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SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 3. Business Combinations (Continued)
onward. Core Networks specialized in software products for network monitoring, management and activation of advanced digital
services for DSL and cable broadband providers. The purchase price for Core Networks exceeded the fair value of Core Networks’ net
tangible and intangible assets acquired; as a result, we recorded goodwill in connection with this transaction.
Upon consummation of the Acquisition, the Company charged to expense $1.6 million representing acquired in−process research
and development that had not yet reached technological feasibility and had no alternative future use. The amount of purchase price
allocated to acquire in−process research and development was determined by estimating viable products, estimating the resulting net
cash flows from such products, and discounting the net cash flows back to their present value. The discount rate included a factor that
took into account the inherent risk and expected growth of in−process products.
The total purchase price is summarized as follows (in thousands):
September 2,
2004
Cash consideration $ 16,850
Acquisition costs 713
Total purchase price $ 17,563
An allocation among the tangible and identifiable intangible assets and liabilities acquired (including acquired in−process research
and development) is summarized as follows. The financial information presented includes purchase accounting adjustments to the
tangible and intangible assets (in thousands):
Amount Amortization
Period
Cash $ 1 —
Accounts receivable 158 —
Net fixed assets 591 2 years
Accrued vacation (44) —
Amortizable intangible assets:
Developed and core technology 4,360 5 years
Customer relationships 1,087 5 years
In−process research and development 1,618 Expensed
Goodwill 9,792 Indefinite
Purchase Price $ 17,563
The goodwill balance recorded in the Company’s Canadian subsidiary is amortized and deducted for Canadian tax purposes but
not for financial statement purposes.
60
Source: SUPPORTSOFT INC, 10−K, March 16, 2007