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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
Note 20 – Acquisitions
Amici LLC: In July 2006, we acquired substantially
all of the net assets of Amici LLC (“Amici”), a provider
of electronic-discovery (e-discovery), services for $175 in
cash, including transaction costs. Amici provides
comprehensive litigation discovery management services,
including the conversion, hosting and production of
electronic and hardcopy documents. Amici also provides
consulting and professional services to assist attorneys in
the discovery process. The purchase agreement requires
us to pay the sellers an additional $20 if certain
performance targets are achieved in 2008, which would
be an addition to the acquired cost of the entity. The
operating results of Amici were not material to our
financial statements and are included within our Other
segment from the date of acquisition.
The table below presents the estimated purchase price allocation based upon third-party valuations and
management estimates. The Goodwill was assigned to our Other segment. The primary elements that generated the
Goodwill are the value of synergies and the acquired assembled workforce, neither of which qualify as an amortizable
intangible asset.
(in millions)
Amortization
Period in Years
Purchase Price
Allocation
Net assets, less cash acquired ............................................... $ 2
Goodwill ............................................................... N/A 136
Intangible assets:
Customer relationships ................................................ 13 29
Software ........................................................... 5 8
Total Purchase price ..................................................... $175
XMPie, Inc: In November 2006, we acquired the
stock of XMPie, Inc. (“XMPie”), a provider of variable
information software, for $54 in cash, including
transaction costs. XMPie’s software enables printers and
marketers to create and print personalized and customized
marketing materials to help improve response rates. We
had an existing relationship with XMPie, as its largest
reseller, and its software is primarily sold together with
our Production systems including the iGen3. The
operating results of XMPie are not material to our
financial statements, and are included within our
Production segment from the date of acquisition. The
purchase price was primarily allocated to Goodwill $48,
Intangible assets, net $9 and deferred tax liabilities $(3).
The primary element that generated the Goodwill is the
value of synergies between the entities, which do not
qualify as an amortizable intangible asset. The allocations
were based on third-party valuations and management
estimates which have not yet been finalized. Accordingly,
the allocation of purchase price is preliminary and
revisions may be necessary, although not expected to be
material.
Note 21 – Divestitures and Other Sales
During the three years ended December 31, 2006,
the following significant divestitures occurred:
Ridge Re: In March 2006, Ridge Re, a wholly owned
subsidiary included in our net investment in discontinued
operations (within Other long-term assets), completed an
agreement to transfer its obligations under its remaining
reinsurance agreement, together with related investments
held in trust, to another insurance company as part of a
complete exit from this business. As a result of this
transaction, the remaining investments held by Ridge Re
were sold and the excess cash held by Ridge Re of $119,
after the payment of its remaining liabilities, was
distributed back to the Company as part of a plan of
liquidation. This amount is presented within investing
activities in the Consolidated Statements of Cash Flows.
Integic: In March 2005, we completed the sale of our
entire equity interest in Integic Corporation (“Integic”)
for $96 in cash, net of transaction costs. The sale resulted
in a pre-tax gain of $93. Prior to this transaction, our
investment in Integic was accounted for using the equity
105