WowWee. Optimal entered the consumer robotics, toy and entertainment products segment in November 2007 with the acquisition of WowWee Limited (“WowWee”). In August 2008, Optimal acquired Sablon Distribution S.A. (“Sablon”), a distributor of toy products in the Benelux countries, Austria and Germany, to strengthen and broaden WowWee’s direct distribution model and position WowWee closer to retailers and end users in Sablon’s market. Based in Hong Kong, with offices in Carlsbad, California; New York, New York; Xxxxxxxx-Xxxxxx, Belgium; and Montréal, Quebec; WowWee designs, develops, markets and distributes technology-based, consumer robotic, toy and entertainment products.
WowWee. The comparative summary showing the financial results of WowWee for the last six years and the forecasted results for 2010 is presented below. The financial results include Sablon starting in August 2008. Years ended and ending December 31 1,2,3,4& 5 Budget FY 20106 In thousands of US dollars 2004 2005 2006 2007 2008 2009 2009F Scenario 1 Scenario 2 (9 months) Net sales revenue 60,048 137,153 124,970 104,669 93,395 41,919 66,442 97,778 70,000 Increase (decrease in net sales revenue) N.A. 128.4 % -8.9 % -16.2 % -10.8 % -42.2 % -28.9 % N.A. X.X. Xxxxx profit 22,555 58,172 38,498 31,008 26,995 5,752 7,108 29,160 21,000 As a % of net sales revenue 37.6 % 42.4 % 30.8 % 29.6 % 28.9 % 13.7 % 10.7 % 29.8 % 30.0 % Selling, general and administrative expenses 16,867 30,653 34,163 28,636 38,485 32,089 45,834 25,013 25,013 EBITDA 5,688 27,519 4,335 2,372 (11,490 ) (26,337 ) (38,726 ) 4,147 (4,013 ) As a % of net sales revenue 9.5 % 20.1 % 3.5 % 2.3 % -12.3 % -62.8 % -58.3 % 4.2 % -5.7 % Notes [1] Numbers from 2004 to 2006 are taken directly from the due diligence draft report on WowWee dated July 5, 2007. [2] Numbers in 2007 are based on WowWee’s statement of earnings for fiscal year 2007. [3] Numbers in 2008 are based on 2008 10-K. [4] 2009F numbers have been estimated by Management based on available information up to March 12, 2010. [5] Numbers for the period of 9 months ended September 30, 2009 are based on the 10-Q for the period ended September 30, 2009 [6] Based on the budget prepared by Management as at January 15, 2010. These amounts exclude other income of $3M from the payment processing business.
WowWee. 10.1.1 Intangible assets Intangible assets are made up mostly of customer relations and trade names related to the acquisitions of the toy business segment. Subsequent to significant reductions in sales since acquisition and growing EBITDA losses over the last two years, we believe that the earning power is insufficient to justify the carrying book value of these intangible assets. We have attributed a value of $14.0M to intangible assets. This amount is mostly attributable to PaperJamz and WowWee trade name and trademarks and is justified by our implied EBITDA multiples (section 10.1.5).
