Lenovo 2015 Annual Report Download - page 206

204 Lenovo Group Limited 2014/15 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
35 RETIREMENT BENEFIT OBLIGATIONS (continued)
(c) Additional information on post-employment benefits (pension and medical) (continued)
The amounts recognized in the consolidated income statement are as follows:
Pension Medical
2015 2014 2015 2014
US$’000 US$’000 US$’000 US$’000
Current service cost 14,272 15,850 455 495
Past service cost (1,542) (695) –(34)
Interest cost 10,845 9,689 676 685
Interest income (6,150) (5,965) (146) (160)
Curtailment losses 5,205 2,920 (1,870) (494)
Total expense recognized in the
consolidated income statement 22,630 21,799 (885) 492
36 BUSINESS COMBINATIONS
During the year, the Group completed two business combination activities aiming at expanding the Group’s existing scale of
operations and to enlarge the Group’s market share.
On October 1, 2014, the Group acquired certain assets and assumed certain liabilities in connection with System X. The
acquisition provides the Group with end-to-end capabilities to serve enterprise customers and explore new growth segments
in the enterprise hardware market. It also offers a comprehensive and competitive portfolio of server products including
towers, racks, blades and converged systems, as well as associated maintenance services.
On October 30, 2014, the Group acquired 100% of the issued and outstanding equity interests in Motorola. Motorola
is principally engaged in the business of developing, manufacturing, distributing and selling mobile devices, particularly
smartphones based on the Android operating system, and their related products. The acquisition provides the Group with
immediate access to key assets, technology and personnel to accelerate the Group’s entry into mature geographies for
smartphones, including those based on the popular Android operating system under its strong relationships with retailers and
carriers.
The estimated total consideration for the business combination activities completed during the year is approximately US$5,232
million, including cash, the Company’s shares as consideration shares, deferred consideration and share-based compensation
obligation assumed by the Company.
Set forth below is the preliminary calculation of goodwill:
Motorola System X Total
US$’000 US$’000 US$’000
Purchase consideration:
– Cash paid less cash to be refunded (a) 836,306 1,859,188 2,695,494
– Fair value of consideration shares (b) 768,482 270,914 1,039,396
– Present value of deferred consideration (c) 1,376,230 –1,376,230
– Share-based compensation obligation assumed 114,922 6,330 121,252
Total purchase consideration 3,095,940 2,136,432 5,232,372
Less: Fair value of net assets acquired (1,436,665) (1,072,453) (2,509,118)
Goodwill (Note 17(a)) 1,659,275 1,063,979 2,723,254