Kodak 2007 Annual Report Download - page 88

87
2005
Creo Inc.
On June 15, 2005, the Company completed the acquisition of Creo Inc. (Creo), a premier supplier of prepress and workflow systems used by commercial
printers around the world. The acquisition of Creo uniquely positions the Company to be the preferred partner for its customers, helping them improve
efficiency, expand their offerings and grow their businesses. The Company paid $954 million (excluding approximately $13 million in transaction related
costs), or $16.50 per share, for all of the outstanding shares of Creo. The Company used its bank lines to initially fund the acquisition, which has been
refinanced with a term loan under the Company’s Secured Credit Agreement. Creo’s extensive solutions portfolio is now part of the Company’s Graphic
Communications Group segment.
The following represents the total purchase price of the acquisition (in millions):
Cash paid at closing $ 954
Estimated transaction costs 13
Total purchase price $ 967
Upon closing of an acquisition, the Company estimates the fair values of assets and liabilities acquired in order to consolidate the acquired balance sheet.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition and represents the final
allocation of the purchase price.
As of June 15, 2005 — (in millions):
Current assets $ 328
Intangible assets (including in-process R&D) 292
Other non-current assets (including PP&E) 166
Goodwill 483
Total assets acquired $ 1,269
Current liabilities $ 241
Non-current liabilities 61
Total liabilities assumed $ 302
Net assets acquired $ 967
Of the $292 million of acquired intangible assets, approximately $36 million was assigned to in-process research and development assets that were
written off at the date of acquisition. The remaining $256 million of intangible assets, which relate to developed technology, trademarks and customer
relationships, have useful lives ranging from six to eight years. The $483 million of goodwill was assigned to the Company’s Graphic Communications
Group segment.
As of the acquisition date, management began to assess and formulate restructuring plans at Creo. As of June 30, 2006, management completed its
assessment and approved actions on these plans. Accordingly, the Company recorded a related liability of approximately $38 million. This liability is
included in the current liabilities amount reported above and represents restructuring charges related to Creo net assets acquired.
During 2007, the Company recorded purchase accounting corrections increasing goodwill by $38 million. See Note 5, “Goodwill and Other Intangible
Assets,” for further discussion.