EXAR » Topics » Purchase price allocation

This excerpt taken from the EXAR 10-K filed Jun 12, 2009.

Purchase Price Allocation

The allocation of the purchase price to Sipex’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Goodwill resulted primarily from our expectations of synergies from integration of Sipex’s product offerings with our product offerings. Goodwill is not deductible for tax purposes. We had up to twelve months from the closing date of the acquisition to adjust pre-acquisition contingencies, if any.

 

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EXAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FISCAL YEARS ENDED MARCH 29, 2009, MARCH 30, 2008 AND MARCH 31, 2007

 

The purchase price was adjusted as follows (in thousands):

 

     As of
March 30,
2008
    Adjustments     As of
March 29,
2009
 

Cash

   $ 1,122       $ 1,122  

Accounts receivable

     5,720         5,720  

Inventory

     12,245         12,245  

Other assets

     2,056         2,056  

Property, plant and equipment

     19,883         19,883  

Accounts payable

     (6,439 )       (6,439 )

Other liabilities

     (10,530 )   1,449       (9,081 )

Long-term financing obligations and others

     (18,470 )       (18,470 )
                  

Net tangible assets acquired

     5,587         7,036  

Identifiable intangible assets

     60,600         60,600  

In-process research and development

     8,800         8,800  

Fair value of unvested options assumed

     4,811         4,811  

Goodwill

     170,940     (1,449 )     169,491  
                  

Total purchase price

   $ 250,738       $ 250,738  
                  

During fiscal 2009, goodwill was reduced by $1.4 million, principally in connection with the reduction of $0.4 million in the allowance for sales returns and volume price discounts for Sipex’s products in the distribution channel, and $0.9 million related to employee related liabilities which were initially estimated in August 2007. We recorded a goodwill impairment loss of approximately $41.0 million and $128.5 million, associated with the Sipex acquisition during fiscal years ended March 29, 2009 and March 30, 2008, respectively.

This excerpt taken from the EXAR 10-Q filed Feb 6, 2009.

Purchase Price Allocation

The allocation of the purchase price to Sipex’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Goodwill resulted primarily from our expectations of synergies from integration of Sipex’s product offerings with our product offerings. Goodwill is not deductible for tax purposes. We had up to twelve months from the closing date of the merger to adjust pre-acquisition contingencies, if any.

The purchase price was adjusted as follows during the nine months ended December 28, 2008 (in thousands):

 

     As of
March 30,
2008
    Adjustments     As of
December 28,
2008
 

Cash

   $ 1,122       $ 1,122  

Accounts receivable

     5,720         5,720  

Inventory

     12,245         12,245  

Other assets

     2,056         2,056  

Property, plant and equipment

     19,883         19,883  

Accounts payable

     (6,439 )       (6,439 )

Other liabilities

     (10,530 )   1,449       (9,081 )

Long-term financing obligations and others

     (18,470 )       (18,470 )
                  

Net tangible assets acquired

     5,587         7,036  

Identifiable intangible assets

     60,600         60,600  

In-process research and development

     8,800         8,800  

Fair value of unvested options assumed

     4,811         4,811  

Goodwill

     170,940     (1,449 )     169,491  
                  

Total estimated purchase price

   $ 250,738       $ 250,738  
                  

During the nine months ended December 28, 2008, goodwill was reduced by $1.4 million, principally in connection with the reduction of $0.4 million in the allowance for sales returns and volume price discounts for Sipex’s products in the distribution channel, and $0.9 million related to employee related liabilities which were initially estimated in August 2007.

This excerpt taken from the EXAR 10-Q filed Nov 7, 2008.

Purchase Price Allocation

The allocation of the purchase price to Sipex’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Goodwill resulted primarily from our expectations of synergies from integration of Sipex’s product offerings with our product offerings. Goodwill is not deductible for tax purposes. We had up to twelve months from the closing date of the merger to adjust pre-acquisition contingencies, if any.

The purchase price was adjusted during the first six months of fiscal 2009 as follows (in thousands):

 

     As of
March 30,
2008
    Adjustments     As of
September 28,
2008
 

Cash

   $ 1,122       $ 1,122  

Accounts receivable

     5,720         5,720  

Inventory

     12,245         12,245  

Other assets

     2,056         2,056  

Property, plant and equipment

     19,883         19,883  

Accounts payable

     (6,439 )       (6,439 )

Other liabilities

     (10,530 )   418       (10,112 )

Long-term financing obligations and others

     (18,470 )       (18,470 )
                  

Net tangible assets acquired

     5,587         6,005  

Identifiable intangible assets

     60,600         60,600  

In-process research and development

     8,800         8,800  

Fair value of unvested options assumed

     4,811         4,811  

Goodwill

     170,940     (418 )     170,522  
                  

Total estimated purchase price

   $ 250,738       $ 250,738  
                  

We recorded an adjustment to reduce goodwill by $0.4 million during the first six months of fiscal 2009. This adjustment reduced the allowance for sales returns and volume price discounts for Sipex’s products in the distribution channel, which was initially estimated on the Sipex merger date.

During the fourth quarter of fiscal year ended March 30, 2008, we recorded a goodwill impairment loss of approximately $128.5 million associated with the Sipex merger.

This excerpt taken from the EXAR 10-Q filed Aug 8, 2008.

