Netgear 2009 Annual Report Download - page 98

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Table of Contents
the purchase method of accounting. The aggregate purchase price was $2.1 million, paid in cash. Additionally, the acquisition agreement
specified that Leaf shareholders may receive a total additional payout of up to $900,000 in cash over the three years following closure of the
acquisition if developed products pass certain acceptance criteria. The Company has determined that the present value of the $900,000 potential
additional payout is approximately $800,000, for which the Company will record a liability.
In accordance with the purchase method of accounting and as updated with the FASB’s April 2009 additional authoritative guidance for
business combinations, the Company will allocate the total purchase price to identifiable intangible assets in the three months ending March 28,
2010 based on each element’s estimated fair value. Acquisition costs are expensed as incurred. Purchased intangibles will be amortized on a
straight-line basis over their respective estimated useful lives. Goodwill will be recorded based on the residual purchase price after allocating the
purchase price to the fair market value of intangible assets acquired certain expensed acquisition costs. Goodwill arises as a result of the
$800,000 present valuation of the $900,000 potential additional payout, plus $100,000 in additional payment consideration. The preliminary
allocation of the purchase price is as follows (in thousands):
The $2.0 million in acquired intangible assets was designated as existing technology. The value was calculated based on the present value
of the future estimated cash flows derived from projections of future revenue attributable to existing technology. This $2.0 million will be
amortized over its estimated useful life of seven years.
96
Intangibles, net
2,000
Goodwill
900
Total purchase price allocation
$
2,900