iRobot 2012 Annual Report Download - page 114

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iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
64
The completed technology consists of two separate assets, one valued at $17.9 million and one valued at $9.0 million.
The estimated fair value attributed to $17.9 million of the completed technology was determined based upon a discounted cash
flow forecast. Cash flows were discounted at a rate of 15.5%. The fair value of the $9.0 million relating to the second
completed technology was determined based on the estimated cost to replace the technology. The fair value of the completed
technology will be amortized over a period of 7-10 years on a straight-line basis, which approximates the pattern in which the
economic benefits of the completed technology are expected to be realized.
The fair value of the tradename will be amortized over 3 years on a straight-line basis, which approximates the pattern in
which the economic benefits of the tradename are expected to be realized.
Goodwill represents the excess of the purchase price over the fair values of the net tangible and intangible assets acquired
and is primarily the result of expected synergies. None of the goodwill or identifiable intangibles associated with this
transaction will be deductible for tax purposes.
Acquisition-related costs of $0.85 million were incurred in 2012.
Pro Forma Disclosures (Unaudited)
The following unaudited pro forma consolidated results of operations for fiscal 2012 and fiscal 2011 assume that the
acquisition of Evolution occurred as of January 2, 2011.
Fiscal Year Ended
December 29,
2012 December 31,
2011
(In thousands)
Revenue $ 445,469 $ 482,850
Net Income 8,723 31,778
These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the
acquisitions had occurred at the beginning of the periods presented or that may be obtained in the future.
Since the date of the acquisition, October 1, 2012, the Company has recorded $3.8 million of revenue attributable to
Evolution within its consolidated financial statements.
14. Goodwill and other intangible assets
The carrying amount of the goodwill at December 29, 2012 is $49.0 million. $41.0 million resulted from the acquisition
of Evolution Robotics, Inc. in October 2012, and $7.9 million resulted from the acquisition of Nekton completed in September
2008. In the fourth quarter of 2012, the Company completed its annual goodwill impairment test. The first step of the two-step
impairment test, which involves comparing the fair values of the applicable reporting units with their aggregate carrying values,
including goodwill, was completed, and the Company did not identify any goodwill impairment.
Other intangible assets include the value assigned to completed technology, research contracts, and trade names. The
estimated useful lives for all of these intangible assets are two to ten years. The intangible assets are being amortized on a
straight-line basis, which is consistent with the pattern that the estimated economic benefits of the intangible assets are expected
to be utilized.