Creative 2002 Annual Report Download - page 48

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46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 – BUSINESS COMBINATION (Cont’d)
The following table summarizes the allocation of the purchase price to the tangible and identifiable intangible assets
acquired and liabilities assumed (in US$’000):
Net liabilities assumed $ (21,062)
Goodwill 91,976
Acquired in-process technologies 26,080
Other intangible assets consisting of:
Existing technology 7,580
Patent/core technology 6,910
Non-competition agreement 620
Trade name/trademarks 4,160
Total purchase price excluding deferred share compensation $ 116,264
Total deferred share compensation 7,053
Total purchase price including deferred share compensation $ 123,317
The intangible assets are being amortized over their respective benefit periods, which range from one to six years. In
accordance with SFAS 142, “Goodwill and Other Intangible Assets,” Creative will not amortize the goodwill, but will
evaluate it at least annually for impairment.
In accordance with the prevailing accounting standards, the amount of $26.1 million allocated to acquired in-process
technology was written off as other charges in fiscal 2002. It is reasonably possible that the development of this technology
could fail because of either prohibitive cost, inability to perform the required efforts to complete the technology or other
factors outside of Creative’s control such as a change in the market for the resulting developed products. In addition, at
such time that the project is completed it is reasonably possible that the completed products do not receive market
acceptance or that Creative is unable to produce and market the product cost effectively.
The following unaudited pro forma information has been prepared assuming that the above acquisitions had taken place
at the beginning of the earliest periods presented. The amount of the aggregate purchase price allocated to in-process
technology has been excluded from the pro forma information as it is a non-recurring item. The pro forma financial
information is not necessarily indicative of the combined results that would have occurred had the acquisitions taken place
at the beginning of the earliest period, nor is it necessarily indicative of results that may occur in the future.
Unaudited Pro Forma
In US$’000 for the years ended June 30
2002 2001
Sales, net $ 859,096 $ 1,317,147
Net loss (31,778) (160,611)
Basic loss per share (0.43) (2.03)
Diluted loss per share (0.43) (2.03)