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Acquisition of Vilebrequin
 9 Months Ended
Oct. 31, 2012
Acquisition of Vilebrequin [Abstract]  
Acquisition of Vilebrequin

Note 2 – Acquisition of Vilebrequin

On August 7, 2012, the Company acquired all of the outstanding shares of Vilebrequin International SA, a Swiss corporation (“Vilebrequin”) for aggregate consideration consisting of (i) €70.5 million (approximately $87.6 million) in cash and (ii) €15.0 million (approximately $18.6 million) of unsecured promissory notes due December 31, 2017, with interest payable at the rate of 5% per year and (iii) contingent consideration of up to €22.5 million (approximately $27.9 million) based upon achieving certain performance objectives related to the growth of the Vilebrequin business over the three years ending December 31, 2015. The dollar equivalents to the amounts in Euro set forth in the notes to these Condensed Consolidated Financial Statements are based on the exchange rate at the time of the acquisition.

The total consideration was approximately $111.7 million, including the estimated fair value of the contingent consideration. The purchase price has been preliminarily allocated to the tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values, and is subject to adjustment when additional information concerning asset and liability valuations is finalized. The fair value of the contingent consideration is estimated as of the acquisition date based on the present value of the expected contingent payments, which are determined using weighted probabilities of possible payments. The preliminary allocation has resulted in goodwill and intangible assets in the aggregate amount of $99.9 million related to the acquisition of Vilebrequin. Such amounts could change upon finalization of the purchase accounting which is expected to be completed by year end.

The following table (in thousands) summarizes the components of the preliminary purchase price allocation for the acquisition of Vilebrequin:

 

         

Purchase price:

        

Cash paid

   $ 87,573  

Notes issued

     18,633  

Fair value of contingent consideration

     5,452  
   

 

 

  
    $ 111,658  
   

 

 

  

Allocation:

        

Current assets

   $ 25,793  

Property, plant and equipment

     5,725  

Identifiable intangible assets

     68,847  

Other non-current assets, net

     6,208  

Assumed liabilities

     (12,938 ) 

Deferred income taxes

     (13,020 ) 

Goodwill

     31,043  
   

 

 

  
    $ 111,658  
   

 

 

  

 

The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management. Identifiable intangible assets acquired include trademarks valued at $58.6 million with an indefinite life, franchise agreements valued at $7.4 million with an estimated useful life of 14 years, and customer relationships valued at $2.6 million with an estimated useful life of 8 years. The goodwill represents the future economic benefits expected to arise that could not be individually identified and separately recognized, including use of our existing infrastructure to expand sales of Vilebrequin products.

The following unaudited pro forma information presents the results of operations of the Company as if the Vilebrequin acquisition had taken place on February 1, 2011:

 

                                 
    Three Months Ended
October 31,		     Nine Months Ended
October 31,		  
    2012     2011     2012     2011  
    (In thousands, except per share amounts)  

Net sales

   $ 552,275     $ 526,442     $ 1,059,507     $ 984,983  

Net income

     49,389       45,496       51,035       48,324  

Net income per share:

                                

Basic

   $ 2.46     $ 2.29     $ 2.56     $ 2.44  

Diluted

   $ 2.42     $ 2.26     $ 2.51     $ 2.39  

The unaudited pro forma results shown above reflect the assumption that the Company would have financed the acquisition under identical terms and conditions as the actual financing and do not reflect any anticipated cost savings that may result from combining the entities. The unaudited pro forma results of operations have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the Vilebrequin acquisition occurred as of February 1, 2011.

The operating results of Vilebrequin have been included in the Company’s financial statements since August 7, 2012, the date of acquisition, and are reported on a calendar year basis.