Lexmark 2015 Annual Report Download - page 87

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83
Year Ended
December 31
2015
2014
Unaudited pro forma revenue
$
3,656.5
$
3,965.2
Unaudited pro forma earnings
$
(50.5)
$
(6.3)
Acquisition-related costs of $38.2 million incurred by Lexmark and Kofax, which were historically recorded in the year ended
December 31, 2015 and which will not have an ongoing effect on the results of the combined entity were reflected in unaudited pro
forma earnings for the year ended December 31, 2014, as if the acquisition had been completed on January 1, 2014. Unaudited pro
forma earnings for the year ended December 31, 2015 do not reflect acquisition-related costs of $38.2 million that were historically
recognized by Lexmark and Kofax in this period. Additionally, unaudited pro forma earnings for the year ended December 31, 2014
reflect $0.1 million of acquisition-related costs that were historically recognized in that period. Unaudited pro forma earnings for the
year ended December 31, 2014 reflect $8.7 million of acquisition-related compensation expenses, including the aforementioned
$2.6 million expense related to the accelerated vesting of certain Kofax LTIP awards, that were incurred in the year ended December
31, 2015 and which will not have an ongoing effect on the results of the combined entity; unaudited pro forma earnings for the year
ended December 31, 2015 do not reflect these expenses.
Claron Technology, Inc.
On January 2, 2015 the Company acquired substantially all of the assets of Claron Technology, Inc., (“Claron”) other than those used
in Claron’s surgical navigation business, in a cash transaction valued at $33.0 million. As a leading provider of medical image
viewing, distribution, sharing and collaboration software technology, Claron helps healthcare delivery organizations provide universal
access to patient imaging studies and other content across and between healthcare enterprises.
Of the $33.0 million cash payment, $30.3 million was paid to acquire the net assets of Claron, $2.2 million was used to pay certain
transaction costs and long-term debt obligations of Claron and $0.5 million relates to intangible assets acquired in the form of non-
compete agreements from certain shareholders of Claron that were recognized separately from the business combination. The payment
for the net assets of Claron includes identifiable intangible assets of $17.4 million, goodwill of $14.7 million and other net liabilities
assumed totaling $1.8 million.
The following table summarizes the identifiable intangible assets recognized in the acquisition of Claron. 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)
Intangible assets subject to amortization:
Developed technology
$
13.8
5.0
Customer relationships
2.1
7.0
Trade name
0.1
1.0
Total intangible assets subject to amortization
16.0
5.3
Intangible assets not subject to amortization:
In-process technology (1)
1.4
Total intangible assets not subject to amortization
1.4
Total identifiable intangible assets
$
17.4
(1) Amortization commenced in the second quarter of 2015.
The goodwill resulting from the Claron acquisition was assigned to the Company’s Enterprise Software segment and includes
projected future revenue and profit growth. Of the goodwill resulting from the acquisition, $11.0 million is expected to be deductible
for income tax purposes.
The purchase of Claron is included in Purchase of businesses, net of cash acquired in the Consolidated Statements of Cash Flows for
the year ended December 31, 2015 in the amount of $30.3 million.
In the third quarter of 2015 the Company determined and recognized measurement period adjustments that increased both net
liabilities and goodwill $0.2 million. The measurement period adjustments were recognized in the third quarter of 2015 and were
based on information obtained subsequent to the acquisition related to trade receivables conditions that existed at the acquisition date.