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Product Acquisitions | 12 Months Ended
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Dec. 31, 2012
Product Acquisitions | (8) Product Acquisitions All product acquisitions made after January 1, 2009 have been accounted for pursuant to FASB ASC 805. On October 7, 2011, AMVAC completed the acquisition of the international rights to cotton defoliant product tribufos (sold under the trade name Def ®) from Bayer CropScience AG (“BCS AG”). The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, and the trademark Def. Def complements AMVAC’s existing cotton defoliant product Folex®, which it has marketed since 2002. This acquisition also complements the U.S. rights to Def that the Company purchased from BCS AG in July 2010 (see below). Both Folex and Def are fast and effective cotton defoliants that facilitate the removal of leaves surrounding the cotton boll and in combination with other products function as a harvest aid. On December 20, 2010, AMVAC completed the acquisition of a global product line relating to the active ingredient tebupirimfos from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, and the trademarks Aztec®, Azteca® and Capinda®. When combined in a mixture with another active ingredient Cyfluthrin, the resulting dual active ingredient product is a leading insecticide that is registered in the United States as Aztec and Mexico as Azteca, where it is used to combat such soil borne insects as rootworm, cutworm, wireworm, seed corn maggots/beetles and white grub in a variety of corn crops. Additionally, it is registered in South Korea (and sold under the trade name Capinda) for use primarily in vegetable crops such as Chinese cabbage and ginseng. On December 7, 2010, AMVAC completed the acquisition of a global insecticide product line relating to the active ingredient ethoprophos (sold under the trade name Mocap®) from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, the Ultima® packaging system and the trademarks Mocap and Ultima. Mocap is a leading soil insecticide that is registered in 50 countries where it is used to combat nematode species in a wide range of crops. On December 7, 2010—AMVAC completed the acquisition of a global (except for Europe and Argentina) insecticide product line relating to the active ingredient fenamiphos (sold under the trade name Nemacur®) from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories and the trademark Nemacur. Nemacur is a leading soil insecticide that is registered in 30 countries for use primarily as a nematicide with additional efficacy against above-ground sucking insects. On October 14, 2010, AMVAC and Kanesho Soil Treatment completed agreements with Certis-USA regarding the crop protection product Basamid® (dazomet) under which AMVAC will become the exclusive distributor and registration holder for this granular soil fumigant in the United States. Certis-USA, will continue to market Basamid into non-food crop applications under a distribution agreement with AMVAC. Basamid complements the strong market position of AMVAC’s Vapam® & K-Pam® soil fumigant brands. The Company will be developing the use of Basamid for high-valued crop segments such as strawberries, tomatoes, lettuce & spinach and will be responsible for the re-registration of dazomet in the United States. On July 21, 2010, AMVAC completed the acquisition of the U.S. cotton defoliant product Tribufos (sold under the trade name Def®) from BCS AG. The acquired assets include registrations and data rights, rights relating to manufacturing and formulation know-how, inventories, and the trademark Def. Def complements AMVAC’s existing cotton defoliant product Folex®, which it has marketed since 2002. Both are fast and effective cotton defoliants that facilitate the removal of leaves surrounding the cotton boll and in combination with other products function as a harvest aid. The following schedule represents intangible assets recognized in connection with product acquisitions (See description of Business, Basis of Consolidation and Significant Accounting Policies for the Company’s accounting policy regarding intangible assets):
|  | Amount |
Intangible assets at December 31, 2009 |  | $ | 86,973 |
Acquisitions during fiscal 2010 |  |  | 32,677 |
Impact of movement in exchange rates and other adjustments |  |  | 63 |
Amortization expense |  |  | (4,464 | )
Intangible assets at December 31, 2010 |  |  | 115,249 |
Acquisitions during fiscal 2011 |  |  | 316 |
Impact of movement in exchange rates and other adjustments |  |  | (161 | )
Other Adjustments related to deferred liabilities |  |  | 6,802 |
Amortization expense |  |  | (6,017 | )
Intangible assets at December 31, 2011 |  |  | 116,189 |
Acquisitions during fiscal 2012 |  |  | 3,473 |
Impact of movement in exchange rates |  |  | (118 | )
Amortization expense |  |  | (6,023 | )
Intangible assets at December 31, 2012 |  | $ | 113,521 |
During 2012 the Company completed the acquisition of product licenses and recorded intangibles assets in the amount of $3,473, of which $2,400 was paid in the period. Furthermore, the Company made payments in the amount of $7,447 associated with product line acquisitions. During 2011, the Company recorded final purchase accounting entries related to the product line acquisitions completed in the final quarter of 2010. As a result, the Company recorded $6,802 as additions to intangible assets and related liability. There was no cash impact on this transaction during this period. The Company made payments in the amount of $400 and $401 associated with product line acquisitions in 2008 and 2010 respectively. During 2010, the Company completed the acquisition of product lines and recorded intangible assets in the amount of $32,677, of which $20,655 was paid during the period. Furthermore, the Company made payments in the amount of $400 associated with product line acquisitions completed in 2008. The following schedule represents the gross carrying amount and accumulated amortization of the intangible assets. Product rights are amortized over their expected useful lives of 25 years. Customer lists are amortized over their expected useful lives of ten years, and trademarks are amortized over their expected useful lives of 25 years.
