Support.com 2009 Annual Report Download - page 62

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Table of Contents
SUPPORT.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Tax expenses have been attributed to discontinued operations or continuing operations based on specific analysis for federal, state and international
amounts. As a result, we recorded $4.8 million of income tax expense related to the $9.1 million gain on sale of its Enterprise segment. The income tax expense
was recorded as part of our discontinued operations and was fully offset by an income tax benefit recorded in the continuing operations in 2009 (see Note 9,
Income Tax).
Note 3. Business Combination
Xeriton, Inc.
On December 7, 2009, we signed an Asset Purchase Agreement (“APA”) to acquire substantially all of the assets of privately-held consumer software
provider Xeriton, Inc. (“Xeriton”) (the “Acquisition”). No stock was acquired as part of the transaction. Xeriton provides consumer software products designed to
improve and optimize the performance and security of users’ computers (such as Advanced Registry Optimizer, Hard Disk Tune Up, MemTurbo, and a number
of computer security products). We expect to derive benefits from the acquisition through the sale of these products via its existing services channels. We paid a
total cash-only consideration of $8.5 million for the acquired assets and liabilities. In addition, we paid deal-related expenditures of approximately $542,000
which are included in general and administrative expense.
We engaged an independent third-party appraisal firm to assist in determining the fair value of assets acquired and liabilities assumed. Such a valuation
requires management to make significant estimates, especially with respect to intangible assets. These estimates are based on historical experience and
information obtained from the management of the acquired company. The purchase price for Xeriton exceeded the fair value of the net tangible and intangible
assets acquired. As a result, we have recorded goodwill in connection with this transaction. The goodwill is expected to be deductible for tax purposes.
The operating results of the business acquired from Xeriton are included in our accompanying consolidated statements of operations from December 7,
2009, the date of the Acquisition.
The tangible and identifiable intangible assets and liabilities acquired are summarized as follows. The financial information presented includes purchase
accounting adjustments to the tangible and intangible assets (in thousands):
Amounts Amortization Period
Cash $ 557
Accounts receivable 270
Other current assets 22
Fixed assets 26
Accrued liabilities (729)
Deferred revenue (174)
Net liabilities assumed (28)
Identifiable intangible assets:
Technology/Technology Rights 430 48 months
Tradenames 450 48 months
Non-Compete 140 36 months
Ask Jeeves/IAC Partner Relationship 120 36 months
Blue Phone Customer Base 30 36 months
Email List 40 12 months
Goodwill 7,318
Total estimated purchase price $ 8,500
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Source: Support.com, Inc., 10-K, March 12, 2010 Powered by Morningstar® Document Research℠