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This excerpt taken from the ADI 10-K filed Nov 24, 2009. Acquisitions
In fiscal 2006, we completed a transaction with TTPCom Limited
(TTPCom), whereby TTPCom transferred to us intellectual
property, engineering resources, and related assets associated
with the support and customization of TTPCom’s
GSM/GPRS/EDGE modem software for use on our existing and future
generations of
SoftFone®
baseband processors. We also acquired development rights for
AJAR, TTPCom’s advanced applications platform. As a result
of this transaction, we became the single point of contact for
both hardware and software support for our new and existing
wireless handset customers, thus improving our ability to
service the needs of individual customers. During fiscal 2007,
we paid $6.1 million of contingent consideration related to
this acquisition.
In fiscal 2006, we acquired substantially all the outstanding
stock of privately-held Integrant Technologies, Inc. (Integrant)
of Seoul, Korea. The acquisition enabled us to enter the mobile
TV market and strengthened our presence in the Asia region. We
paid $8.4 million related to the purchase of shares from
the founder of Integrant during the period from July 2007
through July 2009. We recorded these payments as additional
goodwill.
In fiscal 2006, we acquired all the outstanding stock of
privately-held AudioAsics A/S (AudioAsics) of Roskilde, Denmark.
The acquisition of AudioAsics allows us to continue developing
low-power audio solutions, while expanding our presence in the
Nordic and Eastern European regions. We paid additional cash
payments of $3.1 million during fiscal 2009 for the
achievement of revenue-based milestones during the period from
October 2006 through January 2009, which were recorded as
additional goodwill. In addition, in accordance with the terms
of the acquisition documents, we paid $3.2 million during
fiscal 2009 based on the achievement of technological milestones
during the period from October 2006 through January 2009, which
were recorded as compensation expense in fiscal 2008. All
revenue and technological milestones related to this
acquisitions have been met and no additional payments will be
made.
We have not provided pro forma results of operations for TTPCom,
Integrant and AudioAsics in this report as they were not
material to us on either an individual or an aggregate basis. We
included the results of operations of each acquisition in our
consolidated statement of income from the date of such
acquisition.
These excerpts taken from the ADI 10-K filed Nov 25, 2008. Acquisitions
In fiscal 2006, we completed a transaction with TTPCom Limited
(TTPCom), whereby TTPCom transferred to us intellectual
property, engineering resources, and related assets associated
with the support and customization of TTPCom’s
GSM/GPRS/EDGE modem software for use on our existing and future
generations of
SoftFone®
baseband processors. We also acquired development rights for
AJAR, TTPCom’s advanced applications platform. As a result
of this transaction, we became the single point of contact for
both hardware and software support for our new and existing
wireless handset customers, thus improving our ability to
service the needs of individual customers. We paid TTPCom
$11.9 million in initial cash payments. We allocated the
purchase price to the tangible and intangible assets acquired
based on their estimated fair values at the date of acquisition.
The estimated fair values of the assets exceeded the initial
payments by $7.8 million, resulting in negative goodwill.
Pursuant to SFAS No. 141, Business
Combinations, we recorded a liability for the contingent
consideration that was accounted for as additional purchase
price, up to the amount of the negative goodwill. As contingent
payments became due, we applied the payments against the
contingent liability. As of October 28, 2006, we had paid
$6 million of contingent payments and the remaining
contingent liability was $1.8 million. The purchase price
included $5.5 million of
in-process
technology that had not yet reached technological feasibility,
had no alternative future use and was charged to operations
during fiscal 2006. The in-process technology related to
software code developed for use in our semiconductor chipsets
manufactured for devices that use both the 2G and 2.5G cellular
wireless technology standards. We determined the fair value of
the in-process technology with the assistance of a third party
using the income approach. At the time of the acquisition, the
in-process technology was approximately 56% complete. We
completed the in-process research and development projects
during fiscal 2007. During fiscal 2007, we paid an additional
$6.1 million of contingent consideration, which resulted in
reducing the $1.8 million liability and recording
additional goodwill of $4.3 million. All technological
milestones have been met and no additional payments will be
made. The acquisition also included $13.2 million of
intangible assets that we were amortizing over their estimated
useful lives of five years using an accelerated amortization
method that reflects the estimated pattern of economic use. As a
result of the sale of our Baseband Chipset Business to MediaTek
Inc., we reclassified $7.9 million of net intangible assets
to assets of discontinued operations at November 3, 2007
and transferred them to MediaTek Inc. during the first quarter
of fiscal 2008. See Note 2u. in the Notes to Consolidated
Financial Statements contained in Item 8 of this Annual
Report on
Form 10-K
for additional information on assets of discontinued operations.
