Memorex 2007 Annual Report Download - page 82

The following table summarizes our purchase price analysis as of December 31, 2007:
Amount
(In millions)
Cash consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31.8
Promissory notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5
Direct acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0
Total preliminary purchase price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $70.3
The purchase price allocation as of December 31, 2007 resulted in goodwill of $33.6 million. The goodwill is
deductible for tax purposes. The following illustrates the allocation of the purchase price to the assets acquired and
liabilities assumed:
Amount
(In millions)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.9
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.3)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.6
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.1
$70.3
Our allocation of the purchase price to the assets acquired and liabilities assumed resulted in the recognition of the
following intangible assets:
Amount
Weighted
Average
Life
(In millions)
Trade name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7 12 years
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 6 years
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 3 years
Intangible assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25.1
With respect to the promissory notes, a total of $30 million is to be paid in quarterly installments over three years
from the closing date with an interest rate of 6 percent per annum, secured by an irrevocable letter of credit issued
pursuant to Imation’s credit agreement, and not subject to offset. The remaining $7.5 million is to be paid to Memcorp in a
lump sum payment 18 months from the closing date, with an interest rate of 6 percent per annum, are unsecured and
subject to offset to satisfy any indemnification claims; provided that if an existing obligation of Memcorp is satisfied prior to
the 18-month maturity date, $3.75 million of such note will be paid in advance of the maturity date. Memcorp resolved the
outstanding obligation and we paid the $3.75 million during the third quarter of 2007. An additional $2.5 million was paid
during the fourth quarter of 2007 in accordance with the note agreements.
Memcorp operating results are included in our Consolidated Statements of Operations from the date of acquisition.
2006 Acquisition
Memorex International Inc.
On April 28, 2006, we closed on the acquisition of substantially all of the assets of Memorex International Inc.
(Memorex), including the Memorex brand name and the capital stock of its operating subsidiaries engaged in the business
of the design, development, sourcing, marketing, distribution and sale of hardware, media and accessories used for the
storage of electronic data under the Memorex brand name. Memorex’s product portfolio includes recordable CDs and
DVDs, branded accessories, USB flash drives and magnetic and optical drives.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)