Rosetta Stone 2015 Annual Report Download - page 78
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Table of Contents
learning services primarily to corporate and educational organizations. Tell Me More offers a robust suite of SaaS-based language-learning products and
services that provide intermediate, advanced and business language solutions in nine languages. The Tell Me More Merger strengthens the Company's
growing Enterprise & Education business and expands its global footprint. The aggregate amount of consideration paid by the Company was €22.1 million
($30.2 million), including assumed net debt.
The Tell Me More Merger resulted in goodwill of approximately $21.7 million, none of which is deductible for tax purposes. This amount represents
the residual amount of the total purchase price after allocation to the assets acquired and liabilities assumed.
All expenditures incurred in connection with the Tell Me More Merger were expensed and are included in general and administrative expenses.
Transaction costs incurred in connection with the Merger were $1.0 million and $0.5 million during the years ended December 31, 2014 and 2013,
respectively. The results of operations for Tell Me More have been included in the consolidated results of operations since January 9, 2014.
The Company has allocated the purchase price based on current estimates of the fair values of assets acquired and liabilities assumed in connection with
the Tell Me More Merger. The table below summarizes the estimates of fair value of the Tell Me More assets acquired, liabilities assumed and related deferred
income taxes as of the acquisition date.
The Company finalized its allocation of the purchase price for Tell Me More as of December 31, 2014. The purchase price was allocated as follows (in
thousands):
Cash
$ 2,323
Accounts receivable
2,979
Inventory
246
Prepaid expenses
243
Fixed assets
5,595
Other non-current assets
330
Accounts payable
(732)
Accrued compensation
(2,855)
Deferred revenue
(2,190)
Other current liabilities
(1,211)
Obligation under capital lease
(3,958)
Net deferred tax liability
(1,392)
Net tangible assets acquired
(622)
Goodwill
21,703
Amortizable intangible assets
9,105
Purchase price
$ 30,186
The acquired amortizable intangible assets and the related estimated useful lives consist of the following (in thousands):
Customer relationships
5 years
4,348
Technology platform
5 years
4,144
Tradename
1 year
613
Total assets
$ 9,105
2013 Acquisitions:
The Company acquired Livemocha Inc. and Lexia Learning Systems Inc. in April and August of 2013, respectively. Under the acquisition method of
accounting, the total purchase price was allocated to the tangible and intangible assets acquired
F-22