Plantronics 2006 Annual Report Download - page 92

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The fair values of the intangible assets acquired were estimated with the assistance of an independent
valuation firm.
The following table presents an allocation of the purchase price based on the estimated fair values of the
assets acquired and liabilities assumed at the date of acquisition:
Fair Value at
(in thousands) August 18, 2005
Total cash consideration $165,126
Less cash balance acquired 7,494
157,632
Allocated to:
Prepaid compensation 1,067
Inventory 29,640
Other current assets 18,370
Property, plant, and equipment, net 9,322
Identifiable intangible assets 108,300
Deferred tax assets 3,447
Current liabilities assumed (30,341)
Deferred tax liability (46,036)
Goodwill $ 63,863
Goodwill was recorded based on the residual purchase price after allocating the purchase price to the fair
market value of tangible and intangible assets acquired less liabilities assumed. Goodwill arises as a result
of, among other factors, future unidentified new products, new technologies and new customers as well as
the implicit value of future cost savings as a result of the combining of entities. In accordance with
SFAS No. 142 ‘‘Goodwill and Other Intangible Assets’’ (‘‘SFAS 142’’), goodwill is not amortized but
tested at least annually for impairment at the reporting unit level. In the fourth quarter of fiscal 2006,
management completed the annual impairment test, which indicated that there was no impairment. (See
Note 5).
The goodwill arising from this acquisition is not deductible for tax purposes under Internal Revenue
Code Section 197.
The fair value and remaining useful lives of identifiable intangible assets acquired were estimated with the
assistance of an independent appraiser and in accordance with SFAS No. 141 ‘‘Business Combinations,’’
SFAS No. 142, and FASB Interpretation No. 4: Applicability of SFAS No. 2 to Business Combinations
Accounted for by the Purchase Method.
86 ⯗Plantronics