Lexmark 2013 Annual Report Download - page 95

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Estimated Fair
Value
Weighted-
Average Useful
Life (years)
Cash $ 5.3
Trade receivables 4.2
Other current assets 2.5
Property, plant and equipment 1.0
Identifiable intangible assets:
Trade names and trademarks 0.8 1.9
Customer relationships 18.3 5.7
Non-compete agreements 0.1 3.0
Purchased technology 42.7 5.0
In-process technology (1) 1.2
Other assets 0.1
Accounts payable (0.4)
Deferred revenue (6.7)
Other current liabilities (11.5)
Other long-term liabilities (0.5)
Deferred tax liability, net (2) (9.9)
Total identifiable net assets 47.2
Goodwill 58.3
Total purchase price $ 105.5
(1) The in-process technology was not subject to amortization at the acquisition date. A portion of the acquired in-process technology valued at $0.3 million was written
off in 2012 subsequent to the acquisition as the related project was abandoned. Amortization was commenced for the balance of the in-process technology in 2013 upon
completion of the related project.
(2) Deferred tax liability, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.
The values above include measurement period adjustments determined in 2012 affecting Identifiable intangible assets $8.7 million,
Deferred revenue $1.3 million, Deferred tax liability, net $(0.4) million and Goodwill $(9.4) million. The purchase price for ISYS
increased by $0.2 million due to certain adjustments contemplated in the purchase agreement. The measurement period adjustments
were based on information obtained subsequent to the acquisition related to certain income tax matters contemplated by the Company
at the acquisition date. Additionally, the fair values of assets acquired and liabilities assumed were initially based on estimates, and
were subsequently based on a more thorough valuation. The acquired companies consisted mostly of technology and other related
assets and processes to be utilized by the Company’s Perceptive Software segment.
The values above also include measurement period adjustments determined during 2013 related to the Company’s acquisition of Acuo
in the fourth quarter of 2012 affecting Other current assets $(0.3) million, Accounts payable $(0.1) million, Other current liabilities
$(1.5) million, and Goodwill $1.9 million. The measurement period adjustments were determined based on facts and circumstances
that existed at the acquisition date and were adjusted retrospectively to the consolidated financial results.
The total estimated fair value of intangible assets acquired was $63.1 million, with a weighted-average useful life of 5.2 years. The
intangible assets subject to amortization are being amortized on a straight-line basis over their estimated useful lives as of the
respective acquisition dates.
The goodwill recognized in the acquisitions of Acuo, Nolij and ISYS was assigned to the Perceptive Software segment and comprises
the value of expected synergies arising from the acquisitions that are complementary to the Perceptive Software business. Goodwill of
$17.3 million that resulted from the Acuo acquisition is expected to be deductible for income tax purposes. Goodwill of $41.0 million
that resulted from the acquisitions of Nolij and ISYS is not expected to be deductible for income tax purposes.
The purchase of Acuo is included in Purchase of businesses, net of cash acquired in the Consolidated Statements of Cash Flows for
2012 in the amount of $40.5 million. Total cash acquired in the acquisition of Acuo was $3.3 million. The Company also acquired
intangible assets in the form of covenants not to compete from certain employees and members of Acuo. These covenants were valued
at $0.4 million and were recognized separately from the acquisition. The purchases of Nolij and ISYS are included in Purchase of
businesses, net of cash acquired in the Consolidated Statements of Cash Flows for 2012 in the amount of $57.8 million. Total cash
acquired in the acquisitions of Nolij and ISYS was $2.0 million. Included in Cash and cash equivalents on the Company’s
Consolidated Statements of Financial Position is $2.1 million which is restricted in use as it is due to a former shareholder of Nolij.
This amount has been recognized as a liability incurred to a former shareholder. The liability was increased by $0.2 million in 2013
when the portion of the purchase price placed in escrow upon acquisition was released.
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