Adaptec 2001 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2001 Adaptec annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 93

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93

67
applications which bridge voice and high-speed data netw orks by compressing voice traffic
into ATM or IP packets.
The acquisitions of Octera, Datum and Malleable were accounted for using the purchase
method of accounting and accordingly, the consolidated financial statements include the
operating results of each acquisition from the respective acquisition dates.
The fair value of the common shares of the Company issued to acquire Malleable, Datum, and
Octera was based on the closing market price of the Company’s stock a short period before and
after the date the terms of the acquisitions were agreed to by the parties and announced to the
public.
The total consideration, including acquisition costs, w as allocated based on the estimated fair
values of the net assets acquired on the respective acquisition dates as follows:
A portion of the purchase price of each acquisition was allocated to unearned compensation
based on the value of certain unvested shares and options of the Company issued to effect each
acquisition. The fair value of the common shares that were issued to acquire Malleable and that
were subject to vesting provisions based on continuing employment was recorded as unearned
compensation. The intrinsic value of the unvested shares and options issued to acquire Datum
and Octera, which were acquired after July 1, 2000, w as allocated to unearned compensation.
Unearned compensation will be recognized as compensation cost over the respective remaining
future service periods.
Purchased In Process Research and Development
The amounts allocated to in process research and development ("IPR&D") w ere determined
through independent valuations using established valuation techniques in the high-technology
industry. The value allocated to IPR& D was based upon the forecasted operating after-tax cash
flows from the technology acquired, giving effect to the stage of completion at the acquisition
date. Estimated future cash flows related to the IPR&D were made for each project based on
the Company’s estimates of revenues, operating expenses and income taxes from the project.
These estimates were consistent with historical pricing, margins and expense levels for similar
products.
Revenues were estimated based on relevant market size and growth factors, expected industry
trends, individual product sales cycles and the estimated life of each product’s underlying
technology. Estimated operating expenses, income taxes and charges for the use of contributory
assets were deducted from estimated revenues to determine estimated after-tax cash flows for
(in thousands) Octera Datum Malleable Total
Tangible assets 258$ 3,788$ 2,031$ 6,077$
Intangible assets:
Internally developed software - - 500 500
Assembled workforce - 250 400 650
Goodwill 1,881 106,356 232,303 340,540
Unearned compensation 14,197 8,363 29,033 51,593
In process research and development - 6,700 31,500 38,200
Liabilities assumed (316) (143) (1,932) (2,391)
16,020$ 125,314$ 293,835$ 435,169$