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Certain income tax-related contingencies related to Brainware totaling $5.7 million were recognized by the Company as of the
acquisition date. The Company is indemnified for this matter in the purchase agreement for an amount not to exceed the proceeds
actually received by the selling shareholders in consummation of the acquisition. An indemnification asset of $2.5 million was initially
recognized and measured on the same basis as the indemnified item, taking into account factors such as collectability. The
measurement of the indemnification asset is subject to changes in management’s assessment of changes in both the indemnified item
and collectability. The indemnification asset was reduced by $0.8 million in 2014 and $0.6 million in 2013 commensurate with
decreases in the related liability. The reductions of the indemnification asset were recorded in Other expense (income), net on the
Consolidated Statements of Earnings.
The purchases of Brainware, Acuo, Nolij and ISYS are included in Purchase of businesses, net of cash acquired on the Consolidated
Statements of Cash Flows for the year ended December 31, 2012 in the amount of 245.4 million. Included in the purchase price for
Nolij and ISYS is $1.9 million which is due to a former shareholder of Nolij. This amount is included in Cash and cash equivalents on
the Company’s Consolidated Statements of Financial Position and 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.
Divestiture
In August 2012, the Company announced restructuring actions including exiting the development and manufacturing of its remaining
inkjet hardware. On April 1, 2013, the Company and Funai Electric Co., Ltd. (“Funai”) entered into a Master Inkjet Sale Agreement of
the Company’s inkjet-related technology and assets to Funai for total cash consideration of $100 million, subject to working capital
adjustments. Included in the sale were one of the Company’s subsidiaries, certain intellectual property and other assets of the
Company. The Company must also provide certain transition services to Funai and will continue to sell supplies for its current inkjet
installed base. The sale closed in the second quarter of 2013.
In addition to the $100 million of cash consideration, the Company received a subsequent working capital adjustment of $0.9 million.
The Company derecognized the following upon the sale:
Cash and cash equivalents $2.3
Inventories 3.0
Prepaid expenses and other current assets 0.2
Property, plant and equipment, net 27.8
Goodwill 1.1
Other assets 2.1
Accounts payable (1.9)
Accrued liabilities (2.4)
Other liabilities (2.6)
Accumulated other comprehensive income (10.3)
Carrying value of disposal group $ 19.3
The Company recognized a gain of $73.5 million upon the sale recorded in Gain on sale of inkjet-related technology and assets on the
Consolidated Statements of Earnings for the year ended December 31, 2013. The gain consisted of total consideration of $100.9
million, offset partially by the carrying value of the disposal group of $19.3 million and $8.1 million of expenses incurred during 2013
to effect the sale. The net gain of $73.5 million consisted of a gain of $103.1 million, recognized in Imaging Solutions and Services
(“ISS”), offset by a loss of $29.6 million, recognized in All other. In its Annual Report on Form 10-K for the year ended December
31, 2013, the Company incorrectly described the components of the net gain as being recognized entirely in ISS. The description has
been corrected to reflect how the components were recognized in the Company’s segments. Refer to Note 20 to the Notes to
Consolidated Financial Statements for more information on the Company’s segments. This correction had no effect on the Company’s
consolidated results of operations, financial position or cash flow and is considered immaterial to the prior period financial statements.
Of the $100.9 million of cash proceeds received, or $98.6 million net of the $2.3 million cash balance held by the subsidiary included
in the sale, $97.6 million was presented in investing activities for the sale of the business and $1.0 million was included in operating
activities for transition services on the Consolidated Statements of Cash Flows for the year ended December 31, 2013.
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