Lexmark 2014 Annual Report Download - page 84

ReadSoft as of August 19, 2014, representing approximately 35.4 percent of ReadSoft’s total outstanding shares and 52.2 percent of
the votes in aggregate. Accordingly, August 19, 2014 is the acquisition date of ReadSoft under business combination accounting
guidance. The purchase accounting for the acquisition of ReadSoft has not been finalized as certain income tax matters are still being
evaluated.
The following table summarizes the preliminary values of assets acquired and liabilities assumed as of the acquisition date of August
19, 2014 for ReadSoft. The intangible assets subject to amortization are being amortized on a straight-line basis over their estimated
useful lives as of the acquisition date:
Estimated Fair
Value
Weighted-Average
Useful Life (years)
Cash and cash equivalents $ 10.8
Trade receivables 29.7
Inventories 0.1
Prepaid expenses and other current assets 9.7
Property, plant and equipment 3.5
Identifiable intangible assets:
Developed technology 52.5 5.0
In-process technology (1) 1.2
Customer relationships 31.2 10.0
Trade names and trademarks 8.2 4.0
Non-compete agreements 0.1 1.0
Other long-term assets 2.3
Accounts payable (2.1)
Short-term borrowings (4.3)
Current portion of long-term debt (1.3)
Loans payable to employees (10.6)
Deferred revenue (17.5)
Accrued expenses and other current liabilities (21.3)
Deferred tax liability, net (2) (16.2)
Other long-term liabilities (1.1)
Total net identifiable assets 74.9
Goodwill 179.3
Total net assets $ 254.2
Consideration transferred on acquisition date $ 58.1
Fair value of equity interest held before acquisition date 32.0
Fair value of noncontrolling interest 164.1
Total consideration transferred and noncontrolling interest $ 254.2
(1) Amortization to begin upon completion of the 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 2014 affecting Trade receivables $3.8 million, Inventories
$(0.3) million, Prepaid expenses and other current assets $(4.4) million, Identifiable intangible assets $(1.6) million, Other long-term
assets $0.2 million, Deferred revenue $(0.5) million, Accrued expenses and other current liabilities $0.3 million, Deferred tax
liability, net $(0.1) million, Other long-term liabilities $(1.1) million and Goodwill $3.7 million. The adjustments were due to facts
and circumstances that existed at the acquisition date.
The preliminary fair value of trade receivables approximates its carrying value of $29.7 million. The gross amount due from
customers is $34.3 million, of which $4.6 million was estimated to be uncollectible as of the date of acquisition.
The goodwill resulting from the ReadSoft acquisition was assigned to the Company’s Perceptive Software segment. The goodwill
recognized includes projected future revenue and profit growth, as well as an expanded international presence for Perceptive Software
and certain synergies specific to the combined entity. None of the goodwill acquired is expected to be deductible for income tax
purposes. The preliminary total estimated fair value of intangible assets acquired was $93.2 million, with a weighted-average useful
life of 6.6 years.
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