ANNUAL REPORT & ACCOUNTS - Somero Enterprises

In addition, the Company calculated a weighted average fair value by placing a 90% weighting
on the discounted cash flow approach and a 10% weighting on the comparable market
approach. The analysis resulted in the weighted average fair value of the Compay exceeding
the carrying value of the Company.
Based upon the fact that the Company’s analysis resulted in the fair value of the Company
exceeding the book value, management concluded that goodwill is not impaired at 31
December 2008 and no adjustments to goodwill were recorded.
5. Property, Plant and Equipment
Property, plant and equipment consist of the following at 31 December:
2007 2008
US$ 000 US$ 000
Land 207 207
Buildings and improvements 3,574 3,572
Machinery and equipment 975 1,410
Equipment sold under recourse contracts 178 -
4,934 5,189
Less: accumulated depreciation and amortization (831) (929)
4,103 4,260
Depreciation expense for the years ended 31 December 2007 and 2008, was approximately
US$378,000 and US$373,000, respectively.
The Company previously offered a facility to customers whereby the Company guaranteed the
financing on the sale of equipment. Equipment previously sold under recourse contracts
continue to be included in Property, Plant and Equipment at a net book value at 31 December
2007 of approximately US$21,000. Revenue under these arrangements has been deferred and
recognized over the life of the financing arrangement, approximately five years. Deferred
revenue of approximately US$20,000 related to these transactions was included in accrued
expenses at 31 December 2007. The Company has made no further sales under recourse
arrangements since 2003.
6. Notes Payable
Summary The Company executed a credit facility with a bank in March 2007 (see section
entitled “Credit Facility” below). The proceeds of the new term loan and the revolving line of
credit were used to pay off in full existing debt balances. The Company incurred a loss in the
early extinguishment of debt of approximately US$1,481,000 which included deferred
financing cost of approximately US$1,245,000. Company’s debt obligations consisted of the
following at 31 December:
2007 2008
US$ 000 US$ 000
Bank debt:
Five year secured reducing revolving line of credit 6,000 2,954
Five year secured term loan 8,929 7,501
Less debt obligations due within one year (1,429) (1,429)
Obligations due after one year 13,500 9,026
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