Adobe 2007 Annual Report Download - page 75

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75
unrecognized tax benefits. FSP FIN 48-1 is effective upon the initial adoption of FIN 48, and therefore is effective our first
quarter of fiscal 2008. The actual impact of the adoption of FIN 48 and FSP FIN 48-1 on our consolidated results of
operations and financial condition will depend on facts and circumstances that exist on the date of adoption. We are currently
calculating the impact of the adoption of FIN 48 and FSP FIN 48-1 but do not expect it to have a material impact on our
financial statements.
Note 2. Acquisitions
Fiscal 2007 Acquisitions
During fiscal 2007, we completed two business combinations and one asset acquisition for cash consideration of
approximately $80.0 million. Both individually and in the aggregate, these acquisitions were not material to our consolidated
balance sheet and results of operations. Related to the acquisition that occurred during the second quarter of fiscal 2007, $1.5
million of in-process research and development is included in our amortization of purchased intangibles. See Note 5 for
information regarding goodwill and purchased and other intangibles.
Fiscal 2006 Acquisitions
During fiscal 2006, we completed the acquisition of Macromedia, a provider of software technologies that enables the
development of a wide range of Internet and mobile application solutions. The acquisition of Macromedia accelerated our
strategy of delivering an industry-defining technology platform that provided more powerful solutions for engaging people
with digital information. The transaction was accounted for using the purchase method of accounting in accordance with
SFAS No. 141, “Business Combinations”. The results of operations of Macromedia have been included in the Consolidated
Statements of Income beginning on December 3, 2005.
Assets acquired and liabilities assumed were recorded at their fair values as of December 3, 2005. The total $3.5 billion
purchase price is comprised of the following:
Value of Adobe stock issued (109 million shares)........................ $ 3,209,121
Fair value of stock options assumed................................... 227,604
Direct transaction costs ............................................. 29,060
Restructuring costs................................................. 72,728
Total purchase price................................................ $ 3,538,513
Purchase Price Allocation
The table below represents the allocation of the purchase price to the acquired net assets of Macromedia based on their
estimated fair values as of December 3, 2005 and the associated estimated useful lives at that date. The fair values assigned to
tangible and intangible assets acquired and liabilities assumed are based on estimates and assumptions of management.
Goodwill decreased $28.8 million for insignificant revisions to the valuation of Macromedia assumed options.
Amount
Estimated
Useful Life
Net tangible assets...................................................... $ 713,164 N/A
Identifiable intangible assets:
Acquired product rights ............................................... 365,500 4 years
Customer contracts and relationships .................................... 183,800 6 years
Non-competition agreements ........................................... 500 2 years
Trademarks ......................................................... 130,700 5 years
Goodwill ............................................................. 1,993,898 N/A
Stock-based compensation............................................... 150,951 2.18 years†
Total purchase price .................................................... $ 3,538,513
† Estimated weighted-average remaining vesting period as of December 3, 2005.