Table of Contents
In fiscal 2006, we acquired substantially all the outstanding
stock of privately-held Integrant Technologies, Inc. (Integrant)
of Seoul, Korea. The acquisition enabled us to enter the mobile
TV market and strengthened our presence in the Asian region. We
paid $127.2 million in initial cash payments at closing and
were obligated to make additional cash payments of up to an
aggregate of $33 million upon the satisfaction of certain
conditions. The initial cash payments included $4.2 million
held in escrow for the purchase of the remaining non-founder
outstanding shares. We purchased these shares during fiscal 2007
and recorded them as additional goodwill. We allocated the
purchase price to the tangible and intangible assets acquired
based on their estimated fair values at the date of acquisition.
We completed the final purchase accounting for this transaction
during fiscal 2007, which resulted in an additional
$5.6 million of goodwill. The $33 million of potential
cash payments is comprised of $25 million for the
achievement of revenue-based milestones during the period from
July 2006 through December 2007, none of which were met, and
$8.4 million related to the purchase of shares from the
founder of Integrant during the period from July 2007 through
July 2009. We recorded or will record these payments as
additional purchase price. We have paid $6.3 million to
repurchase founder shares through November 1, 2008 and will
make the remaining $2.1 million payment during fiscal 2009.
The purchase price included $11.1 million of in-process
technology that had not yet reached technological feasibility,
had no alternative future use and was charged to operations
during the fourth quarter of fiscal 2006. The in-process
technology related to technologies currently in development for
Dual DAB,
T-DMB,
DVB-H, RFID and WiBro applications. We determined the
fair value of the in-process technology with the assistance of a
third party using the income forecast approach. At the time of
the acquisition, the in-process technology was approximately 74%
complete. We completed the in-process research and development
projects during fiscal 2007. The acquisition also included
$21.6 million of intangible assets that we are amortizing
over their estimated useful lives of two to five years using an
accelerated amortization method that reflects the estimated
pattern of economic use.
In fiscal 2006, we acquired all the outstanding stock of
privately-held AudioAsics A/S (AudioAsics) of Roskilde, Denmark.
The acquisition of AudioAsics allows us to continue developing
low-power audio solutions, while expanding our presence in the
Nordic and Eastern European regions. We paid $19.3 million
in initial cash payments at closing and may be obligated to make
additional cash payments of up to an aggregate of
$8 million upon the satisfaction of certain conditions. We
allocated the purchase price to the tangible and intangible
assets acquired based on their estimated fair values at the date
of acquisition. The $8 million of potential cash payments
is comprised of $4.8 million for the achievement of
revenue-based milestones that may be payable during the period
from October 2006 through January 2009 and $3.2 million
based on the achievement of technological milestones during the
period from October 2006 through January 2009. If the
revenue-based milestone is met by January 2009, it will be
recorded as additional goodwill. The technological milestones
required post-acquisition services to be rendered and, as such,
we recorded them as compensation expense in fiscal 2008. These
technological milestones were achieved during fiscal 2008 and
will be paid during fiscal 2009. The purchase price included
$5.1 million of in-process technology that had not yet
reached technological feasibility, had no alternative future use
and was charged to operations during the fourth quarter of
fiscal 2006. The in-process technology related to technologies
currently in development for analog and digital microphone
pre-amplifiers.
