SanDisk 2013 Annual Report Download - page 219

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Purchase Price Allocation. The total purchase price was allocated to SMART Storage’s net tangible and
intangible assets based upon their estimated fair values as of August 22, 2013. The excess purchase price
over the value of the net tangible liabilities and identifiable intangible assets was recorded as goodwill. The
fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on
estimates and assumptions of management. These estimates include those related to the forecast used to
value the intangible assets assumed, including the allocation of developed technology and IPR&D, and the
fair value of inventory and obligations related to excess committed purchases. The purchase price
allocation is preliminary and the measurement period is open pending final adjustments to the opening net
assets acquired.
The following table presents the allocation of the SMART Storage purchase price (in thousands):
Purchase Price
Allocation
Net tangible assets ....................................................... $ 20,843
Intangible assets:
Developed technology ..................................................... 146,100
Trademarks ............................................................ 8,500
Customer relationships .................................................... 7,600
In-process research and development .......................................... 6,300
Total intangible assets .................................................. 168,500
Goodwill .............................................................. 115,775
Total purchase price ...................................................... $ 305,118
The total weighted-average amortization period for finite-lived intangible assets is 3.9 years. The
intangible assets are amortized on a straight-line basis over the period during which the economic benefits
of the intangible assets are expected to be utilized. The goodwill resulted from expected synergies from the
transaction, including the Company’s supply of NAND flash and complementary products, which will
enhance the Company’s overall product portfolio. Goodwill is not deductible for tax purposes. The
Company did not record a deferred tax liability due to certain tax incentives awarded by the Malaysian
government.
Acquisition-related costs of $3.1 million during the fiscal year ended December 29, 2013 were related
to legal, regulatory and accounting fees, and were expensed to General and administrative expense in the
Consolidated Statement of Operations. SMART Storage’s prior period financial results are not considered
material to the Company.
Note 16: Litigation
From time-to-time, the Company is involved in various litigation matters, including those described
below, among others. The litigation proceedings in which the Company is involved from time to time, may
include matters such as intellectual property, antitrust, commercial, labor, class action, and insurance
disputes. The semiconductor industry is characterized by significant litigation seeking to enforce patent
and other intellectual property rights. The Company has enforced and likely will continue to enforce its
own intellectual property rights through litigation and related proceedings.
In each case listed below where the Company is the defendant, the Company intends to vigorously
defend the action. At this time, the Company does not believe it is reasonably possible that losses related
to the litigation described below have occurred beyond the amounts, if any, which have been accrued.
F-53
Annual Report