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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The unaudited pro forma amounts have been calculated as if the acquisition had occurred on January 1, 2011 and
include the following adjustments: (i) additional amortization expense of $5.1 million for each of the years ended
December 31, 2012 and 2011 that would have been recorded for the intangible assets recognized as part of the acquisition,
(ii) adjustment of $0.6 million and $1.1 million and for the years ended December 31, 2012 and 2011, respectively, associated
with the deferred revenue recorded as part of the purchase accounting for the acquisition, (iii) the elimination of transaction
related variable compensation expense of $15.4 million for the year ended December 31, 2012, recognized as a result of the
acquisition, (iv) the elimination of interest expense of $0.9 million and $1.0 million for the years ended December 31, 2012
and 2011, respectively, related to Nexsan debt obligations that were repaid upon closing of the acquisition and (v) the
elimination of transaction costs incurred of $4.3 million for the year ended December 31, 2012 directly associated with the
acquisition of Nexsan. Pro forma loss from continuing operations has also been calculated to reflect estimated adjustments to
Imation’s income tax provision as if the acquisition had occurred on January 1, 2011. There were no material pro forma
adjustments necessary as a result of conforming Nexsan’s accounting policies to those utilized by Imation.
IronKey Systems, Inc.
On October 4, 2011, we acquired the secure data storage hardware business of IronKey Systems Inc. (IronKey) for a
cash payment of $19.0 million. During 2012, we purchased the IronKey license for its secure storage management software
and service and the IronKey brand for secure storage products for $4.0 million (we held a license for brand use in 2011 with
the acquisition of IronKey). IronKey is a part of our TSS reporting segment.
The purchase price allocation resulted in goodwill of $9.4 million, primarily attributable to expected strategic synergies
and intangible assets that do not qualify for separate recognition and is deductible for tax purposes. Goodwill associated with
the acquisition of IronKey is included in our Mobile Security reporting unit for the purposes of goodwill impairment testing. See
Note 6 — Intangible Assets and Goodwill for more information regarding goodwill. During 2012, we recorded an adjustment to
the purchase price related to working capital in the amount of $0.6 million. As the purchase accounting for this acquisition was
finalized in 2011, the adjustment was recorded as a charge to restructuring and other in our Consolidated Statements of
Operations. The comparability of our results with this acquisition was not materially impacted and therefore, pro forma
disclosures have not been presented.
The following table illustrates our allocation of the purchase price to the assets acquired and liabilities assumed:
Amount
(In millions)
Accounts receivable and other assets ............................................... $ 3.5
Inventories ................................................................... 2.1
Intangible assets ............................................................... 7.8
Goodwill ..................................................................... 9.4
Accounts payable and other liabilities ............................................... (3.8)
$19.0
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