We determined the fair value of the
in-process
technology with the assistance of a third party using the income
approach. At the time of the acquisition, the in-process
technology was approximately 69% complete. We completed the
in-process research and development projects during fiscal 2007.
The acquisition also included $8.3 million of intangible
assets that we are amortizing over their estimated useful lives
of five years using an accelerated amortization method that
reflects the estimated pattern of economic use.
We have not provided pro forma results of operations for TTPCom,
Integrant and AudioAsics herein as they were not material to us
on either an individual or an aggregate basis. We included the
results of operations of each acquisition in our consolidated
statement of income from the date of such acquisition.
Acquisitions In fiscal 2006, we completed a transaction with TTPCom Limited (TTPCom), whereby TTPCom transferred to us intellectual property, engineering resources, and related assets associated with the support and customization of TTPCom’s GSM/GPRS/EDGE modem software for use on our existing and future generations of SoftFone® baseband processors. We also acquired development rights for AJAR, TTPCom’s advanced applications platform. As a result of this transaction, we became the single point of contact for both hardware and software support for our new and existing wireless handset customers, thus improving our ability to service the needs of individual customers. We paid TTPCom $11.9 million in initial cash payments. We allocated the purchase price to the tangible and intangible assets acquired based on their estimated fair values at the date of acquisition. The estimated fair values of the assets exceeded the initial payments by $7.8 million, resulting in negative goodwill. Pursuant to SFAS No. 141, Business Combinations, we recorded a liability for the contingent consideration that was accounted for as additional purchase price, up to the amount of the negative goodwill. As contingent payments became due, we applied the payments against the contingent liability. As of October 28, 2006, we had paid $6 million of contingent payments and the remaining contingent liability was $1.8 million. The purchase price included $5.5 million of in-process technology that had not yet reached technological feasibility, had no alternative future use and was charged to operations during fiscal 2006. The in-process technology related to software code developed for use in our semiconductor chipsets manufactured for devices that use both the 2G and 2.5G cellular wireless technology standards. We determined the fair value of the in-process technology with the assistance of a third party using the income approach. At the time of the acquisition, the in-process technology was approximately 56% complete. We completed the in-process research and development projects during fiscal 2007. During fiscal 2007, we paid an additional $6.1 million of contingent consideration, which resulted in reducing the $1.8 million liability and recording additional goodwill of $4.3 million. All technological milestones have been met and no additional payments will be made. The acquisition also included $13.2 million of intangible assets that we were amortizing over their estimated useful lives of five years using an accelerated amortization method that reflects the estimated pattern of economic use. As a result of the sale of our Baseband Chipset Business to MediaTek Inc., we reclassified $7.9 million of net intangible assets to assets of discontinued operations at November 3, 2007 and transferred them to MediaTek Inc. during the first quarter of fiscal 2008. See Note 2u. in the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for additional information on assets of discontinued operations.
