Acer 2008 Annual Report Download - page 48

Acer Incorporated 2008 Annual Report92
Financial Standing
Acer Incorporated 2008 Annual Report 93
(a) Acquisitions
(i) Gateway, Inc.
On October 15, 2007, the Company completed the acquisition of 100% ownership of Gateway,
Inc., a personal computer company in the U.S., through its indirectly wholly owned subsidiary Acer
American Holding, at a price of US$1.90 (dollars) per share. The total purchase price amounted to
US$711,420 thousand, which was inclusive of direct transaction costs. Gateway Inc. then became the
Company’s indirectly wholly owned subsidiary.
The acquisition was accounted for in accordance with ROC SFAS No. 25 “Business Combinations”.
The Consolidated Companies recognized goodwill, which represents the excess of the purchase price
and direct transaction costs over the fair value of the net identiable tangible and intangible assets.
The following represents the allocation of the purchase price to the assets acquired, liabilities
assumed, and goodwill at the date of acquisition:
NT$ NT$
Purchase Price: 23,507,016
The identiable assets acquired and liabilities assumed:
Current assets 32,139,646
Investments carried at cost 277,057
Property, plant, and equipment 2,808,517
Intangible assets ‒ trademarks and trade names 5,504,220
Intangible assets ‒ customer relationships 1,551,042
Intangible assets ‒ others 1,687,210
Other assets 58,355
Current liabilities (24,576,616)
Long-term liabilities (9,673,377)
Other liabilities (2,923,302) 6,852,752
Goodwill 16,654,264
As of December 31, 2008, the Company identified adjustments which subsequently met the
recognition criteria after the initial recognition and during the purchase price allocation period. The
adjustments included a decrease in property, plant and equipment of NT$77,564 or an increase in
current liabilities of NT$1,766,474, resulting in an increase in goodwill of NT$1,844,038.
The Gateway trademark and trade name have an indefinite life and, accordingly, are not subject
to amortization. The eMachine trademark and trade name are being amortized using the straight-
line method over 20 years, the estimated period in which the economic benets will be consumed.
Customer relationships are being amortized using the straight-line method over the estimated useful
life of 10 years.
(ii) Packard Bell B.V.
In March and June of 2008, the Company completed the acquisition of 100% ownership of Packard
Bell B.V., a personal computer company in Europe, through its indirectly wholly owned subsidiary
Acer Europe B.V., at a total purchase price of Euro 66,117 thousand, which was inclusive of direct
transaction costs.
The acquisition was accounted for in accordance with ROC SFAS No. 25 “Business Combinations”.
The Consolidated Companies recognized goodwill, which represents the excess of the purchase price
and direct transaction costs over the fair value of the net identiable tangible and intangible assets.
The following represents the allocation of the purchase price to the assets acquired, liabilities
assumed, and goodwill at the date of acquisition:
NT$ NT$
Purchase Price: 3,172,080
The identiable assets acquired and liabilities assumed:
Current assets 9,587,790
Property, plant, and equipment 351,162
Intangible assets – Packard Bell trademark 2,163,744
Current liabilities (10,665,179)
Other liabilities (39,608) 1,397,908
Goodwill 1,774,172
The Packard Bell trademark has an indenite life and, accordingly, is not subject to amortization.
(iii) E-Ten Information Systems Co., Ltd
As of September 1, 2008, the Company completed acquisition of 100% ownership of E-Ten
Information Systems Co., Ltd (E-TEN), a handheld device company in Taiwan. The Company
offered to exchange one share of its stock for every 1.07 shares of outstanding E-Ten stock, and issued
a total of 168,158,878 common shares. E-Ten has become the Company’s directly wholly owned
subsidiary.
The acquisition was accounted for in accordance with ROC SFAS No. 25 “Business Combinations”.
The Consolidated Companies recognized goodwill, which represents the excess of the purchase price
and direct transaction costs over the fair value of the net identiable tangible and intangible assets.
The following represents the allocation of the purchase price to the assets acquired, liabilities
assumed, and goodwill at the date of acquisition:
NT$ NT$
Purchase Price: 8,837,267
Fair value of common shares issued 8,700,751
Fair value of outstanding employee stock options assumed 136,516
The identiable assets acquired and liabilities assumed:
Current assets 2,574,588
Equity method investment 789,753
Property, plant, and equipment 1,856,836
Intangible assets – ETEN trademark 450,900
Intangible assets – customer relationship 151,100
Intangible assets – developed technology 1,802,500
Intangible assets – others 88,400
Other assets 485,261
Current liabilities (1,263,892) 6,935,446
Goodwill 1,901,821