Logitech 2004 Annual Report Download - page 109

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LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 3 — Acquisitions
3Dconnexion
In June 1998, the Company acquired 49% of the outstanding shares of 3Dconnexion, the provider of
Logitech’s 3D controllers, and accounted for its investment using the equity method. In September 2001, the
Company acquired an additional 2% of the outstanding shares and a controlling interest in 3Dconnexion.
3Dconnexion’s assets and liabilities have been included in the Company’s consolidated financial statements
since September 30, 2001, and its results of operations have been included since October 1, 2001. The impact of
3Dconnexion’s assets, liabilities and results of operations have not been material to the Company’s financial
position, results of operations, or cash flows.
On April 5, 2002, the Company exercised its option to purchase the remaining outstanding shares for
$7.4 million, which was paid in cash in July 2003. A summary of the purchase consideration is as follows (in
thousands):
Net investment in 3Dconnexion at April 5, 2002 ........................... $ 5,800
Notes payable to 3Dconnexion stockholders ............................... 7,400
Transaction costs .................................................... 510
Total consideration ............................................... $13,710
The acquisition of the remaining outstanding shares in April 2002 was accounted for using the purchase
method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded at their preliminary
estimated fair values as determined by the Company’s management based upon assumptions as to future
operations and other information currently available. The $5.8 million net investment at April 5, 2002, reflects
the original investment in 3Dconnexion under the equity method as well as the fair value of the assets and
liabilities acquired at the time of the 2% acquisition.
The Company obtained an independent appraisal to assist in the determination of the fair values of the
acquired identifiable intangible assets. A summary of the allocation of the purchase price to the fair values of
assets acquired and liabilities assumed in the acquisition is as follows (in thousands):
Core technology ..................................................... $ 2,100
Existing technology .................................................. 4,800
Trademarks......................................................... 200
Goodwill ........................................................... 6,610
Total net assets .................................................. $13,710
The values of the core technology and trademarks were estimated using the relief from royalty method and
the values of the existing technology were estimated using the future cash flows method. These assets are being
amortized on a straight-line basis over their estimated useful lives of five years.
The 3Dconnexion business has been combined with the 3D input device business acquired with the
Company’s Labtec acquisition in March 2001, to offer a complete line of 3D input devices utilizing the market
strengths, engineering resources and global presence of both entities.
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