Redbox 2008 Annual Report Download - page 66

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The total purchase price consideration consists of the following:
(In thousands)
Cash paid for the initial Redbox investment of 47.3% ownership ................. $32,000
Cash paid for the additional investment of 3.7% ownership in January 2008 ........ 5,106
Estimated acquisition related costs ....................................... 392
Equity investment (loss) from December 2005 to January 2008 .................. (3,689)
Total investment in Redbox at the acquisition date ......................... $33,809
The acquisition was recorded under the purchase method of accounting and the purchase price was allocated
based on the fair value of the assets acquired and the liabilities assumed to the extent of the 51% ownership interest
acquired as of the various dates the payments were made under step acquisition accounting. The remaining 49%
portion of net assets represents the minority interest ownership in Redbox. The following unaudited condensed
balance sheet presents assets and liabilities of Redbox, consolidated on January 18, 2008, resulting from our step
acquisitions of Redbox.
(In thousands)
Assets acquired:
Cash and cash equivalents . . . ........................................ $ 13,470
Trade accounts receivable ............................................ 10,175
Inventory ........................................................ 27,072
Prepaid expenses and other assets ...................................... 7,142
Property and equipment ............................................. 100,691
Intangible assets ................................................... 1,905
Goodwill ........................................................ 11,898
172,353
Liabilities assumed:
Accounts payable and accrued liabilities ................................. 112,521
Deferred tax liability ............................................... 2,101
Minority interest .................................................. 23,922
Total investment in Redbox ............................................ $ 33,809
The calculation and recognition of goodwill is consistent with the step acquisition guidance in FASB
Statement No. 141, Business Combination and ARB No. 51, Consolidated Financial Statements. Goodwill of
$11.9 million represents primarily the excess of purchase price paid over the fair of value of the tangible and
identifiable intangible assets acquired, and is not amortized. The goodwill of $2.5 million recognized as a result of
the additional purchase of 3.7% in 2008 is expected to be deductible for tax purposes.
We used forecasted future cash flows to estimate the fair value of Redbox intangible assets. Intangible assets of
$1.9 million represent the internal-use software and customer relations acquired when payments were made under
step acquisition accounting and are amortized over 5 years. The amortization expense for the year ended
December 31, 2008 was approximately $0.5 million. Based on intangible assets recorded as of December 31,
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