months ended December 31 of the current year.  Excluding the initial recognition of the CPP, any change in CPP is based on the change in net present value of the €3,000,000 and the current quarter’s EBITDA projection, and will be recognized as interest income or interest expense during the current quarter.  During the second quarter of 2010, the Company recognized the initial fair value of the CPP of $3,320,000, which is recorded in Other Income/(Expense), net on its Consolidated Statement of Earnings/Loss.

The change in the CPP or the change in the fair value of MRMI during the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):

	2011		2010		2009
Beginning balance	$	3,689	$	0	$	3,759
Purchase of remaining 43% of Palladium		0		0		(4,417	)
Initial recognition of the net present value of the CPP		0		3,320		0
Change in net present value of the CPP/MRMI		50		369		658
Ending balance	$	3,739	$	3,689	$	0