|  | 2012 |  |  | 2011 |
$000’s |  | Gross |  |  | Accumulated Amortization |  |  | Net Book Value |  |  | Gross |  |  | Accumulated Amortization |  |  | Net Book Value |
Product Rights |  | $ | 139,256 |  |  | $ | 38,530 |  |  | $ | 100,726 |  |  | $ | 135,901 |  |  | $ | 33,130 |  |  | $ | 102,771 |
Customer Lists |  |  | 1,091 |  |  |  | 218 |  |  |  | 873 |  |  |  | 1,091 |  |  |  | 109 |  |  |  | 982 |
Trademarks |  |  | 12,941 |  |  |  | 1,019 |  |  |  | 11,922 |  |  |  | 12,941 |  |  |  | 505 |  |  |  | 12,436 |
Total Intangibles |  | $ | 153,288 |  |  | $ | 39,767 |  |  | $ | 113,521 |  |  | $ | 149,933 |  |  | $ | 33,744 |  |  | $ | 116,189 |
The following schedule represents future amortization charges related to intangible assets:
Year ending December 31, |  |  |
2013 |  | $ | 6,370 |
2014 |  |  | 6,370 |
2015 |  |  | 6,370 |
2016 |  |  | 6,370 |
2017 |  |  | 6,370 |
Thereafter |  |  | 81,671 |
|  | $ | 113,521 |
The following schedule represents the Company’s obligations under product acquisition agreements:
|  | Amount |
Obligations under acquisition agreements at December 31, 2009 |  |  | 1,200 |
Additional obligations acquired |  |  | 32,608 |
Payments on existing obligations |  |  | (20,986 | )
Obligations under acquisition agreements at December 31, 2010 |  |  | 12,822 |
Additional obligations acquired |  |  | 216 |
Addition of deferred liabilities |  |  | 6,802 |
Adjustment to deferred liabilities |  |  | (2,857 | )
FX impact |  |  | 101 |
Amortization of discounted liabilities |  |  | 1,341 |
Payments on existing obligations |  |  | (801 | )
Obligations under acquisition agreements at December 31, 2011 |  | $ | 17,624 |
Additional obligations acquired |  |  | 1,073 |
Adjustment to deferred liabilities |  |  | (216 | )
FX impact |  |  | 48 |
Amortization of discounted liabilities |  |  | 818 |
Payments on existing obligations |  |  | (7,447 | )
Obligations under acquisition agreements at December 31, 2012 |  | $ | 11,900 |
During 2012, the Company remeasured the fair value of the earn out liabilities related to the acquisitions completed in the first quarter of 2010. Based on the remeasurement, the fair value was reduced by $189. The fair value change had the effect of reducing cost of sales by $0 and operating expenses by $189. During 2011, the Company remeasured the fair value of the earn out liabilities related to the acquisitions completed in the first quarter of 2010. Based on the remeasurement, the fair value was reduced by $2,857. The fair value change had the effect of reducing cost of sales by $495 and operating expenses by $2,362. As of December 31, 2012, of the $11,900 obligations under the product acquisitions, $6,154 is included in debt and $5,746 is in other liabilities for a total of $11,900.

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- Definition This element represents the amount of any measurement period adjustment (as defined) realized during the reporting period to intangibles acquired in connection with a business combination for which the initial accounting was complete. + References No definition available. + Details
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