Creative 1999 Annual Report Download - page 39

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37
NOTE 14 – ACQUISITIONS AND INVESTMENTS
Acquisitions
In November 1997, Creative paid $14.0 million from existing cash resources for all the assets of the NetMedia Division of OPTi Inc. and
received warrants to purchase 200,000 shares of OPTi’s common stock at a price of $10 per share. The NetMedia Division is in the business
of research, development and sales of audio chipsets. In December 1997, Creative completed the acquisition of the remaining 76% of the
outstanding shares of Cambridge SoundWorks, Inc. (“Cambridge”) through a tender offer for cash in the amount of approximately $35.0
million. Cambridge manufactures home stereo, car stereo, home theater and computer speakers. Creative purchased the initial 24% of
the outstanding shares of Cambridge in March 1997. In December 1997, Creative acquired for cash all outstanding shares of Ensoniq for
approximately $77.0 million. Ensoniq is a key innovator in the design and development of PCI audio microchip technology and has strong
brand recognition associated with its line of electronic musical instruments.
Creative accounted for these acquisitions using the purchase method of accounting and accordingly has included the results of their
operations from their respective acquisition dates. Excluding the $60.3 million write-off of acquired in-process technology from these
companies required by US GAAP, the aggregate impact on Creative’s results of operations from these acquisitions was not material.
The allocation of Creative’s aggregate purchase price for the above three acquisitions to net tangible assets, in-process technology and
identifiable intangible assets acquired was based on independent appraisals and is summarized below. The tangible assets acquired primarily
comprised inventory, accounts receivable and fixed assets. The intangible assets are amortized over their respective benefit periods, which
range from one to five years.
US$’000
Net tangible assets $ 20,532
In-process technology 60,300
Intangible assets 50,494
131,326
Net carrying value of initial equity interest in Cambridge (4,662)
Cash acquired in transactions (298)
Net cash used for acquisitions of Cambridge, Ensoniq, and
NetMedia Division of OPTi during fiscal year 1998 $ 126,366
Notes to Consolidated Financial Statements