Memorex 2007 Annual Report Download - page 83

The estimated cash purchase price for the acquisition was $329.3 million, after estimated net asset adjustments were
made to the original purchase price of $330.0 million. This amount excludes the cost of integration, as well as other
indirect costs related to the transaction. Certain price adjustments were finalized post-closing. Additional cash consideration
of a minimum of $5.0 million will be paid and may range up to a maximum of $45.0 million over a period of up to three
years after close, contingent on financial performance of the purchased business. During the second quarter of 2007 we
paid $2.5 million related to the minimum additional cash consideration. The financial performance is measured by the net
earnings before interest, income taxes, depreciation and amortization (EBITDA) of the purchased business as defined in
the acquisition agreement previously filed by Imation as Exhibit 2.1 to our Current Report on Form 8-K filed January 25,
2006.
We placed $33.0 million of the purchase price paid at closing in escrow to address potential indemnification claims.
From this escrowed amount $31.6 million was released to the seller during 2007. We submitted a claim against the
remaining amount of $1.4 million and settled the claim for $1.0 million in the first quarter of 2008. In addition, we placed
$8.0 million of the purchase price paid at closing in escrow until the determination of any required post-closing purchase
price adjustments under the acquisition agreement were finalized. On March 30, 2007, we received $7.9 million of this
escrow amount in a settlement of post-closing adjustments relating to working capital. The remaining escrow balance of
$0.1 million was released to the seller. As set forth in Note 6, the finalization of working capital adjustments resulted in a
decrease to the goodwill balance during 2007.
The following table summarizes our purchase price analysis as of December 31, 2006:
Amount
(In millions)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $329.3
Direct acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
Memorex restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
Present value of minimum additional purchase price consideration . . . . . . . . . . . . . . . . . . . . . . . . 4.6
$347.9
The following illustrates the allocation of the purchase price to the assets acquired and liabilities assumed:
Amount
(In millions)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.5
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.3
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.1
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.3
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231.0
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61.8)
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29.1)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10.9)
$347.9
Memorex operating results are included in our Consolidated Statements of Operations from the date of acquisition.
Our Consolidated Balance Sheet as of December 31, 2006, reflects the allocation of the purchase price to the assets
acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The allocation of the
purchase price has been completed except for the completion of management’s integration plans. These changes may
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)