Motorola 2004 Annual Report Download - page 130

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122 MOTOROLA INC. AND SUBSIDIARIESNOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except as noted)
Force Computers
In August 2004, the Company acquired Force Computers, (""Force''), a worldwide designer and supplier of
open, standards-based and custom embedded computing solutions, for $121 million in cash.
The Company recorded approximately $59 million in goodwill, none of which is expected to be deductible for
tax purposes, a $2 million charge for acquired in-process research and development, and $35 million in other
intangibles. The in-process 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 Force have been included in the Integrated Electronic Systems 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.
Quantum Bridge
In May 2004, the Company acquired Quantum Bridge Communications, Inc. (""Quantum Bridge''), a leading
provider of Ñber-to-the-premises solutions, for $55 million in cash. Terms of the acquisition include contingent
purchase price payments, to be made by Motorola to the sellers, not to exceed $143 million. The payments are
contingent upon certain milestones being met, primarily related to future revenue targets extending through 2007. In
October 2004, the Company paid an additional $13 million as a result of certain of the milestones being met. This
payment, along with any future contingent payments, will be included as part of the purchase price if and when the
milestones are met.
The Company recorded a $15 million charge for acquired in-process research and development costs and
$15 million in other intangible assets. The acquired in-process research and development will have no alternative
future uses if the products are not feasible. 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 other intangible assets are included in Other Assets in the Company's consolidated
balance sheets. The intangible assets will be amortized over periods ranging from 4 to 14 years on a straight-line
basis.
The results of operations of Quantum Bridge have been included in the Broadband Communications 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 Ñnancial statements were not signiÑcant.
Winphoria Networks
In May 2003, the Company acquired Winphoria Networks, Inc. (""Winphoria''), a core infrastructure provider
of next-generation, packet-based mobile switching centers for wireless networks, for approximately $179 million in
cash.
The Company recorded approximately $93 million in goodwill, none of which is expected to be deductible for
tax purposes, a $32 million charge for acquired in-process research and development, and $54 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 eight projects were in process. The average risk adjusted
rate used to value these projects ranged from 25% to 28%. 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 periods ranging from 3 to 5 years on a
straight-line basis.