Table of ContentsIn fiscal 2006, we acquired substantially all the outstanding stock of privately-held Integrant Technologies, Inc. (Integrant) of Seoul, Korea. The acquisition enabled us to enter the mobile TV market and strengthened our presence in the Asian region. We paid $127.2 million in initial cash payments at closing and were obligated to make additional cash payments of up to an aggregate of $33 million upon the satisfaction of certain conditions. The initial cash payments included $4.2 million held in escrow for the purchase of the remaining non-founder outstanding shares. We purchased these shares during fiscal 2007 and recorded them as additional goodwill. We allocated the purchase price to the tangible and intangible assets acquired based on their estimated fair values at the date of acquisition. We completed the final purchase accounting for this transaction during fiscal 2007, which resulted in an additional $5.6 million of goodwill. The $33 million of potential cash payments is comprised of $25 million for the achievement of revenue-based milestones during the period from July 2006 through December 2007, none of which were met, and $8.4 million related to the purchase of shares from the founder of Integrant during the period from July 2007 through July 2009. We recorded or will record these payments as additional purchase price. We have paid $6.3 million to repurchase founder shares through November 1, 2008 and will make the remaining $2.1 million payment during fiscal 2009. The purchase price included $11.1 million of in-process technology that had not yet reached technological feasibility, had no alternative future use and was charged to operations during the fourth quarter of fiscal 2006. The in-process technology related to technologies currently in development for Dual DAB, T-DMB, DVB-H, RFID and WiBro applications. We determined the fair value of the in-process technology with the assistance of a third party using the income forecast approach. At the time of the acquisition, the in-process technology was approximately 74% complete. We completed the in-process research and development projects during fiscal 2007. The acquisition also included $21.6 million of intangible assets that we are amortizing over their estimated useful lives of two to five years using an accelerated amortization method that reflects the estimated pattern of economic use. In fiscal 2006, we acquired all the outstanding stock of privately-held AudioAsics A/S (AudioAsics) of Roskilde, Denmark. The acquisition of AudioAsics allows us to continue developing low-power audio solutions, while expanding our presence in the Nordic and Eastern European regions. We paid $19.3 million in initial cash payments at closing and may be obligated to make additional cash payments of up to an aggregate of $8 million upon the satisfaction of certain conditions. We allocated the purchase price to the tangible and intangible assets acquired based on their estimated fair values at the date of acquisition. The $8 million of potential cash payments is comprised of $4.8 million for the achievement of revenue-based milestones that may be payable during the period from October 2006 through January 2009 and $3.2 million based on the achievement of technological milestones during the period from October 2006 through January 2009. If the revenue-based milestone is met by January 2009, it will be recorded as additional goodwill. The technological milestones required post-acquisition services to be rendered and, as such, we recorded them as compensation expense in fiscal 2008. These technological milestones were achieved during fiscal 2008 and will be paid during fiscal 2009. The purchase price included $5.1 million of in-process technology that had not yet reached technological feasibility, had no alternative future use and was charged to operations during the fourth quarter of fiscal 2006. The in-process technology related to technologies currently in development for analog and digital microphone pre-amplifiers. We determined the fair value of the in-process technology with the assistance of a third party using the income approach. At the time of the acquisition, the in-process technology was approximately 69% complete. We completed the in-process research and development projects during fiscal 2007. The acquisition also included $8.3 million of intangible assets that we are amortizing over their estimated useful lives of five years using an accelerated amortization method that reflects the estimated pattern of economic use. We have not provided pro forma results of operations for TTPCom, Integrant and AudioAsics herein as they were not material to us on either an individual or an aggregate basis. We included the results of operations of each acquisition in our consolidated statement of income from the date of such acquisition. This excerpt taken from the ADI 10-K filed Nov 30, 2007. Acquisitions
In the third quarter of fiscal 2006, we completed a transaction
with TTPCom Limited (TTPCom), whereby TTPCom transferred to us
intellectual property, engineering resources, and related assets
associated with the support and customization of TTPCom’s
GSM/GPRS/EDGE modem software for use on our existing and future
generations of
SoftFone®
baseband processors. We also acquired development rights for
AJAR, TTPCom’s advanced applications platform. As a result
of this transaction, we became the single point of contact for
both hardware and software support for our new and existing
wireless handset customers, thus improving our abilities to
Table of Contents
service the needs of individual customers. We paid TTPCom
$11.9 million in initial cash payments. The purchase price
was allocated to the tangible and intangible assets acquired
based on their estimated fair values at the date of acquisition.
The estimated fair values of the assets exceeded the initial
payments by $7.8 million, resulting in negative goodwill.
