SanDisk 2014 Annual Report Download - page 194

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SANDISK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Business Acquisitions
The Consolidated Financial Statements include the operating results of the acquired businesses
described below from the respective dates of acquisition. Pro forma results of operations have not been
presented as the prior-period financial results of the acquired businesses are not considered material to the
Company. None of the goodwill was deductible for tax purposes.
Fusion-io, Inc. On July 23, 2014, the Company acquired 100% of Fusion-io, a leading developer of flash-
based, Peripheral Component Interconnect Express (‘‘PCIe’’) hardware and software solutions that
enhance application performance in enterprise and hyperscale data centers. The Company expects this
acquisition to accelerate its efforts to enable the flash-transformed data center, helping companies better
manage increasingly heavy data workloads at a lower total cost of ownership. The total aggregate
consideration to acquire Fusion-io was $1.26 billion and comprised of the following (in thousands):
Purchase Price
Cash consideration ....................................................... $ 1,256,502
Fair value of assumed equity attributed to pre-combination service ...................... 7,041
Total purchase price .................................................... $ 1,263,543
The total aggregate consideration net of cash assumed was $1.07 billion.
The Company assumed all of Fusion-io’s outstanding unvested stock option awards with an exercise
price less than or equal to the acquisition price of $11.25 per share and unvested RSU awards. The
assumed unvested stock options converted into 427,388 options to purchase the Company’s common stock
and the assumed unvested RSUs converted into 445,072 RSU awards.
The weighted-average fair value of the assumed unvested stock option awards was $35.02 and was
determined using the Black-Scholes-Merton valuation model and included the following assumptions:
Dividend yield ............................................................. 1.14%
Expected volatility ........................................................... 0.32
Risk-free interest rate ........................................................ 1.00%
Weighted average expected life .................................................. 2.6 years
The fair value of the assumed unvested RSU awards was based on the Company’s acquisition-date
share value of $94.35 per share.
The fair value of the assumed unvested stock option and RSU awards attributed to post-combination
services of $49.9 million was not included in the consideration transferred and will be recognized over the
awards’ remaining requisite service periods.
F-54