Logitech 2011 Annual Report Download - page 214

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The acquisition has been accounted for using the purchase method of accounting. Accordingly, the total
consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values as of the acquisition date. Fair values were determined by Company management based
on information available at the date of acquisition. The results of operations of Ultimate Ears were included in
Logitech’s consolidated financial statements from the date of acquisition, and were not material to the Company’s
reported results.
The allocation of total consideration, including transaction costs, to the assets acquired and liabilities assumed
based on the estimated fair value of Ultimate Ears was as follows (in thousands):
August 19,
2008 Estimated Life
Tangible assets acquired ....................................... $ 4,132
Intangible assets acquired
Existing technology ........................................ 5,900 4 years
Patents and core technology ................................. 1,900 4 years
Trademark/trade name...................................... 2,900 5 years
Customer relationships and other ............................. 2,500 5 years
Goodwill................................................. 25,254 —
42,586
Liabilities assumed ........................................... (2,845)
Deferred tax liability, net....................................... (5,235)
Total consideration......................................... $34,506
The existing technology of Ultimate Ears relates to the technical components used in the in-ear monitors and
earplugs. The value of the technology was determined based on the present value of estimated expected cash flows
attributable to the technology. The patents and core technology represent awarded patents, filed patent applications
and core architectures used in Ultimate Ears’ current and planned future products. Trademark/trade name relates to
the Ultimate Ears brand names. The value of the patents, core technology and trademark/trade name was estimated
by capitalizing the estimated profits saved as a result of acquiring or licensing the asset. Customer relationships and
other relates to Ultimate Ears’ existing customer base, valued based on projected discounted cash flows generated
from customers in place. The intangible assets acquired are amortized on a straight-line basis over their estimated
useful lives. The goodwill associated with the acquisition is not subject to amortization and is not expected to be
deductible for income tax purposes. The deferred tax liability relates to the acquired intangible assets which are
also not expected to be deductible for income tax purposes.
3Dconnexion
On March 31, 2011, the Company sold its equity interest in certain 3Dconnexion subsidiaries, the provider
of the Company’s 3D controllers, and its intellectual property rights related to the manufacture and sale of certain
3Dconnexion products, to a group of third party individuals and certain 3Dconnexion employees. The sale price
was $9.1 million, not including cash retained. Under the sale agreement, the Company will continue to manufacture
3Dconnexion products and sell to the buyers for a period of three years. The loss resulting from the sale was
not material.