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Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company designated $1.4 million
of the acquired intangible assets as trade name and trademarks. The value was calculated based on the
present value of the future estimated cash flows derived from projections of future operations attributable to existing trade name and trademarks and
discounted at 16.0% . The acquired trade name and trademarks are being amortized over an estimated useful life of five years .
In addition, $2.0 million
of the consideration paid represents the fair value of acquired IPR&D projects. The IPR&D acquired is considered
indefinite lived intangible assets until research and development efforts associated with the projects are completed or abandoned. The most significant of
the acquired IPR&D projects relate to camera technology and applications. As of the first fiscal quarter of 2013, all of the acquired IPR&D had reached
technical feasibility and was reclassified to definite intangibles with an estimated useful life of four years.
Firetide, Inc.
On June 4, 2012 , the Company acquired certain intellectual property of Firetide, Inc. (“Firetide”) for an aggregate purchase price of
$7.2 million
in cash. The acquisition included intangible assets that existed at the closing date, including IP contracts, technology assets, business technology, and
goodwill. The Company believes the acquisition will bolster its wireless product offerings in its commercial business unit and strengthen its market
position in the small to medium size campus wireless LAN market.
The acquisition qualified as a business combination and was accounted for using the acquisition method of accounting. The results of Firetide have
been included in the consolidated financial statements since the date of acquisition. Pro forma results of operations for the acquisition are not presented
as the financial impact to the Company's consolidated results of operations is not material.
The Company paid $6.6 million of the aggregate purchase price in the second quarter of 2012, and the remaining $0.6 million
was paid in the
second fiscal quarter of 2013. The ongoing costs of developing these assets subsequent to the date of acquisition have been included in the consolidated
financial statements since the date of acquisition. The historical results of operations related to the acquired assets prior to the acquisition were not
material to the Company’s results of operations.
The allocation of the purchase price was as follows (in thousands):
Of the $3.0 million of goodwill recorded on the acquisition of Firetide, approximately $1.6 million and $3.0 million
is deductible for U.S. federal
and state income tax purposes, respectively. The goodwill recognized, which was assigned to the Company's commercial business unit, is primarily
attributable to expected synergies and the assembled workforce of Firetide.
The Company designated the $4.2 million
in acquired intangible assets as technology. The value was calculated based on the present value of the
future estimated cash flows derived from estimated savings attributable to the existing technology and discounted at 22.0%
. The acquired existing
technology is being amortized over its estimated useful life of five years .
71
Intangible assets, net
$
4,159
Goodwill
3,041
Total consideration
$
7,200