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NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
Note 2 − Acquisition of MediaQ, Inc.
On August 19, 2003, we completed the acquisition of MediaQ, Inc., or MediaQ, a leading provider of graphics and multimedia
technology for wireless mobile devices. Our primary reasons for the acquisition of MediaQ, Inc. were to accelerate our entry into the
handheld devices market, use MediaQ's two−dimensional, or 2D, and low power capabilities, allowing us to continue to focus on
three−dimensional, or 3D, and advanced video efforts, use existing MediaQ channel and design wins, and enhance MediaQ's PDA
business through our existing OEM and ODM channels.
The aggregate purchase price consisted of cash consideration of approximately $71.3 million, including $1.3 million of direct
acquisition costs. Following is a summary of estimated fair values of the assets acquired and liabilities assumed:
Fair Market
Value
Straight−Line Depreciation/Amortization
Period
(In
thousands)
Accounts receivable $ 1,505 −−
Inventories 4,066 −−
Other assets 323 −−
Property and equipment 1,460 9 months − 3 years
Deferred income tax assets 1,601 −−
In−process research and development 3,500 −−
Goodwill 52,913 −−
Intangible assets:
Existing technology 13,100 1 − 3 years
Customer relationships 2,100 18 months
Backlog 600 3 months
Non−compete agreement 150 18 months
Total assets acquired $ 81,318
Current liabilities $ (1,767) −−
Current liabilities recognized in connection with the business combination (1,868) −−
Long−term deferred income tax liabilities (6,380) −−
Total liabilities assumed $ (10,015)
Net assets acquired $ 71,303
The amount of the purchase price allocated to purchased in−process research and development, or IPR&D, represents the value
assigned to research and development projects of MediaQ that had commenced but had not yet reached technological feasibility and
have no alternative future use. In accordance with SFAS No. 2, Accounting for Research and Development Costs, as clarified by FIN
4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method an interpretation of FASB
Statement No. 2, amounts assigned to IPR&D meeting the above−stated criteria were charged to expense as part of the allocation of
the purchase price.
The pro forma results of operations have not been presented for the acquisition of MediaQ because the effect of this acquisition was
not considered material.
65