8x8 2015 Annual Report Download - page 83

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The Company recorded the acquired tangible and identifiable intangible assets and liabilities assumed based on their estimated fair values. The
excess of the consideration transferred over the aggregate fair values of the assets acquired and liabilities assumed is recorded as goodwill. The
amount of goodwill recognized is primarily attributable to the expected contributions of the entity to the overall corporate strategy in addition to
synergies and acquired workforce of the acquired business. The finite−lived intangible assets consist of customer relationship, with an estimated
weighted-
average useful life of 7 years. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions
made by management using the excess earnings method. Intangible assets are amortized on a straight-line basis.
The fair values of the assets acquired and liabilities assumed are as follows (in thousands):
None of the goodwill recognized is expected to be deductible for income tax purposes.
Voicenet contributed revenue of approximately $3.3 million and a net loss of approximately $0.8 million for the period from the date of
acquisition to March 31, 2014. The Company determined that it is impractical to include such pro forma information given the difficulty in
obtaining the historical financial information of Voicenet. Inclusion of such information would require the Company to make estimates and
assumptions regarding Voicenet's historical financial results that we believe may ultimately prove inaccurate.
14. GAIN ON SETTLEMENT OF ESCROW CLAIM
In December 2013, the Company settled an escrow claim for indemnification with the sellers of Contactual, Inc. Under the terms of the
settlement, the Company recorded a gain of $0.6 million in other income, net, in the consolidated statement of income during the year ended
March 31, 2014. Under the terms of the Contactual merger agreement and the escrow agreement, each indemnifying seller paid his, her or its pro
rata share of the obligations owed to the Company on January 29, 2014. Upon receipt of the cash on January 29, 2014, the Company released the
remaining escrow account balance to the sellers of Contactual Inc.
15. PATENT SALE
In June 2012, the Company entered into a patent purchase agreement and sold a family of patents to a third party for approximately $12.0
million plus a future payment of up to a maximum of $3.0 million based on future license agreements entered into by the third party purchaser.
In August 2014 and February 2013, the third party entered into two separate license agreements with its customers; therefore, the Company
earned an additional $1.0 million each under the patent purchase agreement for fiscal 2015 and 2013. Under the terms and conditions of the
patent purchase agreement, the Company has retained certain limited rights to continue to use the patents. The patent purchase agreement
contains representations and warranties customary for transactions of this type.
76
Fair Value
Assets acquired:
Cash
$
854
Current assets
1,114
Property and equipment
956
Intangible asset - customer relationship
6,381
Total assets acquired
9,305
Liabilities assumed:
Current and non-current liabilities
(4,132)
Total liabilities assumed
(4,132)
Net identifiable assets acquired
5,173
Goodwill
14,155
Total consideration transferred
$
19,328