SanDisk 2014 Annual Report Download - page 195

SANDISK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the fair values of the tangible and intangible assets acquired and
liabilities assumed from, and goodwill attributed to, the Fusion-io acquisition as of July 23, 2014, and
reflects adjustments made during the open measurement period to finalize the purchase accounting (in
thousands):
Cash ................................................................ $ 190,336
Accounts receivable, net ................................................... 67,666
Inventory ............................................................. 76,780
Deferred tax asset, net .................................................... 54,490
Finite-lived intangible assets ................................................. 382,000
IPR&D ............................................................... 61,000
Goodwill .............................................................. 513,398
Other assets ........................................................... 30,498
Other current liabilities .................................................... (94,016)
Other non-current liabilities ................................................. (18,609)
Total purchase price .................................................... $ 1,263,543
Goodwill in the table above was reduced by $29.3 million during the three months ended
December 28, 2014 in connection with the finalization of the purchase accounting, due primarily to the
recognition of deferred tax assets associated with the divestiture of the io-Control product line of
Fusion-io. The divestiture of the product line was deemed immaterial to the Company’s Consolidated
Financial Statements.
The following table presents the fair value of the intangible assets acquired (in thousands):
Weighted-Average
Useful Lives Fair Value
Intangible assets:
Developed technology ..................................... 5 years $ 271,000
Customer relationships .................................... 1.5 years 57,000
Trademark and trade names ................................. 5 years 54,000
IPR&D ............................................... 61,000
Total intangible assets acquired, excluding goodwill ................ $ 443,000
The initial weighted-average amortization period for the finite-lived intangible assets was 4.5 years.
The intangible assets are amortized on a straight-line basis over the period which the economic benefits of
the intangible assets are expected to be utilized. The goodwill resulted from expected synergies from the
transaction, including complementary products that will enhance the Company’s overall product portfolio.
In-process Research and Development. A portion of the Fusion-io purchase price was allocated to
acquired IPR&D. The value of the IPR&D project was determined by estimating the future net cash flows
and by discounting them to their present values, which represents an established valuation technique in the
high-technology computer industry.
The net cash flows from the IPR&D project were based on estimates of revenues, costs of revenues,
research and development expenses, including costs to complete the project, selling, marketing and
administrative expenses, and income taxes from the project. The estimated net revenues and gross margins
were based on projections of the project and were in line with industry averages. Estimated total net
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