Motorola 2004 Annual Report Download - page 129
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121
MOTOROLA INC. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS(Dollars in millions, except as noted)
The following is a summary of signiÑcant acquisitions in 2004, 2003 and 2002:
In-Process
Research and
Quarter Development
Acquired Consideration Form of Consideration Charge
2004 Acquisitions
MeshNetworks, Inc. Q4 $169 Cash $16
Force Computers Q3 $121 Cash $ 2
Quantum Bridge Communications, Inc. Q2 $ 68 Cash $15
2003 Acquisitions
Winphoria Networks, Inc. Q2 $179 Cash $32
2002 Acquisitions
Synchronous, Inc. Q1 $270 Common stock $11
(16.2 million shares)
Assumed Stock Options
The following table summarizes net tangible and intangible assets acquired and the consideration provided for
the acquisitions identiÑed above:
Years Ended December 31
2004
2003 2002
Tangible net assets $77 $Ì $ 4
Goodwill 178 93 194
Other intangibles 70 54 61
In-process research and development 33 32 11
$358 $179 $270
Consideration:
Cash $358 $179 $ Ì
Stock ÌÌ 270
$358 $179 $270
MeshNetworks
In November 2004, the Company acquired MeshNetworks, Inc. (""MeshNetworks''), a developer of mobile
mesh networking and position location technologies that allow customers to deploy high-performance, Internet
Protocol-based wireless broadband networks, for $169 million in cash.
The Company recorded approximately $119 million in goodwill, none of which is expected to be deductible
for tax purposes, a $16 million charge for acquired in-process research and development, and $20 million in other
intangibles. The acquired in-process research and development will have no alternative future uses if the products
are not feasible. At the date of the acquisition, a total of three projects were in process. The average risk adjusted
rate used to value these projects was 45%. The allocation of value to in-process research and development was
determined using expected future cash Öows discounted at average risk adjusted rates reÖecting both technological
and market risk as well as the time value of money. These research and development costs were written oÅ at the
date of acquisition and have been included in Other Charges in the Company's consolidated statements of
operations. Goodwill and intangible assets are included in Other Assets in the Company's consolidated balance
sheets. The intangible assets will be amortized over a period of 5 years on a straight-line basis.
The results of operations of MeshNetworks have been included in the Commercial, Government and Industrial
Solutions segment in the Company's consolidated Ñnancial statements subsequent to the date of acquisition. The
pro forma eÅects of this acquisition on the Company's consolidated Ñnancial statements were not signiÑcant.