Purchase Price Allocation

The allocation of the purchase price to Sipex’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Goodwill resulted primarily from our expectations of synergies from integration of Sipex’s product offerings with our product offerings. Goodwill is not deductible for tax purposes. We have up to twelve months from the closing date of the merger to adjust any pre-acquisition contingencies, if any.

 

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The purchase price has been adjusted during the first fiscal quarter of 2009 as follows (in thousands):

 

     As of
March 30, 2008
    Adjustments     As of
June 29, 2008
 

Cash

   $ 1,122       $ 1,122  

Accounts receivable

     5,720         5,720  

Inventory

     12,245         12,245  

Other assets

     2,056         2,056  

Property, plant and equipment

     19,883         19,883  

Accounts payable

     (6,439 )       (6,439 )

Other liabilities

     (10,530 )   291       (10,239 )

Long-term financing obligations and others

     (18,470 )       (18,470 )
                  

Net tangible assets acquired

     5,587         5,878  

Identifiable intangible assets

     60,600         60,600  

In-process research and development

     8,800         8,800  

Fair value of unvested options assumed

     4,811         4,811  

Goodwill

     170,940     (291 )     170,649  
                  

Total estimated purchase price

   $ 250,738       $ 250,738  
                  

We recorded an adjustment to reduce goodwill by $291,000 during the first fiscal quarter of 2009. This adjustment reduced the allowance for sales returns and volume price discounts for Sipex’s products in the distribution channel, which was initially estimated on the Sipex merger date.

During the fiscal year ended March 30, 2008, we recorded a goodwill impairment loss of approximately $128.5 million associated with the Sipex merger.

This excerpt taken from the EXAR 10-K filed Jun 13, 2008.

Purchase Price Allocation

The allocation of the purchase price to Sipex’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Goodwill resulted primarily from our expectations of synergies from integration of Sipex’s product offerings with our product offerings. Goodwill is not deductible for tax purposes. We have up to twelve months from the closing date of the merger to adjust any pre-acquisition contingencies, if any.

 

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Table of Contents

EXAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FISCAL YEARS ENDED MARCH 30, 2008, MARCH 31, 2007 AND MARCH 31, 2006

 

The purchase price has been allocated and adjusted as follows (in thousands):

 

     As of
August 25,
2007
    Adjustments     As of
March 30,
2008
 

Cash

   $ 1,122       $ 1,122  

Accounts receivable

     5,720         5,720  

Inventory

     12,025     220       12,245  

Other assets

     1,972     84       2,056  

Property, plant and equipment

     19,960     (77 )     19,883  

Accounts payable

     (6,439 )       (6,439 )

Other liabilities

     (10,490 )   (40 )     (10,530 )

Long-term financing obligations and others

     (18,470 )       (18,470 )
                  

Net tangible assets acquired

     5,400         5,587  

Identifiable intangible assets

     60,600         60,600  

In-process research and development

     8,800         8,800  

Fair value of unvested options assumed

     4,811         4,811  

Goodwill

     171,127     (187 )     170,940  
                  

Total estimated purchase price

   $ 250,738       $ 250,738  
                  

We recorded net adjustments totaling approximately $187,000 to our goodwill during the fiscal year ended March 30, 2008. The adjustments were primarily due to an increase in the fair value of acquired inventory from a recovery of approximately $220,000 and a decrease in the fair value of our severance costs accrual of $381,000, which was partially offset by an increase in the fair value of our facility costs accrual by approximately $338,000 resulting primarily from our Billerica lease termination.

During the same period, we recorded a goodwill impairment loss of approximately $128.5 million associated with the Sipex merger (See Note 8 – Goodwill and Intangible Assets).

This excerpt taken from the EXAR 10-Q filed Nov 9, 2007.

Purchase Price Allocation:

The allocation of the purchase price to Sipex’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values. Further adjustments may be included in the final allocation of the purchase price of Sipex, if the adjustments are determined within the purchase price allocation period (up to twelve months from the closing date). The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Goodwill resulted primarily from our expectations of synergies from integration of Sipex’s product offering with our product offerings. None of the goodwill recorded is expected to be deductible for tax purposes.

 

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The estimated purchase price has been preliminary allocated as follows (in thousands):

 

     As of
August 25, 2007
 

Cash

   $ 1,122  

Accounts receivable

     5,720  

Inventory

     12,025  

Other assets

     1,972  

Property, plant and equipment

     19,960  

Accounts payable

     (6,439 )

Other liabilities

     (10,490 )

Long-term financing obligation and others

     (18,470 )
        

Net assets acquired

     5,400  

Identifiable intangible assets

     60,600  

In-process research and development

     8,800  

Fair value of unvested options assumed

     4,811  

Goodwill

     171,127  
        

Total estimated purchase price

   $ 250,738  
        

Note 4 contains information related to the cost of restructuring programs for Sipex employees and facilities. The costs were included as part of other liabilities assumed as of August 25, 2007.

The following table sets forth the components of the identifiable intangible assets, which are being amortized over their estimated useful lives on both a straight-line basis (dollars in thousands):

 

     Fair Value    Useful Life
(in years)

Existing technology

   $ 40,900    6.0

Patents/Core technology

     7,900    5.0

Customer backlog

     400    0.5

Distributors relationships

     6,500    6.0

Customer relationships

     4,300    7.0

Tradename/Trademarks

     600    3.0
         

Total acquired identifiable intangible assets

   $ 60,600   
         

"Purchase price allocation" elsewhere:

MoSys (MOSY)
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