Adobe 2002 Annual Report Download - page 115

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The following table summarizes the purchase price allocation:
Cash and cash equivalents ……………………………………………………. $ 9,117
Accounts receivable, net…………………………………………………….… 11,906
Other current assets…………………………………………………….……… 4,735
Purchased technology…………………………………………………….……. 2,710
Goodwill…………………………………………………….…………………. 77,649
In-process research and development………………………………………….. 410
Trademarks and other intangible assets………………………………………... 1,029
Total assets acquired……………………………………………………… 107,556
Current liabilities…………………………………………………….………… (18,176)
Liabilities recognized in connection with the business combination………….. (16,836)
Deferred revenue…………………………………………………….………… (2,360)
Total liabilities assumed………………………………………………….. (37,372)
Net assets acquired…………………………………………………… $ 70,18
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We obtained an independent appraiser’s valuation to determine the amounts allocated to purchased technology
and in-process research and development. The valuation analysis utilized the Income Approach that takes into
consideration discounted future cash flows. Based on this valuation $2.7 million and $0.4 million was allocated to
purchased technology and in-process research and development, respectively. The amount allocated to purchased
technology of $2.7 million represented the fair market value of the technology for each of the existing products, as
of the date of the acquisition. The purchased technology of $2.7 million was assigned a useful life of three years and
will be amortized to cost of goods sold. The amount allocated to in-process research and development of $0.4
million was expensed at the time of acquisition due to the state of the development of certain products and the
uncertainty of the technology. At the date we acquired Accelio, it was estimated that 10% of the development effort
had been completed and that the remaining 90% of the development effort would be completed at various times over
the next 24 months. The efforts required to complete the development of the technology primarily includes
finalization of coding and completion testing.
The remaining purchase price was allocated to goodwill because Accelio’s business fits Adobe’s long-term
strategy, shortens time to market, and provides a market position in the eForms business for Adobe to build upon.
The total purchase price allocated to goodwill of $75.0 million was assigned to our ePaper Solutions segment. In
accordance with SFAS No. 142, the goodwill will not be amortized but will be reviewed for impairment on an
annual basis. During the fourth quarter of fiscal 2002, we revised our estimate of certain costs associated with our
acquisition of Accelio, resulting in an increase to goodwill of approximately $2.6 million. The adjustment primarily
reflected higher than estimated transaction costs and costs related to closing redundant facilities.
The $1.0 million of acquired trademarks and other intangible assets will be amortized over their useful lives
ranging from six-months to three years.
In the second quarter of fiscal 2002, we recognized liabilities in connection with the acquisition of Accelio. The
liabilities recognized included severance and related charges associated with a worldwide reduction in force of
Accelio employees, transaction costs, costs related to closing redundant facilities and terminating contracts, and
other exit costs associated with the acquisition. As of November 29, 2002, the majority of the restructuring
transactions were completed. Total liabilities recognized in connection with the acquisition were $14.5 million, of
which $6.2 million remains accrued at November 29, 2002. The majority of the remaining payments will be paid
through May 2003.