Pursuant to Statement of Financial Accounting Standards (SFAS)
No 141, Business Combinations, we recorded a liability
for the contingent consideration that will be accounted for as
additional purchase price, up to the amount of the negative
goodwill. As contingent payments became due, the payments were
applied against the contingent liability. As of October 28,
2006, we had paid $6 million of contingent payments and the
remaining contingent liability was $1.8 million. The
purchase price included $5.5 million of in-process
technology that had not yet reached technological feasibility,
had no alternative future use and was charged to operations
during the third quarter of fiscal 2006. The in-process
technology related to software code developed for use in our
semiconductor chipsets manufactured for devices that use both
the 2G and 2.5G cellular wireless technology standards. The fair
value of the in-process technology was determined with the
assistance of a third party using the income approach. At the
time of the acquisition, the in-process technology was
approximately 56% complete. As of November 3, 2007, the
in-process research and development projects were complete.
During fiscal 2007, we paid an additional $6.1 million of
contingent consideration, which resulted in reducing the
$1.8 million liability and recording additional goodwill of
$4.3 million. As of November 3, 2007, all
technological milestones have been met and no additional
payments will be made. The acquisition also included
$13.2 million of intangible assets that were being
amortized over their estimated useful lives of five years using
an accelerated amortization method that reflects the estimated
pattern of economic use. As a result of the definitive agreement
to sell our Baseband Chipset Business to MediaTek Inc.,
$7.9 million and $11.4 million of net intangible
assets were reclassified to assets of discontinued operations at
November 3, 2007 and October 28, 2006, respectively,
as the TTPCom assets will be transferred to Media Tek Inc. as
part of the transaction. See Note 2u. to our Consolidated
Financial Statements contained in Item 8 of this Annual
Report on
Form 10-K
for further information regarding assets of discontinued
operations.
In the fourth quarter of fiscal 2006, we acquired substantially
all the outstanding stock of privately-held Integrant
Technologies, Inc. (Integrant) of Seoul, Korea. The acquisition
enabled us to enter the mobile TV market and strengthened our
presence in the Asian region. We paid $127.2 million in
initial cash payments at closing and may be obligated to make
additional cash payments of up to an aggregate of
$33 million upon the satisfaction of certain conditions.
The initial cash payments included $4.2 million held in
escrow for the purchase of the remaining non-founder outstanding
shares. These shares were purchased during fiscal 2007 and were
recorded as additional goodwill. The purchase price was
allocated to the tangible and intangible assets acquired based
on their estimated fair values at the date of acquisition. We
completed the final purchase accounting for this transaction
during the first quarter of fiscal 2007, which resulted in an
additional $5.6 million of goodwill. The $33 million
of potential cash payments is comprised of $25 million for
the achievement of revenue-based milestones that may be payable
during the period from July 2006 through December 2007 and
$8 million related to the purchase of shares from the
founder of Integrant during the period from July 2007 through
July 2009. The additional cash payments will be recorded as
additional purchase price. During fiscal 2007, we paid
$3.5 million to repurchase founder shares. No revenue-based
milestones have been met as of November 3, 2007. The
purchase price included $11.1 million of in-process
technology that had not yet reached technological feasibility,
had no alternative future use and was charged to operations
during the fourth quarter of fiscal 2006. The in-process
technology related to technologies currently in development for
Dual DAB, T-DMB, DVB-H, RFID and WiBro applications.
The fair value of the in-process technology was determined with
the assistance of a third party using the income approach. At
the time of the acquisition, the in-process technology was
approximately 74% complete. As of November 3, 2007, the
in-process research and development projects were complete. The
acquisition also included $21.6 million of intangible
assets that are being amortized over their estimated useful
lives of two to five years using an accelerated amortization
method that reflects the estimated pattern of economic use.
