Lexmark 2015 Annual Report Download - page 85

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Certain unvested Kofax LTIPs were accelerated as part of the acquisition; the acceleration was deemed to be for the benefit of
Lexmark and constitutes a transaction recognized separately from the business combination. The portion of the payment for these
awards related to service not yet completed was $2.6 million, which was excluded from consideration transferred and was recognized
in Selling, general and administrative on the Company’s Consolidated Statements of Earnings for the year ended December 31, 2015.
The following table summarizes the consideration transferred to acquire Kofax. The number of issued and outstanding shares of Kofax
was 92,251,889, all of which were acquired by the Company. Amounts shown in the table below include rounding.
Number of Kofax common shares issued and outstanding
92.3
Multiplied by cash consideration per common share outstanding
$
11.00
Cash paid to Kofax shareholders
1,014.7
Liability incurred to former owners of Kofax
5.8
Fair value of Lexmark replacement stock options and RSUs related to pre-combination service
20.0
Reduction for separately recognized transaction
(2.6)
Total consideration transferred
$
1,037.9
The following table summarizes the preliminary values of assets and liabilities recognized in the acquisition of Kofax. The intangible
assets subject to amortization are being amortized on a straight-line basis over their estimated useful lives as of the acquisition date as
follows.
Estimated
Weighted-Average
Fair Value
Useful Life (years)
Cash and cash equivalents
$
41.6
Trade receivables
42.3
Inventories
1.1
Prepaid expenses and other current assets
16.0
Property, plant and equipment
6.9
Identifiable intangible assets:
Developed technology
178.5
5.0
Customer relationships
205.2
10.0
Trade names
12.7
4.0
Non-compete agreements
0.9
2.2
In-process technology (1)
1.5
Other long-term assets
4.4
Accounts payable
(7.5)
Deferred revenue
(39.6)
Accrued expenses and other current liabilities
(31.4)
Other long-term liabilities
(18.6)
Deferred tax liability, net (2)
(100.9)
Total identifiable net assets
313.1
Goodwill
724.8
Total purchase price
$
1,037.9
(1) Amortization commenced in the third quarter of 2015.
(2) Deferred tax liability, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.
Although there is no contingent consideration associated with the acquisition of Kofax, the Company assumed contingent
consideration liabilities related to an earnout from a prior acquisition made by Kofax. The amount payable related to the earnout could
range between $1.0 and $2.2 million, and $1.0 million was preliminarily recorded representing the estimated fair value of the
obligation as of the acquisition date. The fair value measurement of the earnout takes into consideration the minimum contractual
amount due to the sellers of the acquired company as well as the anticipated likelihood of certain performance thresholds being
exceeded and the extent to which performance thresholds have been exceeded in the earlier earnout periods.
The fair value of trade receivables approximated its carrying value of $42.3 million. The gross amount due from customers was
$43.0 million, of which $0.7 million was preliminarily estimated to be uncollectible as of the acquisition date.
The Company assumed defined benefit pension plans covering certain Kofax employees in Switzerland and other countries outside of
the U.S. The purchase price allocation reflects a liability of $5.5 million related to the underfunded status of the plans.