Adaptec 2005 Annual Report Download - page 80

Download and view the complete annual report

Please find page 80 of the 2005 Adaptec annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 131

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131

Table of Contents
Net assets acquired consist of the following:
(in thousands)
Tangible assets, net of liabilities $ 10,512
Intangible assets 82,500
In-process research and development 20,500
Goodwill 146,259
Net assets acquired $259,771
Intangible assets acquired, and their respective estimated remaining useful lives, over which each asset will be amortized on a straight-line basis, are:
(in thousands)
Estimated
fair value
Estimated
average remaining
useful life
Existing technology $ 46,000 4 years
Customer relationships 20,300 4 years
Core technology 15,400 4 years
Backlog 800 eight months
In-process research and development 20,500 N/A
Total intangible assets $ 103,000
The amount allocated to in-process research and development (IPR&D) represented an estimate of the fair value of research projects that had not reached
technological feasibility and had no alternative future use. The estimated fair value of IPR&D was expensed immediately following the consummation of the
acquisition.
PMC acquired IPR&D projects related to EPON and AFE products from Passave.
The value assigned to IPR&D was calculated using the income approach by determining cash flow projections related to identified projects. The assumptions
included information on revenues from existing products and future expected trends for each technology, with an estimated useful life of 6 years. The stage of
completion of each project was estimated to determine the discount rates to be applied to the valuation of the in-process technology. Based upon the level of
completion and the risk associated with in-process technology, we applied discount rates that ranged from 20% – 23% to value the projects acquired.
The fair value, expected costs to complete, and anticipated completion date for each project is as follows:
74
Source: PMC SIERRA INC, 10-K, February 22, 2008