3Ware 2001 Annual Report Download - page 34

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S TAT E M E N T S
in exchange for all of the outstanding stock of MMC, the Company issued 41,392,404 shares of its common stock
and assumed options to purchase 7,981,595 shares of its common stock.
YuniNetworks, Inc.—On June 8, 2000, the Company completed the acquisition of YuniNetworks, a developer
of scalable switch fabric ICs. Under the terms of the merger agreement, in exchange for all YuniNetworks’ shares
of common and preferred stock, the Company issued 4,048,646 shares of its common stock and assumed options
to purchase 225,776 shares of its common stock. Pursuant to a separate agreement, AMCC purchased 10% of the
YuniNetworks’ shares held by the majority stockholder of YuniNetworks for $8.9 million in cash.
Other—The Company also completed the acquisitions of pBaud, Chameleon, SiLUTIA and RTC for a total
purchase price of $73.2 million.
In connection with these transactions, the Company conducted independent valuations of the intangible assets
acquired in order to allocate the purchase price in accordance with Accounting Principles Board Opinion No. 16.
The Company has allocated the excess purchase price over the fair value of net tangible assets acquired to the
following identifiable intangible assets: developed core and existing technology, assembled workforce, acquired
i n - p r ocess re s e a rch and development (“IPR&D”) and trademarks/tradenames. The total purchase price was allocated
as follows:
(in thousands) MMC Yu n i Ne t w o rk s Othe r Tota l
Net tangible assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126,866 $ 2,118 $ (1,457) $ 127,527
In-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . 176,700 21,800 3,600 202,100
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,128,686 192,365 42,935 4,363,986
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (301,129) — (16,420) (317,549)
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,821 2,488 44,536 438,845
Purchased inventory fair value adjustment . . . . . . . . . . . . . . . . . . . . . . 26,907 — — 26,907
Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,549,851 $218,771 $ 73,194 $4,841,816
Total consideration issued in the purchase acquisitions is as follows:
(in thousands) MMC Yu n i Ne t w o rk s Othe r Tota l
Value of securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,919,108 $197,545 $ 62,356 $4,179,009
Assumption of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578,093 11,467 7,288 596,848
4,497,201 209,012 69,644 4,775,857
Cash paid and merger fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,650 9,759 3,550 65,959
$4,549,851 $218,771 $ 73,194 $4,841,816
In accordance with EITF 00-23, which was issued in September 2000, the amount of goodwill has been adjusted for
certain tax benefits related to the exercise of stock options assumed through our acquisitions. The total adjustment
to goodwill related to these totaled $21.4 million for the year ended March 31, 2001.
The purchased inventory fair value adjustment represents the difference between the carrying value of work in process
and finished goods inventory and the estimated selling price of the related inventory at the date of acquisition. This
adjustment was fully charged to cost of sales in the year ended March 31, 2001 as the related inventory was sold.
The related purchased IPR&D for each of the above acquisitions re p r esents the present value of the estimated after-
tax cash flows expected to be generated by the purchased technology, which, at the acquisition dates, had not ye t
reached technological feasibility. The cash flow projections for re venues we re based on estimates of re l e vant market size s
and growth factors, expected industry trends, the anticipated nature and timing of new product introductions by the
Company and its competitors, individual product sales cycles and the estimated life of each pro d u c t’s underlying tech-
n o l o g y. Estimated operating expenses and income taxes we r e deducted from estimated re venue projections to arrive at