NOTE 16 – ACQUISITIONS

On July 3, 2017, the Company, through a wholly-owned U.K. subsidiary, acquired JLB Brands Ltd., the owner of the Olivia Burton brand, one of the United Kingdom’s fastest growing fashion watch and jewelry brands, for $78.2 million, or £60.0 million in cash, subject to working capital and other closing adjustments. After giving effect to the closing adjustments, the purchase price was $79.0 million, or £60.7 million, net of cash acquired of approximately $5.9 million, or £4.5 million. The acquisition was funded with cash on hand of the Company’s non-U.S. subsidiaries, and no debt was assumed in the acquisition. The acquisition adds a new brand with significant global growth potential to the Company’s portfolio.

The results of the JLB Brands Ltd.’s operations have been included in the consolidated financial statements since the date of acquisition within the International location of the Wholesale segment. In the International locations of the Wholesale segment, for the three and six months ended July 31, 2018, operating income included $0.7 million and $1.5 million, respectively, of expenses primarily related to the amortization of acquired intangible assets, as a result of the Company’s acquisition of the Olivia Burton brand.

The acquisition was accounted for in accordance with FASB Topic ASC 805 (“Business Combinations”), which requires that the total cost of an acquisition be allocated to the tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the date of acquisition.

The operating results of the Olivia Burton brand have been included in the Company’s Consolidated Financial Statements beginning July 3, 2017.

The following table provides the Company’s unaudited pro forma net sales, net income and net income per basic and diluted common share as if the results of operations of the Olivia Burton brand had been included in the Company’s operations commencing on February 1, 2017, based on available information relating to operations of the Olivia Burton brand. This pro forma information is not necessarily indicative either of the combined results of operations that actually would have been realized by the Company had the Olivia Burton brand acquisition been consummated at the beginning of the period for which the pro forma information is presented, or of future results.

	Three Months Ended July 31,				Six Months Ended July 31,
	2018		2017		2018		2017
(In thousands, except per share data)	(Unaudited)				(Unaudited)
Net sales	$	144,093	$	136,026	$	271,242	$	239,309
Net income	$	9,140	$	9,957	$	17,255	$	6,214

Basic income per share:
Net income per share attributed to Movado Group, Inc.	$	0.39	$	0.43	$	0.74	$	0.27

Diluted income per share:
Net income per share attributed to Movado Group, Inc.	$	0.39	$	0.43	$	0.73	$	0.27

The change in the carrying amount of the Company’s goodwill, which is included in the International location of the Wholesale segment, is as follows (in thousands):

	Total
Balance, January 31, 2018	$	60,269
Foreign exchange impact		(4,525	)
Balance, July 31, 2018	$	55,744

Trade name and other intangible assets consist of the following (in thousands):

	As of
	July 31, 2018
	Gross carrying amount		Accumulated amortization			Foreign exchange		Net
Intangible assets subject to amortization:
Trade name	$	12,766	$	(1,428	)	$	132	$	11,470
Customer relationships		8,598		(1,603	)		104		7,099
Total intangible assets	$	21,364	$	(3,031	)	$	236	$	18,569

Estimated amortization expense for the next five years is: $1.4 million for the remaining six months of fiscal 2019, $12.8 million in fiscal years 2020 through 2024 and $4.4 million in total in the years thereafter at prevailing foreign exchange rates.