In the fourth quarter of fiscal 2006, we acquired all the
outstanding stock of privately-held AudioAsics A/S (AudioAsics)
of Roskilde, Denmark. The acquisition of AudioAsics allows us to
continue developing our low-power audio solutions, while
expanding our presence in the Nordic and Eastern European
regions. We paid $19.3 million in initial cash payments at
closing and may be obligated to make additional cash payments of
up to an aggregate of $8 million upon the satisfaction of
certain conditions. The purchase price was allocated to the
tangible and intangible assets acquired based on their estimated
fair values at the date of acquisition. The $8 million of
potential cash payments is comprised of $4.8 million for
the achievement of revenue-based milestones that may be
Table of Contents
payable during the period from October 2006 through January 2009
and $3.2 million based on the achievement of technological
milestones during the period from October 2006 through January
2009. In order to be entitled to receive $2.4 million of
the revenue-based contingent consideration, certain key
employees must continue to be employed by us. As such, that
portion of the revenue-based contingent consideration will be
recorded as compensation expense when, and if, it is earned. The
technological milestones require post-acquisition services to be
rendered in order to be achieved and, as such, will be recorded
as compensation expense when earned. The purchase price included
$5.1 million of in-process technology that had not yet
reached technological feasibility, had no alternative future use
and was charged to operations during the fourth quarter of
fiscal 2006. The in-process technology related to technologies
currently in development for analog and digital microphone
pre-amplifiers.
The fair value of the in-process technology was determined with
the assistance of a third party using the income approach. At
the time of the acquisition, the in-process technology was
approximately 69% complete. As of November 3, 2007, the
in-process research and development projects were complete. The
acquisition also included $8.3 million of intangible assets
that are being amortized over their estimated useful lives of
five years using an accelerated amortization method that
reflects the estimated pattern of economic use. As of
November 3, 2007, no contingent consideration has been paid.
Pro forma results of operations for TTPCom, Integrant and
AudioAsics have not been provided herein as they were not
material to us on either an individual or an aggregate basis.
The results of operations of each acquisition are included in
our consolidated statement of income from the date of such
acquisition.
This excerpt taken from the ADI 10-K filed Nov 20, 2006. Acquisitions
In the third quarter of fiscal 2006, we completed a transaction
with TTPCom Limited (TTPCom), whereby TTPCom transferred to us
intellectual property, engineering resources, and related assets
associated with the support and customization of TTPCom’s
GSM/GPRS/EDGE modem software for use on our existing and future
generations of SoftFone(R) baseband processors. We also acquired
development rights for AJAR, TTPCom’s advanced applications
platform. As a result of this transaction, we are the single
point of contact for both hardware and software support for our
new and existing wireless handset customers, thus improving our
abilities to service the needs of individual customers. We paid
$11.9 million in initial cash payments and may become
obligated to make additional cash payments of up to an aggregate
of $12 million based on the achievement of technological
milestones during the period from May 2006 through November
2006. The purchase price was allocated to the tangible and
intangible assets acquired based on their estimated fair values
at the date of acquisition. The estimated fair values of the
assets exceeded the initial payments by $7.8 million,
resulting in negative goodwill. Pursuant to Statement of
Financial Accounting Standards (SFAS) No 141, Business
Combinations, we recorded a liability for the contingent
consideration that will be accounted for as additional purchase
price, up to the amount of the negative goodwill. As contingent
payments become due, the payments will be applied against the
contingent liability. Contingent payments in excess of
$7.8 million, if any, will be recorded as additional
purchase price. As of October 28, 2006, we had paid
$6 million of contingent payments, and the remaining
contingent liability was $1.8 million. The purchase price
included $5.5 million of in-process technology that had not
yet reached technological feasibility, had no alternative future
use and was charged to operations during the third quarter of
fiscal 2006. The in-process technology related to software code
developed for use in our semiconductor chipsets manufactured for
devices that use both the 2G and 2.5G cellular wireless
technology standards. The fair value of the in-process
technology was determined by a third party using the income
forecast method, which is a discounted net cash flow approach.
At the time of the acquisition, the in-process technology was
approximately 56% complete. As of October 28, 2006, the
in-process research and development projects are on schedule. We
expect to complete these projects in the first quarter of fiscal
2007 and incur an additional $1.3 million of expense
related to these projects. The acquisition also included
$13.2 million of intangible assets that will be amortized
over their estimated useful lives of five years using an
accelerated amortization method that reflects the estimated
pattern of economic use.
