Vonage 2014 Annual Report Download - page 91

Table of Contents
VONAGE HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
F-36 VONAGE ANNUAL REPORT 2014
accelerated, such that they are fully vested and exercisable as of the
Effective Time.
We acquired Vocalocity for $134,167, including 7,983 shares
of Vonage common stock (which shares had an aggregate value of
approximately $26,186 based upon the closing stock price on November
15, 2013) and cash consideration of $107,981 including payment of
$2,869 for excess cash as of closing date, subject to adjustments for
closing cash and working capital of Vocalocity, reductions for
indebtedness and transaction expenses of Vocalocity that remained
unpaid as of closing, and deposits into the escrow funds, pursuant to
the Merger Agreement. We financed the transaction with $32,981 of
cash and $75,000 from our revolving credit facility. The aggregate
consideration will be allocated among holders of: (i) Vocalocity preferred
stock, (ii) Vocalocity common stock, (iii) vested options to purchase
Vocalocity common stock, and (iv) warrants to purchase Vocalocity
preferred stock.
During 2013, we incurred $2,768 in acquisition related
transaction and integration costs, which were recorded in selling,
general and administrative expense in the accompanying Consolidated
Statements of Operations.
The Acquisition was accounted for using the acquisition
method of accounting under which assets and liabilities of Vocalocity
were recorded at their respective fair values including an amount for
goodwill representing the difference between the acquisition
consideration and the fair value of the identifiable net assets.
The acquisition price was allocated to the tangible and
identified intangible assets acquired and liabilities assumed as of the
closing date of the Acquisition. Subsequent to the acquisition date, we
decreased the deferred tax liabilities, net, non-current by $3,393 based
upon updated information with respect to NOL utilization.
The table below summarizes the assets acquired and liabilities assumed as of November 15, 2013 as follows:
Estimated Fair Value
Assets
Current assets:
Cash and cash equivalents $ 7,924
Accounts receivable 275
Prepaid expenses and other current assets 787
Total current assets 8,986
Property and equipment 1,777
Intangible assets 75,000
Other assets 53
Total assets acquired 85,816
Liabilities
Current liabilities:
Accounts payable 2,226
Accrued expenses 7,064
Deferred revenue, current portion 1,986
Total current liabilities 11,276
Deferred tax liabilities, net, non-current 24,000
Total liabilities assumed 35,276
Net identifiable assets acquired 50,540
Goodwill 83,627
Total purchase price $ 134,167
The intangible assets as of the closing date of the Acquisition included:
Amount
Customer relationships $ 39,100
Developed technologies 35,200
Trade names 500
Non-compete agreements 200
$75,000
Indications of fair value of the intangible assets acquired in
connection with the Acquisition were determined using either the
income, market or replacement cost methodologies. The intangible
assets are being amortized over periods which reflect the pattern in
which economic benefits of the assets are expected to be realized. The
customer relationships and developed technology are being amortized
on an accelerated basis over an estimated useful life of ten years; trade
names are being amortized on a straight-line basis over five years; and
the non-compete agreements are being amortized on a straight-line
basis over two years.
The excess of purchase price over the fair value amounts
assigned to the assets acquired and liabilities assumed represents the
amount of goodwill resulting from the Acquisition. We do not expect any
portion of this goodwill to be deductible for tax purposes. The goodwill