Rosetta Stone 2015 Annual Report Download - page 79
Download and view the complete annual report
Please find page 79 of the 2015 Rosetta Stone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69 -
70 -
71 -
72 -
73 -
74 -
75 -
76 -
77 -
78 -
79 -
80 -
81 -
82 -
83 -
84 -
85 -
86 -
87 -
88 -
89 -
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
 |
 |
Table of Contents
on the basis of their respective estimated fair values at the date of acquisition. The valuation of the identifiable intangible assets and their useful lives
acquired reflects management's estimates.
On April 1, 2013, the Company completed its acquisition of Livemocha, Inc. (the “Livemocha Merger” and "Livemocha"). Livemocha is one of the
world’s largest online language-learning communities with over 16 million registered members. The acquisition of Livemocha's technology platform has
accelerated the Company’s transition to cloud-based learning solutions and reinforced its leadership position in the competitive language-learning industry.
The aggregate amount of consideration paid by the Company was $8.4 million in cash.
The acquisition of Livemocha resulted in goodwill of approximately $5.2 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 Livemocha Merger were expensed and are included in general and administrative expenses.
Transaction costs incurred in connection with the Livemocha Merger were $0.4 million during the year ended December 31, 2013. The results of operations
for Livemocha have been included in the consolidated results of operations since April 1, 2013.
The Company allocated the purchase price based on current estimates of the fair values of assets acquired and liabilities assumed in connection with the
Livemocha Merger. The table below summarizes the estimates of fair value of the Livemocha assets acquired, liabilities assumed and related deferred income
taxes as of the acquisition date.
The Company finalized its allocation of the purchase price for Livemocha as of March 31, 2014. The purchase price was allocated as follows (in
thousands):
Cash
$ 191
Accounts receivable
227
Other current assets
93
Fixed assets
35
Accounts payable and accrued expenses
(956)
Deferred revenue
(743)
Net deferred tax liability
(1,161)
Net tangible assets acquired
(2,314)
Goodwill
5,185
Amortizable intangible assets
5,500
Purchase Price
$ 8,371
The acquired amortizable intangible assets and the related estimated useful lives consist of the following (in thousands):
Online community
3 years
$ 1,800
Enterprise relationships
5 years
100
Technology platform
5 years
3,400
Tradename
2 years
200
Total assets
$ 5,500
In connection with the Livemocha Merger, the Company recorded deferred tax liabilities related to definite-lived intangible assets that were acquired.
As a result of this deferred tax liability balance, the Company reduced its deferred tax asset valuation allowance by $1.2 million. Such reduction was
recognized as an income tax benefit in the consolidated statement of operations for the year ended December 31, 2013.
F-23