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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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)
Trademark ......................................................... $ 0.7 10years
Supply agreement .................................................... 1.4 3years
Customer relationships ................................................ 1.0 8years
Proprietary technology ................................................. 7.5 6years
$10.6
During 2012, the MXI trademark was abandoned due to consolidation of our brands and we recorded a charge of
$0.6 million in our Consolidated Statement of Operations.
The amount of contingent consideration for this acquisition was based on incremental gross profit (revenue less cost of
goods sold) and gross margin percent from MXI branded products, IronKey products and all other Mobile Security branded
products, as well as future Imation mobile security products.
During 2012 and 2013, we remeasured the estimated fair value of any contingent consideration each reporting period.
At December 31, 2012, our estimated fair value of this contingent consideration obligation was determined to be $0.6 million.
The decrease in the fair value of this contingent consideration obligation from December 31, 2011 was $8.6 million which was
recorded as a benefit in restructuring and other in our Consolidated Statements of Operations. During 2013, the contingent
consideration agreement expired and the criteria for the contingent consideration payments were not achieved. Therefore, the
associated liability was adjusted to zero and we recorded a benefit of $0.6 million in restructuring and other in our
Consolidated Statements of Operations.
We used the income approach in calculating the fair value of our contingent consideration during the period in which this
arrangement was outstanding.
BeCompliant Corporation (doing business as Encryptx)
On February 28, 2011 we acquired substantially all of the assets of BeCompliant Corporation, doing business as
Encryptx (Encryptx), a technology leader in encryption and security solutions for removable storage devices and removable
storage media. The purchase price was $2.3 million, consisting of a cash payment of $1.0 million and the estimated fair value
of future contingent consideration of $1.3 million. Encryptx is a part of our TSS reporting segment.
The purchase price allocation resulted in goodwill of $1.6 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
MXI 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 2013 and 2012 we paid contingent consideration
payments of $0.8 million and $0.7 million, respectively, based on certain milestones. The contingent consideration
arrangement expired in 2013 and, as a result, the contingent consideration liability is zero as of December 31, 2013.
Discontinued Operations
On February 13, 2013, we announced our plans to divest our XtremeMac and Memorex consumer electronics
businesses. The consumer storage business under the Memorex and TDK Life on Record brands and the consumer
electronics business under the TDK Life on Record brand are being retained. These divestitures are part of the acceleration of
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