3Ware 2004 Annual Report Download - page 82

APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
significant variable interest investors to provide certain disclosures. A VIE is an entity in which the voting equity
investors do not have a controlling financial interest or the equity investment at risk is insufficient to finance the
entity’s activities without receiving additional subordinated financial support from the other parties.
Development stage entities that have sufficient equity invested to finance the activities they are currently
engaged in and entities that are businesses, as defined in FIN 46, are not considered VIEs. The provisions of FIN
46 were effective immediately for all arrangements entered into with new VIEs created after January 31, 2003.
For arrangements entered into with VIEs created before January 31, 2003, the provisions of FIN 46 are effective
at the end of the first reporting period ending after March 15, 2004. The Company has completed a review of its
strategic equity investments as well as other arrangements to determine whether it is the primary beneficiary of
any VIEs. The review did not identify any VIEs.
Reclassification
Certain prior period amounts have been reclassified to conform to the current period presentation.
2. Acquisitions
The Company completed two acquisitions during the year ended March 31, 2004 using the purchase method
of accounting. The accompanying consolidated financial statements include the results of operations of each
business acquired from the date of acquisition. Details of the acquired business are as follows:
JNI Corporation—On October 28, 2003, the Company completed the acquisition of JNI Corporation, a
provider of Fibre Channel hardware and software products that form critical elements of storage area networks.
AMCC acquired all outstanding shares of JNI Corporation for approximately $196.4 million in cash and assumed
options to purchase approximately 4.3 million shares of AMCC’s common stock.
IBM Power PRS Switch Fabric product line—On September 30, 2003, the Company purchased assets and
licensed intellectual property associated with IBM’s Power PRS Switch Fabric product line (“PRS business”) for
$47.8 million in cash. On January 1, 2004, the Company exercised an option to purchase additional related assets
located in France for $3 million.
In connection with these transactions, the Company conducted valuations of the intangible assets acquired in
order to allocate the purchase price in accordance with SFAS No. 141, “Business Combinations”, or SFAS 141.
In accordance with SFAS 141, the Company has allocated the excess purchase price over the fair value of net
tangible assets acquired to the identifiable intangible assets. The purchase price in each transaction was allocated
as follows (in thousands):
JNI
PRS
business Total
Net tangible assets ................................................ $ 74,672 $ 815 $ 75,487
In-process research and development ................................. 16,100 5,700 21,800
Developed technology ............................................. 25,600 5,500 31,100
Backlog/customer relationships ...................................... 1,000 400 1,400
Patents/core technology rights/tradename .............................. 7,800 1,700 9,500
Purchased inventory fair value adjustment ............................. 1,262 117 1,379
Goodwill ........................................................ 87,270 36,556 123,826
Total consideration ............................................ $213,704 $50,788 $264,492
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