In the fourth quarter of fiscal 2006, we acquired substantially
all the outstanding stock of privately-held Integrant
Technologies, Inc. (Integrant) of Seoul, Korea. The acquisition
enabled us to enter the mobile TV market as well as strengthened
our presence in the Asian region. We paid $127.2 million in
initial cash payments at closing
Table of Contents
and may be obligated to make additional cash payments of up to
an aggregate of $33 million upon the satisfaction of
certain conditions. The initial cash payments include
$4.2 million held in escrow for the purchase of the
remaining non-founder outstanding shares. The preliminary
purchase price was allocated to the tangible and intangible
assets acquired based on their estimated fair values at the date
of acquisition. We expect to complete the purchase accounting in
the first quarter of fiscal 2007 upon obtaining certain
additional information. The $33 million of potential cash
payments is comprised of $25 million for the achievement of
revenue-based milestones that may be payable during the period
from July 2006 through December 2007 and $8 million related
to the purchase of shares from the founder of Integrant during
the period from July 2007 through July 2009. The additional cash
payments, if any, will be recorded as additional purchase price.
The purchase price included $11.1 million of in-process
technology that had not yet reached technological feasibility,
had no alternative future use and was charged to operations
during the fourth quarter of fiscal 2006. The in-process
technology related to technologies currently in development for
Dual DAB, T-DMB, DVB-H, RFID and WiBro applications.
The fair value of the in-process technology was determined by a
third-party using the income forecast method, which is a
discounted net cash flow approach. At the time of the
acquisition, the in-process technology was approximately 74%
complete. As of October 28, 2006, the in-process research
and development projects are on schedule. We expect to complete
the projects in the second quarter of fiscal 2007 and incur an
additional $3.3 million of expense related to these
projects. The acquisition also included $21.6 million of
intangible assets that will be amortized over their estimated
useful lives of two to five years using an accelerated
amortization method that reflects the estimated pattern of
economic use.
In the fourth quarter of fiscal 2006, we acquired all the
outstanding stock of privately-held AudioAsics
A/S (AudioAsics)
of Roskilde, Denmark. The acquisition of AudioAsics allows us to
continue developing our low-power audio solutions, while
expanding our presence in the Nordic and Eastern European
regions. We paid $19.3 million in initial cash payments at
closing and may be obligated to make additional cash payments of
up to an aggregate of $8 million upon the satisfaction of
certain conditions. The purchase price was allocated to the
tangible and intangible assets acquired based on their estimated
fair values at the date of acquisition. The $8 million of
potential cash payments is comprised of $4.8 million for
the achievement of revenue-based milestones that may be payable
during the period from October 2006 through January 2009 and
$3.2 million based on the achievement of technological
milestones during the period from October 2006 through January
2009. In order to be entitled to receive $2.4 million of
the revenue-based contingent consideration, certain key
employees must continue to be employed by us. As such, that
portion of the revenue-based contingent consideration will be
recorded as compensation expense when, and if, it is earned. The
technological milestones require post-acquisition services to be
rendered in order to be achieved and, as such, will be recorded
as compensation expense when earned. The purchase price included
$5.1 million of in-process technology that had not yet
reached technological feasibility, had no alternative future use
and was charged to operations during the fourth quarter of
fiscal 2006. The in-process technology related to technologies
currently in development for analog and digital microphone
pre-amplifiers.
The fair value of the in-process technology was determined by a
third party using the income forecast method, which is a
discounted net cash flow approach. At the time of the
acquisition, the in-process technology was approximately 69%
complete. As of October 28, 2006, the in-process research
and development projects are on schedule. We expect to complete
the projects by April 2007 and incur an additional
$1.0 million of expense related to these projects. The
acquisition also included $8.3 million of intangible assets
that will be amortized over their estimated useful lives of five
years using an accelerated amortization method that reflects the
estimated pattern of economic use.
Pro forma results of operations for TTPCom, Integrant and
AudioAsics have not been provided herein as they were not
material to us on either an individual or an aggregate basis.
The results of operations of each acquisition are included in
our consolidated statement of income from the date of such
acquisition.
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