Motorola 2006 Annual Report Download - page 123

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115
The developmental products for the companies acquired have varying degrees of timing, technology, costs-to-
complete and market risks throughout final development. If the products fail to become viable, the Company will
unlikely be able to realize any value from the sale of incomplete technology to another party or through internal
re-use. The risks of market acceptance for the products under development and potential reductions in projected
sales volumes and related profits in the event of delayed market availability for any of the products exist. Efforts to
complete all developmental products continue and there are no known delays to forecasted plans.
The following is a summary of significant acquisitions in 2006, 2005 and 2004:
In-Process
Research and
Quarter Development
Acquired Consideration Form of Consideration Charge
2006 Acquisitions
Broadbus Technologies, Inc. Q3 $181 Cash $12
TTP Communications plc Q3 $193 Cash $17
Kreatel Communications AB Q1 $108 Cash $ 1
2005 Acquisitions
No significant acquisitions Ì Ì Ì Ì
2004 Acquisitions
MeshNetworks, Inc. Q4 $169 Cash $16
Force Computers Q3 $121 Cash $ 2
The following table summarizes net tangible and intangible assets acquired and the consideration provided for
the acquisitions identified above:
Years Ended December 31
2006
2005 2004
Tangible net assets $20 $Ì $ 39
Goodwill 262 Ì 178
Other intangibles 170 Ì55
In-process research and development 30 Ì18
$ 482 $Ì $ 290
Consideration:
Cash $ 482 $Ì $ 290
Stock ÌÌ Ì
$ 482 $Ì $ 290
Broadbus Technologies, Inc.
In September 2006, the Company acquired Broadbus Technologies, Inc. (""Broadbus''), a leading provider of
content on-demand technologies, for $181 million in cash. The Company recorded $131 million in goodwill, none
of which is expected to be deductible for tax purposes, a $12 million charge for acquired in-process research and
development costs, and $30 million in identifiable intangible assets. 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, one
project was in process. This project is expected to be completed in 2008. The average risk adjusted rate used to
value this project was 22%. The allocation of value to in-process research and development was determined using
expected future cash flows discounted at average risk adjusted rates reflecting both technological and market risk as
well as the time value of money. These research and development costs were expensed at the date of acquisition.
Goodwill and intangible assets are included in Other assets in the Company's consolidated balance sheets. The
intangible assets are being amortized over periods ranging from 3 to 5 years on a straight-line basis.
The results of operations of Broadbus have been included in the Connected Home Solutions segment in the
Company's consolidated financial statements subsequent to the date of acquisition. The pro forma effects of this
acquisition on the Company's consolidated financial statements were not significant.